The light engineering sector
LIGHT engineering industries form an important sector of the national economy in terms of the number of units, employment and annual turnover. According to Bangladesh Engineering Industry Owners Association (BEIOA), a total of 40,000 such units are producing capital machinery, spare parts of imported machines – new or reconditioned. Their total economic value is claimed to be Tk 20,000 crore a year. The sector reportedly provides employment to some 20 lakh people. According to a recent report, export of light engineering equipment fetched US$220 million and US$189 million in 2007-08 and 2008-09 respectively. But potential of the sector cannot be fully utilised for lack of capital and support survices. In spite of having a large number of experienced technical hands, the sector cannot make innovations as they use age-old machinery. Banks and financial institutions are reportedly less interested to invest in the sector.
Bangladesh depends on foreign countries for costly capital machinery. Local light engineering industries can meet a part of the demand at cheaper prices if the industries are given financial support to produce modern machinery. These industries are already doing a significant part of maintenance works of the existing industries supplying spare parts fabricated locally and thus saving huge foreign exchange. Light engineering industries along with other SMEs are considered engines of industrialisation. They absorb more workforces and can help achieve the goal of poverty reduction.
Bangladesh has hardly any heavy industry. The country with about 30 million unemployed people needs labour intensive industries. Light engineering industries are specially suitable for their high labour intensity, innovativeness and low capital investment. Stakeholders in the sector want the authorities to create a special fund to provide loans at low interest rates. The SME Foundation may extend financial support to them. Policy support for the development of this vital sector would give rich dividends, say experts.