Light Engineering Sectors in Bangladesh
Like many other developing countries, Light Engineering sectors(LEIs) is an important manufacturing sector of Bangladesh that occupy strong and vital position in the economy of the country. It prudently acts as feeder or support industries to all other industries to all other industries and plays a vital role in the socio-economic development of the country. These industries have potentials to make significant contribution towards technological and economic development along with wide opportunities for employment generation. Small industries are engaged in manufacturing various import-substitute products and thus saving valuable foreign currency. Manufacturing and processing activities in small and micro engineering enterprises contribute to the livelihood of huge number of poorest citizen.
There are certain socio-economic advantages that the LEIs enjoy over the large-scale industrial units. The advantages are: lower capital investment, lower job-creation cost, low risk factor, shorter start-up period, lower capital output ratio., less management problem, lower energy cost, moderate infrastructure requirement, promotion of entrepreneurial talents, more environment friendly production process, and promotion of agro-industrial linkages.
In Bangladesh, there are hundreds of roadside light engineering workshop scattered all over the country, starting from small towns to metropolitan cities like Dhaka, Chittagong, Rajshahi and Khulna. Some are equipped with only an electric small size welding machine, various types of horizontal, vertical and turret lathe machines, gas, electric and ac welding sets, various type of drilling machines and grinders, etc. These small workshops make substantial contribution to gross domestic products (GDP) and create employment opportunities. But unfortunately these industries could not prosper and develop as it should have been. Due to many reasons large numbers of small industries and enterprises in the country had to curtail or stop their activities.
Perspective of LEIs in Bangladesh
The SMEs sector-as a whole provides over 87 per cent of industrial value added goods (1) There are lack of information about total number and types of small firms existing presently in Bangladesh. However, according to survey on small industries done by Bangladesh Small & Cottage Industries Corporation (BSCIC), it was revealed that there were total 197 types of small industries with total 38294 industries in the country (BSCIC Survey report, 1994). (2) An estimate shows that presently there are about 60,000 small industries in the country. Among them, Light Engineering Industries are deemed to be approximately 25% i.e., LEI are about 15000. In addition, evidence suggests that there are over 347,000 cottage industrial units and a large number of handloom and power loom enterprises. But as per report of BEIOA (Bangladesh Engineering Industries Owner Association), there are total about 40,000 LEIs in the country generating 50,000 employment per year.
Definition of Light Engineering Industries(LEIs)
LEIs corresponds to those engineering industries that posses smaller capital investment and falls in the gamut from cottage industries to small industries (cottage and small industries have been defined in Industrial Policy –2005 .In Industrial Policy 2005 the Light engineering sectors has been included in the list of thrust sectors category. LEIs includes- all kinds of ferrous and non-ferrous metal mechanical products, machinery (electrical and non-electrical), spare parts, equipment, instrument, parts of mechanical system, electrical and electro-mechanical products, electronic products, machine parts or parts of manufacturing process that is made of ceramics, rubber, plastic, wood, glass etc. Repair, maintenance, erection, installation, fabrication, support service, consultancy etc. are service variety in the light engineering sector. In Export Policy 2003-2006 LEIs is considered as one of the highest priority sector.
Problems of Light Engineering Industries in Bangladesh
Raw materials:
- High price of raw materials
- Required raw materials are not Unavailability of the required raw materials
- Scarcity of quality raw materials in the local market
Finance:
- Lengthy and cumbersome procedure to receive bank loan
- Difficulties to get required amount of bank loan
- Non-availability of sufficient working capital
- Low tariff rate of imported goods that are competing with the local ones
- Difficult to get financial help for technological innovation, development and for big investment
- Non-availability of venture capital
- High rate of interest on bank loan
Innovation promotion and management:
- Non-availability of metal testing facility. Difficult to identify the metal and its quality
- Non-availability of efficient and skilled manpower in many cases
- Sometimes, space is not available or sufficient for extension of the workshop
- Lack of specified policies for price determination of a product
- Difficulty to get Govt, contracts.
- inadequate electricity supply
- Non-availability of heat treatment facility
- Durability of the products become low due to lack of tempering facility
- Lack of skilled manpower required for product diversification
- Due to limited purchasing capacity of market it is not possible to produce quality products with full production capacity
- Lack of designing capability
- Manual in Bangla on production and technology is not normally available in the market
- Lack of standard & quality of product
- Lack of knowledge how and where to patent the product
Marketing
- The price of local goods is high in comparison with foreign goods due to high production cost of local goods. Thus local goods cannot compete with the foreign goods
- Lack of facility or capability of the owner to disseminate information about the workshop and its products.
Priority sub sectors of LEIs may be promoted:
The following sub sectors of LEIs to be upgraded so that these can produce export quality products:
- Automobile Sector: Automobile spare parts has got great export market potential around the world. This sub sector includes Cylinder kit, radiator, engine filters etc.
- Marine engine spare parts: Marine engine spare parts includes gear, pinion, crankshaft, axle, engine head etc.
- Railway spare parts. This sub sector includes railway radiator, railway rolling stock and other 600 parts are being produced by LEIs presently.
- Agro-based and Agro—supportive sector: This sub-sector includes plough head, irrigation pump, trashing machine etc.
- Machinery, equipment and spare parts of various sector: This sub sector includes spare parts of various industries, capital machineries, accessories etc.
- Electrical Machineries: Electrical machinery such as AC, fan, electrical appliances, cooking unit, spare parts, and machine for production of electrical bulb etc.
- Household machinery products: Household machinery products such as wheel chair, mechanized bed, mechanized / hydraulic chair etc.
Priority areas for capacity development:
Capacity may be developed in the following areas on priority basis:
- Modern foundry development
- Heat treatment facility
- Sheet metal products manufacturing facility
- Alloy steel production
- Alloy, CI & DI (Ductile Iron) foundry establishment
- Introduction to CAD, CAM, CIM, CNC etc.
- Mold and Die making
- Use of EDM, Pantograph, Copy milling machine, CNC machine, Wire cut, Machining center
- Surface treatment such as galvanizing, nickel coating, Powder coating Chrome coating
- Die casting products
Recommendations:
Following recommendations may be considered to promote the light engineering sector of the country:
- A definite policy for Light Engineering Industries (LEIs) should be prepared.
- Business / technical information is to be readily available to the enterprises to improve their performance. Networking among the concerned trade Associations and R & D Institutions should be established in order to collect, compile and disseminate the information for ready reference for the entrepreneurs. Data Bank for the LE sector may be created.
- Necessary measures are to be introduced to upgrade the institutional structure of the LE enterprises.
- Appropriate raw materials required to produce quality products should be identified and made locally available.
- Government’s decision to allow duty free import of standby Generators should be continued in future until such time it is possible to ensure reliable power supply.
- Product/ production technology should be upgraded from conventional to modern level as per market demand. Technical support services should be provided to the local machinery manufacturers to enhance their capability for machine designing.
- Material testing facility and R & D facility should be ensured.
- Awareness campaign on standardization and quality of the products should be made.
- LEIs require exposure to modern machines and technology. Support should be given to LEIs in this regard. A technological support cell should be established under Ministry of Industries to ensure the feed back. Workshops, Seminar, exhibitions and discussions with foreign suppliers may also be arranged.
- Entrepreneurial culture should be established so that their capability can be upgraded from the average level to excellent level.
- Technicians working in LEIs are quite innovative. But as most of them do not have formal technical education, they do not understand engineering drawing and are not familiar with scientific methods of measurements, limit, fit, tolerance etc. Formal technical education should be ensured for the personnel of the sector.
- Technical training should be provided to the personnel of LEIs to improve the quality of their work. Training manual written in a simplified way in Bangla should be given to the trainees so that they can use these effectively.
- Necessary provision should be made to make the LEIs familiar with VAT, Tax and other documentation. Knowledge on safety measures, hygiene, environment pollution etc. should also be ensured.
- The management of the industries should be given enough tools and knowledge for reaching foreign markets, preparing price quotations, selecting foreign distributors/ agents, documentation, Letter of Credit, shipping and all other tasks related to export.
- There is a need to consider friendly financing policy for the LE sector. Extensive financial support should be made to the sector. LE sector should get the facility of EPF.
- There should be arrangements for periodic/ permanent exhibition of locally produced engineering products in the country. Permanent Display Center may be established for LE products.
- Periodic professional training courses should be organized for capacity building of the LE sector.
- Continuous searching for export in global markets should be made. Frequent visit to developed countries and participation in int. trade fairs may be helpful to get experience on using modern technology and get export orders.