Light Engineering Industry: Situation, Progress and Prospects
- February 23, 2021
- Posted by: Sujon Ahamed
- Category: Insights, Publications
According to the Bangladesh Chamber of Industry (BCI) President Anwar-ul Alam Chowdhury Parvez, domestic demand for Light Engineering Products (LEPs) in Bangladesh is around $8.2 billion. Which is met by both local industries (40%) and through import (60%). Md Abdur Razzaque, President of Bangladesh Engineering Industry Owners Association (BEIOA) articulates that ten years ago, the local market size of the light engineering industry was only 2.4 billion dollars which is now worth around 3.12 billion dollars. The light engineering industry currently contributing more than the foreign aid to GDP, which is around 2.2%. Among the domestic production, 7.5% (235.3 million) is substituting the imported products which are called import substitution (NVSL-calculation, 2020).
In 2020, Bangladesh Prime Minister Sheikh Hasina announced the LEPs as the ‘product of the year’
during the inauguration program of Dhaka Trade Fair-2020. Currently, 60,000 enterprises in Bangladesh working in this sector, employing approximately 1 million people.
Major hubs and their concentration
Despite starting from Dholaikhal and Jinjira area in Dhaka, the light engineering enterprises have
spread in different parts of Bangladesh. After Dhaka division Chittagong, Narayangong, Bogra,
Gazipur, Kishorganj area have also become as the major hub of different light engineering products. Different types of light engineering enterprises have emerged across the country.
Major Products OF Light Engineering Industry
Domestic Users of LEPs
Export and Import Of Light Engineering Products
Sadly, Bangladesh is losing its export market share year on year. Due to several reasons, the export value of Bangladesh is facing a decreasing trend. From FY2018-19 to FY2019-20 export value decreased by 14.1% and in its previous year it decreases by 4.1%. This is a very alarming indicator of Bangladesh.
On one hand, the export earnings from LEPs are decreasing year by year and on the other hand import payment is increasing. In FY2018-19 Import payment for light engineering products has been increased by 5.15% wherein the previous fiscal year increased by 22.1%. All these figures are indicating our increasing dependency on foreign LEPs. Which is again not a favorable situation for Bangladesh.
Government Initiatives and Future Plan
Challenges and Drawbacks for the Industry
Despite having a huge potential, this sector’s performance is not up to the mark. It has been found that the domestic industry is not capable of providing the lion share of the domestic demand, export earnings are decreasing and import payments are increasing, no large foreign investments are coming in this sector. Although the government is taking necessary steps for the industry but they are not timely and sufficient for the industry. The major challenges and drawbacks for the industry are:
According to market insiders, this industry is not getting enough attention, and it deserves more policy support. Despite having skills, in competing with low-priced Chinese products Bangladesh is far behind. With adequate support, this industry can contribute as much as the RMG industry is contributing to the economy.
Report prepared by: Market Intelligence Bureau- NewVision Solutions Limited Report Analysis and Writing
Md. Atiqul Islam, Senior Research Associate (firstname.lastname@example.org)
Md. Nasir Uddin, Research Associate (email@example.com )
Report Supervised by : Sujon Ahamed, Head of Market Research (firstname.lastname@example.org )