The burgeoning domestic market and the prospect of significant cost reductions for companies sourcing components and finished goods for international markets makes Bangladesh a compelling choice for investors.
Light Engineering Sector of Bangladesh:
The Light Engineering Sector (LES) that draws the least attention of the policymakers has emerged as a potential cost cutting sector by producing at least 50 percent substitutes of imported items in the country. This important sub-sector is now providing critical support to industrial, agricultural and construction sectors by manufacturing a wide range of spare parts, castings, moulds and dices, oil and gas pipeline fittings and light machinery, as well as repairing those. Sector players claim that electrical goods like switch, socket, light shed, channel, cables and electrical fans, generator, which are manufactured by the LES are now meeting 48% to 52% of the country’s demands, which was earlier met through import. Export growth was estimated at 30%. The light engineering sector as ‘the mother of all sectors,’ because it provides backup support to cement, paper, jute, textile, sugar, food processing, railway, shipping, garments capital machineries by repairing and maintaining those. A recent study conducted by International Finance Corporation (IFC) in partnership with UK Department for International Development and Norwegian government shows that LES has in its employment 6,00,000 people involved in 50,000 micro enterprises and 10,000 Small and Medium Enterprises. Another study conducted by Bangladesh University of Engineering and Technology however, estimates that LES comprises of around 40,000 enterprises employing around 8,00,000 people.
The light engineering industry in Bangladesh continues to grow each year. This labor-intensive sector produces a diverse range of items, including import substitute machinery spares, plant machineries, small tools, toys, consumer items and paper products for the domestic market. Most of these enterprises are located in and around Dhaka metropolis. Entrepreneurs from China, Japan and Korea have taken advantage of Bangladesh’s cheap and easily trainable labor and its infrastructure facilities to manufacture products for the export market.