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Light Engineering Industrial Sector

light-engineering2Light Engineering Industrial Sector

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.

Industry Situation

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.

leather Footwear Industry

leather-3

leather Footwear Industry

Bangladesh is set to emerge as the next manufacturing hub for the global footwear industry. The cheap labor is prompting top manufacturers to relocate their factories in the country. The good news is that a number of foreign investors as well as buyers have already shown interest in Bangladesh’s leather and footwear sector.

Recently, the president of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLGFEA) informed all concerned that three large investors in the footwear sector from Taiwan would set up footwear factories in the Dhaka and Chittagong Exporting zones. The buyers from EU, as well as other very highly developed industrial nations like Japan have reportedly been showing importance in Bangladeshi leather products. All these developments look promising for the local footwear industry.

 The Export Processing Zones at present have 18 shoe and leather goods factories but there are at least seven large factories under construction, mostly owned by big manufacturers in the shoe world. The factories under construction include Korean company Young one’s footwear complex which is said to be the largest in Asia. The company started construction of its mega shoe complex in Chittagong six months back. The first part of the complex will go into production by the middle of next year, and the company’s executives said they would be able to manufacture about 30 million pairs of shoes by 2013.

 In addition, Taiwanese shoe manufacturer Pau Chen, which employs about 4,00,000 workers in its factories in China and 50,000 in Vietnam, is also building a large manufacturing facility in Chittagong. Australian manufacturer Bonbon Shoe, a supplier to Hugo Boss, and Xen Chen and Genford of Taiwan., are also building footwear factories in Bangladesh. Apex-Adeichi also has a new factory that will soon start production. With an annual turnover of about $100 million, the Bangladesh-Italy joint venture is now the largest exporter of footwear. However, with a new joint venture factory, Blue Ocean Footwear, due to go into production by February 2011, Apex will get involved with a turnover of nearly $200 million of footwear export by 2013.

Growth rate

The local footwear industry is experiencing an annual growth rate of 21 percent, according to a spokesman from another apex organization, Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LGFMEAB). However, to continue the trend, the present level of growth has not only to be attained; it also has to be taken to a still higher level, if Bangladesh is to match the success of its immediate competitor, Vietnam.

According to a newly released statistics from the Export Promotion Bureau of Bangladesh, footwear exports from the country grew from US$61 million in the period of July-November 2007 to $85 million in the same period of 2008, recording a growth of 39 percent. In the first four months of the 2010 fiscal year there has been $98 million worth of exports, a 65 per cent increase from the same period last year. Taking this rate of growth into account, shoe industry executives estimate that the current fiscal year’s footwear export is likely to cross $300 million. Though in the next two years the existing factories are likely to export more shoes, it is the new capacity that will come on stream from early 2011 that is expected to cause the huge spurt in growth.

Growth in exports is due to the low production cost in Bangladesh compared to its neighboring countries: China, India and Vietnam, who also have a very well entrenched leather and footwear export industry. Orders which earlier used to be given to China or India are now being handed out to footwear manufacturers in Bangladesh because they are able to produce low-priced but quality shoes, which have now found its way in to key markets in EU and Japan.

This growth in footwear exports has come as a blessing in disguise at a time when leather exports have fallen by a massive 18 percent in the period under review. Experts attribute the growth in footwear exports, thanks to machineries imported from Italy that is trusted for its quality output. In recessionary trends, high-priced products tend to register a negative growth, as consumers tend to shy away from them in preference for value for money items. In this scenario, it is a golden opportunity for the leather and footwear sector to increase its global market share.

Import Substitute Products

import-substitute

Import Substitute Products

  • Automobile spares
  • Railway engine & rail line spares,
  • Bicycle & cycle rickshaw,
  • Iron chain,
  • Machine tools,
  • Jute & textile machines and spares,
  • Chemical industry machines and spares,
  • Sugar and food industry machines & spares,
  • Engineering & metal industry machines and spares,
  • Marine and ship industry spares,
  • Agricultural machines, accessories and spares,
  • Plastic and related product machines and spares,
  • Electrical goods and accessories, etc

Auto Bricks Industry

tunnel kiln

Bangladesh has started making bricks using new technology, which cuts carbon emission almost by half and creates scope for earning huge foreign currencies.
Entrepreneurs and financiers said Bangladesh will be able to sell per tonne of saved carbon at $15 after June 2010.

The new technology being used by Diamond Auto and the likes is Hybrid Hoffman Kiln (HHK) technology imported from China.
A single kiln that runs on HHK technology will produce 15 million bricks and cut carbon emission by 5,000 tonnes a year. A double unit kiln will produce 30 million bricks and cut carbon dioxide (CO2) emission by 10,000 tonnes every year.
Industrial and Infrastructure Development Finance Company Ltd (IIDFC) has so far funded four brick manufacturing units including Diamond Auto Bricks under the technology.
Bangladesh has about 6,000 authorised brickfields and numerous illegal ones.
IIFDC Project Officer Shaymal Barman told The Daily Star that the brickfields in Bangladesh emit around 875 lakh tonnes of CO2 every year.
Barman said HHK kilns will reduce carbon emission almost by half.
Most of the works at Diamond Auto are done without human intervention. Coal and clay are mixed automatically and then poured into a machine. In every piece of brick about 2-3 percent coal is mixed. Bricks are prepared automatically and taken to a silo, and smoke of the kiln, which others use for burning bricks, is used for drying the raw bricks.
Owner of the brickfield M Zaydul Abedin said: “The smoke produced in my kiln is being trapped and used for drying raw bricks. So less CO2 is emitted.”
The strength of the bricks produced in this field is more than double than that of the traditional bricks, and the price is also competitive, said Abedin.

AUTOMATIC BRICK MANUFACTURING PLANT with following technologies:

  • Hybrid Hoffman Kiln

 

  • Tunnel Kiln

Agro-based Industry

agro-photoAgro-Based Industry List of Bangladesh:

 

  1. Fruit based processed food manufacturing industries (Jam, Jelly, Juice, Pickles, Syrup, Sauce, etc.)
  2. Fruit (Tomato, Mango, Guava, Sugarcane, Jack fruit, Litchi, Pineapple, Coconut, etc.), vegetables, and lentils processing industries.
  3. Bread, biscuit, vermicelli, chanachur, noodles, etc.production industries.
  4. Production of flour, maida, and semolina.
  5. Processing of mushrooms and spirulina.
  6. Starch, glucose, dextrose, and other starch products manufacturing industries.
  7. Milk processing industries (milk pasteurization, powdered milk, ice cream, condensed milk, sweets, cheese, ghee, butter, chocolate, curd, etc.)
  8. Potato-based food manufacturing industries (potato chips, potato flakes, starch etc.)
  9. Spices manufacturing industries.
  10. Edible oil refining and hydrogenation industries.
  11. Salt processing industries.
  12. Processing and freezing of prawns and other fishes.
  13. Herbal and vestige medicine producing industries.
  14. Unani, Ayurvedic and Homeopathic medicine producing industries.
  15. Manufacturing industries of feed for duck, chickens, livestock and fish.
  16. Seed processing and preservation.
  17. Jute goods (thread, fabric, bag, carpet, sandal shoes etc.) producing industries.
  18. Silk fabrics and clothing manufacturing industries.
  19. Agro-based product processing machinery manufacturing industries.
  20. Rice, puffed rice, beaten rice, popped rice etc. processing industries.
  21. Aromatic rice processing industries.
  22. Tea processing industries.
  23. Coconut oil producing industries (if copra collected from local coconuts is used).
  24. Rubber tape and lakkha processing industries.
  25. Cold storage (processing and preservation of edible and seed potatoes, fruits, vegetables etc. produced by farmers).
  26. Preparation of furniture made of wood, bamboo and cane (except cottage industries).
  27. Flower preservation and exporting enterprises.
  28. Meat processing industries.
  29. Production of organic and mixed fertilizer and guti urea etc.
  30. Production of bio-pesticide and neem pesticide.
  31. Bee-keeping and honey collecting enterprises.
  32. Rubber-based goods producing industries.
  33. Manufacturing of particle board.
  34. Mustard oil manufacturing industries (if local mustard is used)
  35. Production of bio-gas and electricity(produced from paddy shell, poultry and cattle wastes).
  36. Edible oil (rice bran) manufacturing industries.
  37. Poultry and dairy farming industries.