Bangladesh’s light engineering sector offers huge investment opportunities due to the growing demand for machineries and parts / components. The domestic demand for light engineering products (LEPs) in Bangladesh is about $ 8.2 billion. Which caters to both local industry (40%) and imports (60%).
The light engineering industry currently contributes more to GDP than foreign aid, which is about 2.2%. Of the GDP, 7.5% (235.3 million) is replacing imported goods called import substitution.
Export earnings from LEPs have been declining year on year and import payments have been increasing. Bangladesh mainly import from China, India, Singapore, USA & Japan. Import payments for light engineering products increased by 5.15% in FY 2018-19 as against 22.1% in the previous FY. All these statistics indicate our growing reliance on foreign LEPs.
From FY2018-19 to FY2019-20 export value decreased by 14.1% and in its previous year it decreases by 4.1%. Export destination of LEPs is India, UK, Japan & Germany etc.
Despite the huge potential, there is no sign of performance in this sector. It has been observed that domestic industry is not able to meet the lion’s share of domestic demand, export earnings are declining and import payments are increasing. The government is taking necessary steps for the industry.
The light engineering industry is particularly well suited for high labour intensity, innovation and low capital investment. Stakeholders in the sector want to create a special fund for the authorities to provide low interest loans. The SME Foundation can provide them financial support. Experts say policy support for the development of this important sector will pay rich dividends.
