Govt takes $40m infrastructure project for exporters
The government yesterday launched a Public Investment Facility for Infrastructure Constraints (Pific) project to provide infrastructure support to hundreds of export-oriented firms.
Commerce Minister Tipu Munshi launched the $40 million project through a virtual meeting, to facilitate the light engineering, plastics, leather and leather goods, footwear and any other sectors which need such support.
The project will also create jobs for many, he said.
Pific is one of the major components of the Export Competitiveness for Jobs (EC4J) Project to facilitate the exporters by meeting the demand for infrastructure, said Md Obaidul Azam, the EC4J director.
The government will support some 20 potential export-oriented sectors, create jobs and fuel exports as part of a plan to meet the Sustainable Development Goals, he said.
Such an initiative will help the exporters become more compliant and competitive globally, he added.
The SMEs which have been contributing in the export value chains will be benefited from the project, said Hosna Ferdous Sumi, private sector specialist for trade and competitiveness at International Finance Corporation.
Many of the informal sector SMEs, which lack necessary facilities, will also be benefited from the project, she said.
The fund would not be used for facilitating any individual firm but on a cluster basis so that all the industrial units of a particular area can avail the facilities, said Lutfur Rahman, project manager of EC4J, who moderated the launch meeting.
Under the project, the implementing agency will build access roads to reduce transport costs and upgrade water and wastewater services, treatment plants and connections.
It will also develop waste management facility, recycling centres, power transmission, telecom connectivity lab services and warehouse facilities, according to project papers.
However, all these infrastructure facilities would be built upon applications by the potential beneficiaries in any industrial cluster areas.
For instance, there is a big cluster of 50,000 light-engineering firms only at the Dholaikhal area in Dhaka.
Many of the small and medium enterprises (SMEs) are involved in the export of light-engineering products from this area, but they have been facing a lot of troubles for poor infrastructure.
If the problems of infrastructures in this particular area are resolved, the exporters will be able to ship their goods with little effort and cost, the project papers read.
Currently, there are many light-engineering industrial clusters across the country to meet both domestic and international demand.
"So the government should also include the industrial firms, which are producing goods for the local markets as well," said Abdur Razzaque, president of Bangladesh Engineering Industry Owners' Association (BEIOA).
He demanded establishment of a testing lab, international standard accreditation board and a separate office of the BEIOA at Dholaikhal area to ease export of light-engineering products and lower the cost.
This little help from the government will encourage many small entrepreneurs to dream big, create thousands of jobs for others and boost exports, he said.
Nearly 80 per cent of the country's small and medium plastic toy factories are located at Lalbagh and Islambagh areas in Dhaka, said Md Jashim Uddin, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association.
"Many of them export goods directly from their factories," he said.
Currently, Bangladesh exports over $950 million worth of plastics products a year.
He said a separate plastic industrial park was going to be built at Keraniganj area as the demand for the plastic goods from both local and international buyers were increasing.
In the past six consecutive years, the leather and leather goods sector has been exporting over $1 billion worth of products, said Md Saiful Islam, president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh.
Last year, it missed the $1 billion-mark because of the shifting of tanneries from Dhaka's Hazaribagh to Savar Tannery Industrial Estate.
Moreover, the lack of a central effluent treatment plant in the estate has limited the amount of quality tanned leather available for making exportable goods, leading to a loss in business opportunities worth a few billion US dollars, he said.
The timely supply of raw materials from eco-friendly tanneries will help a lot in shortening the lead time set by the international retailers and brands, Islam also said.
Commerce Secretary Md Jafar Uddin said the government has taken such an initiative mainly to help the local exporters become competitive globally.
The competition in the global market has increased a lot over the years keeping pace with the demand from the local markets, he said.
The government wants market and product diversification for exports, said Commerce Minister Tipu Munshi.
"Depending on a single product like garment will not be wise for a long time. So, product diversification is a must."
He said some potential sectors like light-engineering, leather and leather goods and plastic goods could turn into big export sectors in the future.
The government has been encouraging export diversification of other goods, keeping its priority on the garment sector, he said.
Pharmaceuticals, jute and jute goods and leather goods sectors also have the potential to grow big like the garment sector, the minister said.