Light engineering can thrive on bike components
There is huge potential in the country's light engineering sector to exploit the local market for motorcycle components, according to speakers at a webinar yesterday.
"The annual demand for motorcycles reached 550,574 units on average in 2019 while it was 207,835 units in 2015, for which around Tk 2,100 crore worth of spare parts is required," said Ihsanul Karim, director of Bangladesh Industrial Technical Assistance Centre (Bitac).
Of the total requirement for spare parts, local suppliers can provide only that worth Tk 20 crore. So, there is a huge scope to grab the market in the light engineering sector, he added.
Karim made these comments while presenting the keynote paper at a webinar styled "Light engineering industry: backward linkage development perspective" organised by SME Foundation.
"If we want to create employment and save foreign exchange through local manufacturing, we have to develop the light engineering sector," said Abdur Razzak, president of the Bangladesh Engineering Industry Owners Association (BEIOA).
The two-wheeler industry and light engineering sector are related to one another and so, developing quality spare parts through local vendors is important, he said.
Parent companies do not manufacture all the components in their products. Instead, they source industry standard spare parts from local light engineering sectors, he added.
Over the last two years, the government introduced value added tax on capital machineries even though there is no custom duty on their imports, Razzak said.
This type of decision creates an obstacle for the development of the light engineering sector. It is also in conflict with the government's intension to improve the sector, he said.
The BEIOA chief also said it was possible to develop the light engineering sector through the provision of low-cost funds, an industrial park and policy support.
KM Ali Azam, secretary for industry, assured that the government would provide the necessary policy support for the sector's development.
He asked SME foundation to submit a recommendation of the webinar to the ministry to take initiatives as per the recommendations.
Azam also urged for discussions between all stakeholders to identify the barriers and potentiality for backward linkage industries.
Developing light engineering is important for industrialisation, the sector can be incentivised through legal and policy support, he said.
Azam believes the backward linkage sectors of the motorcycle industry should be developed for further developing the economy.
Hafizur Rahman Khan, president of the Motorcycle Manufacturers and Exporters Association of Bangladesh, said a circular from the National Board of Revenue (NBR) issued in 2011 has helped the motorcycle industry.
However, the NBR circulars that were issued later were in conflict with one another and creating barriers to developing the sector. It is not possible to develop the local motorcycle industry without the improvement of local spare parts vendors, Khan added.
He also urged the government to set up a testing institute for motorcycles to ease their exports.
Selim Uddin, additional secretary to the industries ministry, said they would finalise the automobile policy by next month, which would help the industry develop further.
Tax policy support is required from the NBR as well, he said.
"Investments from big industrial groups is required in the light engineering sector to adopt high technology and sector development to develop our own car brand," Uddin added.
Masudur Rahman, chairperson of SME foundation, said Bangladesh's industrial sector spends around Tk 70,000 crore every year and local manufacturers could cater to the whole amount.
"Industrialisation will not be expedited if the backward linkage industries are not improved," he said.
Rahman also expressed intension to work with the private sector to utilise the potentiality of the light engineering sector.
Anwar Hossain Chowdhury, director general of the Bangladesh industrial Technical Assistance Centre (BITAC), sought cooperation from all stakeholders to develop the light engineering sector and implement the policies.
He underscored adaptation of high technology for rapid improvement along with skill development of technicians.
Chowdhury informed that Bitac was going to organise training to utilise high technology.
Syed Golam Kibria, member of the NBR, said they were sincere towards supporting the light engineering sector with regard to the import of capital machineries.
He asked to discuss with the meeting participants with proposer proposals to remove inconsistencies in different circulars of the NBR.