Light engineering seeks govt fund
Workers are seen at an engineering workshop that makes wheels for saws at Gandaria in Dhaka yesterday. The country's light engineering sector needs government fund, easy access to finance for its infrastructure development and upgrading technologies. Photo: Shafiqul Alam
The country's light engineering sector has demanded that the government allocate fund for it in the upcoming national budget for fiscal 2009-10 and ensure easy access to finance for its infrastructure development and upgrading technologies.
Industry people called upon the government to ensure access to the Bangladesh Bank's fund for small and medium enterprise (SME) and Equity Entrepreneurship Fund (EEF) for the sector that are specially meant for infrastructure development.
They have also demanded the government reduce bank interest rate to a single digit, so they can replace their age-old machinery.
“The first and foremost problem of the sector is a lack of finance and investment,” said Abdur Razzaque, president of Bangladesh Engineering Industry Owners' Association, adding: “We don't have access to the central bank's fund for SME, nor to the EEF. The government should include us in those funds to help us grow faster.”
“The banks charge 13 percent interest rate, which is very high for us since light engineering sector belongs to SME category. On the other hand, the banks in India are charging only 5 percent,” he said.
Razzaque urged the government to provide a special package for upgrading the age-old technology in the sector.
“Technology upgradation is another foremost requirement of the sector. We are using first generation machinery that makes us less competitive in the international market, while China and India are using fifth generation latest machinery,” he added.
Industry people have also demanded establishment of a special economic zone and industrial park to develop the sector further. Recently the cabinet has approved a draft law, which is awaiting approval in the parliament, regarding setting up a special economic zone and industrial park for the sector.
“If the government takes initiatives to boost the sector with allocating fund for its infrastructure development and technology upgradation, we will be able to save Tk 1,000 crore that is spent on import every year,” said Razzaque.
Experts said the sector has all the potential for being a foreign exchange earner next to the readymade garment sector.
President of Bangladesh Economic Association Qazi Kholiquzzaman Ahmad said light engineering is a strategic sector for any country.
“The sector contributes 2.2 percent to the GDP, which is more than the foreign aid we receive every year,” he said, suggesting that the government nourish the sector further to improve the country's economy.
“The government should ensure easy access to bank loans at a lower rate for the SMEs, including the light engineering sector,” he said.
Ahmad also asked for a central information service centre to help such entrepreneurs with necessary information regarding funds, bank loans and latest technology.
Presently, the average annual turnover of the sector stands at around Tk 20,000 crore per year with 45,000 entrepreneurs working across the country. The sector makes import substitute products worth Tk 2,000 crore per year and also earns a pretty amount of Tk 1200-1500 crore by exporting products.
According to Export Promotion Bureau data, the light engineering sector posted an export earning of Tk 1,507 crore in fiscal 2007-08.
So far there was no special allocation in the national budget in pre- or post-independence period for the development of this sector, said the industry insiders.
The sector has flourished from almost nothing to a multi-crore-taka business now since the country's independence in 1971, with the sector's development coming about mainly at an informal cottage status.
The sector makes products ranging from automated teller machine (ATM) frames to pharmaceutical packaging machines, from machinery for garment sector to rice mills, from automobile spare parts to power looms, and from ammunition boxes for Bangladesh Army to machinery for paint industry.
It also produces machinery for making ballpoint pens, furniture, bakery equipment, flour mills, CD and DVD covers, plastic baskets and carriers, and many more.
The sector mainly involves three kinds of works: making complete machinery, producing spare parts and repairing old machines. It also does the maintenance works of different machinery, said industry insiders.
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