A “one-day symposium on the development of
capital goods industry in Bangladesh” was held on December 28, 2011
at the board room of Board of Investment (BOI), Dhaka, Bangladesh.
The symposium was sponsored by Bangladesh Development Initiative
(BDI), a USA-based non-profit non-political think-tank (website:
www.bdiusa.org) and hosted by BOI. The objective of the symposium
was to discuss the problems and prospects of the domestic production
of capital goods as well as to generate interest amongst
policy-making bodies, economists, investors and technology experts.
Representatives from local producers and
entrepreneurs association such as Bangladesh Engineering Industries
Owners Association (BEIOA), Bangladesh government patron agencies
such as Bangladesh Industrial Technical Assistance Center (BITAC),
capital investment agencies such as Board of Investment (BOI),
Foreign Investors Chamber of Commerce and Industry (FICCI), American
Chamber of Commerce (AmCham) and A.C. Nielsen (a global company),
research and academic institutions such as Center for Policy
Dialogue (CPD), North-South University, East-West University,
Bangladesh University of Engineering and Technology (BUET), and
print media such as The Daily Star, The University Press Limited
(UPL), Bdnews24.com and Probashipotro attended the symposium and
openly discussed the current problems and the future prospects of
the capital goods industry in Bangladesh.
Economists and capital goods industry experts
Dr. Farida C Khan (Professor of Economics at University of Wisconsin
– Parkside and BDI Secretary), Dr. Zaid Bakht (Research Director of
Bangladesh Institute of Development Studies), Dr. Mozammel Huq
(Emeritus Professor of Economics at University of Strathclyde, UK),
A. F. Mujtahid and Nazrul Islam (formerly at CPD) are saying, the
successful establishment of domestic capital goods industry with
in-house design & analysis capabilities would result in the creation
and retention of formal high-level technical skills in the country
and it would ensure the well-being of the country.
This is because the formal production of
capital goods with in-house design & analysis requires very complex
and sophisticated technical and engineering skills and once this
knowledge and experience is mastered through practice in the
domestic industry, country’s individual productivity will increase.
According to various reports and research work,
the capital and durable goods industries of Bangladesh currently
possess a considerable amount of production capacity. But the local
producers were unable to sell their products in the domestic market
in the past because of unfavorable tariff structure and various
other factors. “Unfavorable tariff is no longer a problem for light
engineering sector”, the President of BEIOA Mr. Abdur Razzaque told
the symposium participants. He said, value addition of this sector
is very high and it may compete with any imported light engineering
product.
Dr. Khondker Golam Moazzem, Senior Research
Fellow of CPD provided valuable insights into tariff and industrial
protection and their impact on industrialization.
There was general consensus amongst all
participants that Bangladesh must start the domestic production of
capital goods with in-house R&D, design and analysis provisions so
as to achieve a gross domestic product (GDP) growth rate in the
desired range of 7 to 10% per year and thus to increase national per
capita income to a respectable level. The participants felt the best
way is to produce parts and components of capital and
durable goods by partnering with the industrialized
countries.
“What we produce makes us who we
are, i.e., a nation is known by the goods it produces”, Dr. Ashraf
Ali, the symposium organizer and BDI Treasurer, told the audience.
“It is not a matter of pride but of pure economics”, he said.
Scope of increasing personal
productivity via production of consumer goods is rather limited.
Capital goods production with internal design and analysis
capabilities dramatically increases personal productivity and
nations with higher personal productivity also have higher per
capita income, remarked Dr. Ali, the founding President of BDI.
Also present at the symposium, Dr. Syed Saad Andaleeb, an executive
member and two-term past President of BDI discussed the
possibilities surrounding shipbuilding industry. Dr. Ali, a former
Lecturer of BUET Civil Engineering Department, asked the
participants if the design and analysis work for the shipbuilding is
being performed within Bangladesh.
An expert on shipbuilding and
BUET Naval Architecture Professor Dr. Abdur Rahim clarified for the
audience that the design and analysis for the ships are being done
in the European countries and Bangladeshi workers only assemble
these ships.
Mere assembly program without the design and analysis work such as
the Maquiladora assembly program near US-Mexico
border is not expected to increase personal productivity by
sufficient degree. Bangladesh is known to assemble capital & durable
goods from imported parts & components. Bangladesh also imports
value-packed intermediate products such as advanced chemical fibers,
medicinal chemical powers to assemble antibiotics & other medicines,
furniture & other goods. Higher GDP growth rate can only be secured
by establishing domestic design and analysis skills and not by
assembly work alone, Dr. Ali emphasized.
Dr. Syed A Samad, Executive
Chairman of BOI, who formally opened the symposium on Capital Goods
as a host, reminded the audience of the progress Bangladesh has
already made over the last forty years. Mr. A Gafur, Executive
Director of American Chamber of Commerce echoed the same
sentiment.
As part of one of his
presentations at the symposium ‘Why Capital Goods’ Dr. Ashraf Ali
reminded everyone present there that Bangladesh ranks at the bottom
12.5 percent in national per capita income, while the world average
per capita income stands at US $10000 and around 48 percent
countries of the world earn more than US $5000 per person (year
2010).
The symposium focused on these five specific sub-topics of the
capital goods industry: (1) Tariff & Protection of Capital Goods
Industry, (2) Connecting Capital Goods Industry with Technical
Academia, (3) Bangladesh as a Junior Partner of Industrialized
Nations, (4) Inputs to Capital Goods Industry, and (5)
Infrastructure Development.
The discussion on the topic
“Inputs to Capital Goods Industry” was led by Masum Taluckder, a
consultant of BEIOA. Mr. Taluckder said the majority of light
engineering enterprises currently run on a small industry scale.
These enterprises use backdated technology. As a result, light
engineering products are not upto international standard. This
industry is in need of quick technology upgrade. To this end, this
sector would require an industrial park, easy access to finance and
access to skill needed to operationalize modern technology, Mr.
Taluckder commented.
Bangladesh should join the
advanced countries by initiating genuine industrialization but may
face difficulty in doing so as a latecomer because she will have to
make it work staying within the competition-based free-market
environment. Dr. Ali characterized the situation as “the asymmetry
in world industrialization scene”.
The success of South-East Asian countries such
as first & second generation NICs (Newly Industrialized Countries)
can however be considered as a resource of hope & inspiration,
opening the door for the possibility of economic symbiosis between
Bangladesh and world’s industrialized nations. Bangladesh can thus
work as a junior partner of industrialized nations, including India
& Asian NICs, Dr. Ali said.
The collaboration between
government outfit BITAC and light engineering factory owners’
association BEIOA was also a subject of discussion at the symposium.
Pressed by
BEIOA President Mr. Abdur Razzaque and BEIOA consultant Mr.
Masum Taluckder, Dr. Ihsanul Karim, additional director of BITAC,
pointed to both short-term and long-term training and technical
support programs of BITAC, geared towards assisting Dholaikhal and
Valuka area workers, including head treat, computer aided design and
computer numerical control (CNC) machine.
Mr. Taluckder requested the Bangladesh
government to initially set up
one modern foundry factory at BITAC. BITAC would in
turn help the light engineering industries by providing training on
how to set up and run modern foundry factory.
According to news reports, in the last couple
of years 2009 and 2010, a number of organizations from USA, Canada
and Japan asked BITAC whether they can get automotive parts produced
by the machinery manufacturing factories in Dholakhal & Valuka
areas. Dr. Ali asked whether this possibility can be formalized and
what steps must be taken to institutionalize the relationship.
President of BEIOA Mr. Abdur
Razzaque emphasized that the government should create dedicated
Light Engineering Park where vendors and original equipment
manufacturers would establish their factories and grow. The light
engineering sector should be given access to Equity Entrepreneurship
Fund (EEF) of Bangladesh Bank, he remarked. Some participants of the
symposium expressed the opinion that dedicated Small Medium
Enterprises (SME) Bank, like Bangladesh Agriculture Bank, should be
established for the light engineering sector.
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