Non-availability of real-time information on market demand, supply gap, access to low-cost fund, and globally accredited certification authority, among others, have been identified as the major bottlenecks to expand export portfolio of the country’s light-engineering sector.
Besides, image crisis that the country can produce quality exportable engineering and electronic products, customs-related complexities, and high import duty on raw materials are holding back the potentials of increasing export earnings from the sector.
Bangladesh needs to set up a competent authority, whose certification would be recognised globally, provide cash incentive, organise single country trade shows, and offer duty-free facility for importing raw materials.
These have been suggested to raise export earnings, especially to the UK. The country has introduced preferential Developing Countries Trading Scheme (DCTS) this year, marking its departure from the European Union’s Generalised System of Preference (GSP).
The observations and recommendations came at a stakeholders’ consultation – ‘Expanding Exports to the UK Market: Light Engineering Products’. Research and Policy Integration for Development (RAPID) and UKAID jointly organised the event in Dhaka on Wednesday.
RAPID is undertaking a research, commissioned by the UK Secretary of State for the Foreign, Commonwealth and Development Office, and consultation exercises to help Bangladeshi exporters take advantage of the UK DCTS Scheme to determine the best ways to boost, expand, and promote exports from Bangladesh to the country.
As part of the study, RAPID has identified several potential export sectors for the UK market. Local leather and footwear and light engineering sectors are among the most prominent ones to unleash their export potential.
Presenting his keynote, RAPID Chairman Dr M A Razzaque said the UK DCTS can be a game-changer for Bangladesh to break into non-RMG export sectors, including various light engineering products.
Explaining the DCTS, he said after Bangladesh’s LDC graduation in 2026, the country will continue to enjoy the same benefits for three more years until 2029.
As an LDC, Bangladesh also stands to benefit from more generous UK Rules of Origin (RoO) requirements, as the minimum value-addition requirement for the LDCs has been reduced to 25 per cent from 30 per cent.
The UK DCTS offers relaxed and liberal product-specific rules, and extended cumulation facilities, allowing inputs to be imported from 95 countries, and yet the LDC manufacturers of final products are eligible for duty-free exports, he noted.
The light engineering sector is a major industrial branch in Bangladesh, producing a wide variety of parts/components and final goods, including transport equipment, bicycles, electrical equipment, casting products, and equipment and machinery used in agriculture, construction, printing and packaging.
Citing the BIDA statistics, he said there are about 40,000 light engineering companies here, employing around 600,000 workers. Bangladesh fetched US$796 billion in last fiscal from export of their products.
In 2021, Bangladesh’s export of light engineering products to the UK was only $56 million against the country’s overall import of such products over $327 billion.
Of the $56 million export earning, $51 million came from bicycle goods, holding a 10 per cent share in the UK’s $516-million market, he added.
Speaking there, M M A Tanvir Titash, chief executive officer of Meghna Group, focused on bridging the gap between local exporters and UK buyers by organising trade fairs.
Mr Titash, also president of the Bangladesh Bicycle and Parts Manufacturers and Exporters Association (BBPMEA), stressed for introducing alternative of REX (registered exporter), a system of certification of origin of goods – based on a principle of self-certification followed by the EU, saying they are facing difficulties.
BBPMEA secretary general Md Luthful Bari said there are competent authorities here, but they need to be globally accredited.
He demanded uninterrupted gas supply, saying power cut causes damage to automated machinery in units.
They face difficulties in claiming cash incentive due to lengthy procedures, he also alleged.
Md Jahangir Hossain, general manager of Super Star Group, said they face difficulties in getting certifications from abroad, like those on environment and use of specific hazardous materials in electrical and electronic products. It is a long process, as there is no such accredited laboratory in the country.
Abu Sayeed from Panna Group opined that there is a psychological fear among many local exporters on whether or not they could match with standards and quality of the UK buyers in absence of real-time information on market, although they are producing quality goods and exporting those to other markets.
He said they are losing competitiveness, as the cost of doing business is high in the country – mainly due to high interest rate.
Ministry of Commerce Additional Secretary Abdur Rahim said they would raise the verification issue in the upcoming UK-Bangladesh joint committee meeting, scheduled to be held on Sunday.
