Originally posted in The Business Post on 6 January 2022
Use of high tech: Export goods makers at rock bottom
The manufacturers of export goods are on the lowest rung of technological scale – a serious setback for producers to stay competitive among their closest peers in global export market.
According to the Centre for Policy Dialogue (CPD), Bangladesh has the least proportion of using high technology in manufacturing export products.
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It finds only 0.61 per cent local manufacturers use high technology, which is 40.94 per cent in Vietnam, 12.44 per cent in India and 35.22 per cent in China. The calculation is based on UN Comtrade data.
The production of goods here is mostly based on low technology accounting for 95.14 per cent, which is the highest in the world, followed by Vietnam 30.70 per cent, India 19.57 per cent and China 27.55 per cent.
A slower penetration of technology in manufacturing goods is causing harm to products’ quality, thereby reining in their entry into global markets.
Why slower adoption of technology
CPD distinguished fellow Mustafizur Rahman told The Business Post, “The technical content in our exports is very low. In manufacturing apparel goods, the use of technology is also low while it is rock-bottom in other export-oriented industries.”
“If we want to improve productivity and quality of goods, we have to introduce mid-range and high technology.
To do this, manufacturers have to identify markets as well as products.”
Unwillingness on the part of entrepreneurs to invest and skilled manpower shortage are barriers to adopting technology in a massive scale, the economist observed, saying that incentives to promote technology are absent; the government should restructure incentive structure so the manufacturers receive a boost to adopt more technology.
In addition, it is necessary to waive duty on the import of machines and their spare parts, suggested Mustafizur.
Leather and jute sectors witness much less use of tech — a barrier for the country to meeting global requirement and thus to staying competitive in the global race.
“As of now, about 90 per cent jute mills are running with old machines and the use of technology is almost absent there, but our competitors like India and Pakistan are doing better as they have introduced high technology in manufacturing fabrics,” said Md Rashedul Karim Munna, managing director, Creation Private Limited, a manufacturer of jute goods.
To cater for the global demand, Bangladesh needs high-end fabrics, and to this end, there is no alternative to applying high technology in manufacturing sector, added Munna.
The businessman urged the government to modernise jute mills and also called upon the private sector to make investment in technology which will create more opportunities for Bangladesh to grow in the global export market.
Low-tech products bar to entering regional, global markets
One of the reasons why Bangladesh is not able to access the regional markets is its inability to diversify medium- to high-tech products. Particularly, Vietnam and China have been able to do this and get into the markets, said the CPD official.
Despite a huge supply of raw materials, Bangladesh fails to cash the opportunity of jute and jute goods due to lack of latest technological adoption in manufacturing.
RMG sector edging towards modern technology
The country’s apparel makers are gradually entering into high tech as well as semi-automation to improve product quality.
“In the last couple of years, the RMG makers have upgraded machinery to increase productivity as well as quality,” said BGMEA president Faruque Hassan.
“Our focus is now on quality and value-added products instead of expansion. We are a labour-intensive country and reaping the benefits of our demographic dividend.”
“But the sector- and product-specific sophistication and high-tech adoption should be there to remain competitive.”
“Bangladesh’s advantage is its young population, and the industry, mostly apparel sector, is labour intensive,” Abdus Salam Murshedy, managing director, Envoy Textile, told The Business Post.
“But our manufacturers are using Jacquard machines, 3D printing, software in cutting and laser in washing as well when it comes to using technology,” he added.