BD can have bigger slice of UK's $327bn light engineering market

The United Kingdom has a huge market of light engineering worth of $327 billion and Bangladesh can have a bigger slice of that, sector insiders and analysts said, as the northwestern European country offers developing nations privileged access to its markets with a new arrangement, called Developing Countries Trading Scheme.

The generous scheme that came into effect early 2023 has replaced the UK's earlier Generalised Scheme of Preferences (GSP). Developing countries like Bangladesh, under the scheme, can now enjoy reduced tariffs and relaxed rules to export goods to the UK.

"The new scheme can be a game changer for Bangladesh to break into non-RMG export sectors, such as light engineering," Research and Policy Integration for Development (RAPID) Chairman Mohammad Abdur Razzque said.

"With the preferential trading scheme for developing countries, the UK relaxed local value-addition requirements from 30% to 25%, liberal product-specific rules, extended cumulation facilities, and removed the requirement of ratification of certain international conventions," he said while presenting the keynote at a meeting that the RAPID organised at a capital hotel to discuss opportunities and challenges in exporting light engineering goods to the UK.

As a result, Bangladesh will enjoy benefits and flexibility in exporting goods to the UK market more than the EU, he said.

Talking to a local media after the event, Abdur Razzaque said the competitive labour force is one of the key strengths of Bangladesh, which can significantly help increase exports of diversified products like light engineering.

"Bangladesh exporters, however, are not linked with the international supply chain, which is a key bottleneck," he further added.

According to the International Trade Centre data, the UK imported light engineering goods worth $327 billion in 2021, while Bangladesh's contribution was worth $56 million or 0.02 per cent only.

In the meantime, the Bangladesh government announced light engineering goods as an emerging export item beyond RMG.

Bangladesh's overall export of engineering products in FY22 was $796 million, according to the Export Promotion Bureau (EPB) of Bangladesh, which is 1.5 per cent of the merchandise export of the country.

In the discussion, stakeholders identified some challenges behind the poor performance in the export of the item.

Lack of value chain connection, complexity in customs, absence of international standard testing facilities, lack of access to finance, problems with LC opening, unavailability of skilled labour force, and disruption in energy supply are the major problems, among others, they added.