The growth rate of the manufacturing industry in Bangladesh is rising, but it is also yet to reach its peak pre-pandemic growth level, said the Centre for Policy Dialogue (CPD) in a discussion on Sunday.
According to CPD's research, the decline in the growth rate of the manufacturing industry fell from 12.33% in 2019 to 1.68% in 2020.
After 2020, the industry has not yet achieved its peak pre-pandemic growth but has recovered well.
Regarding manufacturing’s share of GDP, the CPD said that in FY22, the manufacturing industry generated roughly 24.29% of the GDP, more than double the 11.20% produced by the agriculture industry.
Their research also said that the lower spending in research and development (R&D) is alarming.
According to data, most industries spend less than Tk500 per year on research and development (R&D) for a worker.
In Khulna only 12% of the firms spend on R&D, while this number further decreases to 7% in Rajshahi and 2% in Dhaka respectively.
For R&D in the "other services” the figure was only 5% of the firms, while for food, textiles and other manufacturing industries, the amount was only about 3%.
The number is even lower for the readymade garment (RMG) industry as only 2% of the firms in the industry spend on R&D.
Pharmaceuticals, medicinal chemicals, and botanical products industry have the highest R&D expenditure per worker among all industries.
However, the beverage manufacturing industry has the highest gross value added per worker per month while the repair and installation of machinery industry has the lowest gross value added per worker per month.
CPD revealed the statistics at a dialogue titled “Technology Use in the Manufacturing Industries of Bangladesh”.
Syed Yusuf Saadat, research fellow, CPD, made the keynote presentation.
In his presentation, he said: “Like many other countries in the world, our industrial sector has suffered a lot during Covid-19. Although the growth rate of the manufacturing industry in Bangladesh is rising, it is yet to reach its peak of pre-pandemic growth level.”
He also said: “We have started this kind of study for the first time. We will work more on this in the future.”
His presentation stated that Chittagong had the largest share of firms with websites, with 39% of the manufacturing firms having websites, followed by Khulna and Sylhet at 33%, and Barisal at 31%.
Although, in all regions across the country, the majority of the firms in the manufacturing industry did not have their own website.
The RMG industry takes the lead as 43% of the firms surveyed in it had their own websites, the highest compared to other industries.
The RMG industry accounts for the largest share of exports of the country which may be a reason why this industry outperformed the others when it comes to website presence.
Lack of online sales
Regarding online sales across industries, less than 40% of manufacturing firms had any sales through internet transactions.
Most manufacturing firms in Bangladesh did not have any sales through online transactions.
It can be observed that the region that accounts for the highest share of manufacturing firms that sell through internet transactions is unsurprisingly the Dhaka metropolitan area.
Even in Dhaka, only about 25% of the manufacturing firms have some share of their sales through internet transactions. In other regions, this share is even lower.
The report also stated that In FY22, the manufacturing industry generated roughly 24.29% of the GDP, more than double the 11.20% produced by the agriculture industry.
The increasing share of the manufacturing output highlights the growing importance of manufacturing industries in the economy of Bangladesh.
Speaking as the chief guest, Industries Minister Nurul Majid Mahmud Humayun said: “The government has a lot going on, but the FDI isn't coming. Private firms should come forward, especially for R&D. A collective effort from the private industry is needed to spend more on R&D, as it is not a waste of money.”
“Now we are doing R&D in some industries. Money should be spent more in those industries which have potential,” he added.
“In a changing world, big countries have given up many opportunities. We have to grab it now. And for this, there is no substitute for a skilled labor force," the minister further commented.
"But here we will have some new problems with the old skilled manpower. We have to think for them. Diverting them into new industries like nursing or the health industry could be a solution,” he added.
As a discussant, Syed Almas Kabir, president, Bangladesh-Malaysia Chamber of Commerce & Industry said: “The private industry should come forward in R&D investment. I think academia has a big role to play here. Here the industry knows what kind of manpower they will need in the next 3-5 years.”
Rubana Huq, vice-chancellor, Asian University for Women (AUW) and former BGMEA president, was also present.
Fahmida Khatun, executive director of CPD, moderated the event.