BANGLADESH ASSOCIATION OF CONSTRUCTION INDUSTRY

CONSTRUCTION INDUSTRY CAN HELP BANGLADESH ATTAIN MIC STATUS

9
Jul

CONSTRUCTION INDUSTRY CAN HELP BANGLADESH ATTAIN MIC STATUS

According to the pundits at the World Bank, at Dhaka and Washington, Bangladesh can attain MIC (Middle Income Country) status by 2016, if it can keep a sustained GDP growth rate of 7.5% per annum. Such sustained growth has been achieved by only a few countries in the world. But our track record is really not that bad, in fact GDP growth has averaged over 5% since 1990. The average income in the country today is more that 75% higher than in 1990, which has been done even with its vulnerability to natural calamities. Our per-capita income has not fallen in a single year since 1990, even in years in which there were severe floods. Supposedly there are few countries in the world, developed or developing, that could match this record.

But then how can we achieve such continuous growth rate, what avenues are there for us? As a construction industry professional I would very confidently point out to our engineering construction sector as a bright spot in the existing available capacities of our nation which we could exploit to its fullest advantage if we target the international market.

Off course we are not alone in such thoughts, today many other countries are targeting the international construction market, especially Malaysia, South Korea, and Japan who are going through a lull in business growth in their domestic markets. The companies in those countries are targeting the overflowing with cash Middle East once again, many of them already have substantial projects under execution in the region. Bangladeshi construction companies can for a start target sub-contracting or joint-ventures with companies from those countries. It would be an excellent marriage between their technological expertise and our human wealth. Such joint ventures could indeed be more competitive in pricing terms and could secure many projects if the advantages are tactfully applied. Off course companies from some of those countries would be wary of teaming up with companies from Bangladesh fearing our lack of international exposure as corporate bodies per se. We have to overcome such disadvantages of “poor image” by seriously trying to tackle our short-comings and overcome those in a well planned manner. Our weaknesses lie in the following areas:
1. Country image
2. Banking
3. Corporate Management (ISO certification / organizational structure, etc.)
4. Embassy Support
5. Worker Certification
6. Engineering Project Management
7. Contract law
8. Insurance
9. Logistics (shipping / air transport / etc.)
10. Information Technology
11. Cost Management
12. Supply Chain Management
We need to improve much in all of these areas to better equip ourselves against the competition. Especially governmental and banking support are very important because without such facilities our companies cannot compete. The cost of finance is a major expense in any construction job, the insurance – especially schemes like export credit guarantee scheme will make our companies confident to try to secure overseas contracts. However, the internal management, or corporate management, of our local companies need to substantially improve. Internal document processing, record keeping and accounting practices are major factors in business efficiency and concurrent success and profitability.

Targeting Construction Services for Export Markets
Well many of you might pose the question in return to the heading of this article asking why does Bangladesh at all need to target export markets for exporting construction services. Actually, every nation tries to export as much as it can if it wants to succeed in the world of business and keep its population happy with employment and a decent standard of living. Admittedly, as a country we have not been successful in put 3 square meals a day on the tables of every home in our country. Because we have not been able to provide employment to everyone, because we could not create enough employment opportunities. Every nation tries to capitalize on its intrinsic strengths. Australia, USA, Brazil & Argentina export cereals & oilseeds and related products because they have large tracts of land and soil suitable for farming, Canada & Indonesia export timber and paper products because they have substantial forest resources, the countries of the Middle East export oil because they have huge underground reserves of mineral oil. Japan and Germany have highly skilled engineers and workers and possess the knowledge and expertise for the design & production of machinery and equipment. The Dutch are a nation with experience and expertise in dams and other hydraulic structures including flood control embankments so they share their knowledge through export of related consulting services.

Bangladesh is a country endowed with a sizeable population of skilled labor, among other in the construction industry, it has many engineering/technical colleges enabling the training and development of manpower suitable for the construction industry. The contractors of Bangladesh have experience and expertise in various types of construction and many of them have some overseas experience, many companies have amongst their staff many engineers and workers with working experience on projects in the Middle East and North Africa. Therefore, the construction industry represents one of the strong points of the Bangladeshi engineering profession, and it ought to be capitalized upon.

The Middle Eastern countries and many other countries are now employing manpower from Bangladesh, because they are finding it cheaper to hire from Bangladesh and because there is an abundant supply of skilled and unskilled labor from Bangladesh suitable for the construction industry.

1. National contractors’ capabilities
Bangladeshi contractors, and notably BACI members have a diversified project experience portfolio. Many of them have worked on projects overseas, if not a the main general contractor but as an important civil engineering sub-contractor of a world class main contractor from a developed country such as Japan, UK, USA, Germany, etc. They worked on power plants, industrial plants, high-rise buildings, roads & bridges, river-training works, dams & irrigation projects, railway projects, housing & real-estate projects, all of which being located in mostly the countries of the Middle East or Southeast Asia. They thus have the confidence and managerial and technical skills to independently handle projects in any of those countries.

Moreover, Bangladesh design engineers and architects have come of age as well and have varied experience of working in many countries if not as corporate bodies then as individuals amongst an international team of similar professionals.

2. Industry sector support facilities
Bangladesh is endowed with surplus labor which can go overseas and earn foreign exchange for the country. Some of the categories of human wealth available may be described as follows:
Labor: Labor force of Bangladesh is estimated to be about 15 million, and a large number of un-skilled labor force, skilled, semi-skilled and professional manpower is also available for foreign employment.
Technical manpower: To produce skilled technicians there are mid-level technical and vocational training systems in the country. Mid level technical education is provided after tenth year of schooling. Polytechnic sub-system offers well organized 3 year’s diploma courses in engineering and technology. There are twenty one Polytechnic Institutes in the country with annual intake capacity of 5268 students. Besides Polytechnics, there are a number of agricultural and allied industrial, textile and leather technology institutes and commercial institutes and other specialized polytechnic institutes offering diploma level course in their respective fields.
Vocational Training Institutes: There are 51 Vocational Training Institutes (VTIs) and 13 Technical Training Centers (TTCs) and 1 Bangladesh Institute of Marine Technology (BIMT) which cater to the training needs for craftsmen in the basic trades. Diploma in Marine Technology is also offered from BIMT. 13 TTCs and 1 BIMT produce annually about 7,000 highly skilled technicians on different trades, suitable for overseas employment. Tele Communication Engineers and Technicians, tradesmen skilled in basic engineering and building trades like electricians, petrol/diesel mechanics, air conditioning mechanics, radio/TV mechanics, fabricators, marine mechanist, molders, plumbers, pipe fitters, painters, steel fixtures, carpenters, masons, garments workers, draftsmen, etc. are available for employment.

Technical universities: Engineering Institutes (2 University of Engineering & Technology, 4 Bangladesh Institute of Technology, 4 Engineering College and 1 Marine Academy) produce about 1000 Graduate Engineers annually. In addition 21 Polytechnic Institutes in the country produce about 3000 Diploma Engineers annually. However, recently the number of universities producing graduate and diploma engineers has increased dramatically due the establishment of more such institutes in the private sector.

At present, for that matter at any point in time, about 1000 Engineers and 25000 Technicians are available for employment at home and abroad.

Design firms: The expertise of Bangladesh design engineers and architects can be a plus point in allowing access to technical know-how, especially in design-build projects.

Testing /QC Organizations: The expertise and services of testing & QC companies may not be that important in the context of overseas projects but such knowledge and expertise is required by the QC staff of the companies to ensure their quality for ultimate customer satisfaction.

Construction Materials: The Middle Eastern countries are now self-sufficient to a big extent at least in the basic construction materials, however, the scale of projects in so big in those countries now that the local supply cannot keep up in many instances having back-up, supply-chain from home country can be a major advantage.

Construction equipment: The construction equipment sector is one area where Bangladesh is relative weak because of the abundance of local labor and the tendency to go for the cheaper way. However, use of machinery all over the world is competitive and ensures work quality. The appropriate training of manpower in the use of such equipment has to be expedited.

Fittings/fixtures & building products: Most of the Middle Eastern countries are now self-sufficient in many items, also their quality requirements may be such that Bangladesh is not in a position to supply as per their requirements. However, for some items / products having back-up, supply-chain from home country may be a major advantage.

3. Potential Export markets
Undoubtedly, it would be the oil-rich Middle Eastern countries at this moment. Firstly, because many of our engineers, both employers & employees, have experience of working in the Middle East and are well versed in the culture and business etiquette of those countries. They also have personal contacts, along with the added advantage of many of their friends, classmates and colleagues still serving there. Also there is an existing pool of labor already there, many of whom are on “free visa status” and could be immediately added to a work-team without having to depute personnel from Dhaka. These are very big advantages to start any business. Also the Bangladesh Embassies existing in the Middle Eastern countries, in spite of their weaknesses, are possibly more proactive towards the Bangladeshi community and the local Bangladeshi business communities which have cropped up as a result of the large numbers of Bangladeshis residing in most of those countries.

Even without these advantages the Middle East offers tremendous business potential as by one estimate the size of the construction business market in those countries would be around US$2.5 Trillion on average per annum upto the year 2015.

At present the construction boom in the Gulf region has reached new heights, with 2,837 projects estimated to be worth in excess of US$2.4 trillion now underway, the majority of development being carried out in Saudi Arabia and the UAE. According to research by database company Proleads, which monitors regional construction projects across all industry sectors, the biggest construction project currently underway in the region is the King Abdullah Economic City in Saudi Arabia valued at US$120 billion. This is followed by the US$86 billion Silk City Project in Kuwait and Dubailand in the UAE, valued at US$60 billion. The research also shows that, when additional developments currently at the early planning or concept stage are also taken into account, the Gulf countries account for a total of 3,519 projects worth US$ 2.527 trillion. Massive development like this has turned the Middle East into the world’s biggest market for plant, construction vehicles, machinery and equipment.

4. Market image of Bangladesh
At first glance it may seem that Bangladesh does not have a very good image, may be so, but there have been so many engineers and technicians and other workers serving in the Middle Eastern countries that the decision makers in those countries are well aware of the capabilities of our engineers. Also, the Bangladeshi companies should not target the big projects in their first attempts to secure business there, rather they should be selective in choosing the not so sophisticated or technically complicate ones so that they can easily and successfully complete those projects in time and thus gradually build up a reputation in the construction market.

5. Support for Business

Govt. Agencies
The support of the Govt. agencies, such as the export promotion bureau (EPB), the Board of Investment, and the Embassies (through Ministry of Foreign Affairs) are very important in facilitating the business endeavors of Bangladeshi companies overseas.
Private Sector Support
The chambers of commerce, notably the FBCCI, and the other trade bodies with their network of associates around the globe can play very pro-active roles in promoting the business development of the construction sector. But the indirect services, and sometimes having a direct impact on a business, such as Inspection Agencies (for example SGS, LR, etc), ISO Certification and Training Agencies, CA Firms, and Banks have a direct impact on the overall quality of service and efficiency of construction companies.

The agencies and institutions in the govt. and private sector have to be made aware of their importance in facilitating the growth of this sector with special motivation and training to encourage them to take special interest in the construction industry.

Why Export & what are the possibilities?
If Bangladesh is to become a Middle Income Country by 2016 it has to reduce poverty and one of the important channel through which growth impacts poverty is employment creation. And for a country like Bangladesh to attain constant growth then a labor-intensive activity like construction is especially important. This construction sector is the most likely source of employment generation at a scale that can absorb a large number of skilled & unskilled workers. The garments sector of Bangladesh employs around 2 million workers, mostly women, and the money they send back to their homes further lifts their families from poverty. The construction industry, through export of its services can very easily overtake the garments sector in terms of revenue in a relatively short period of time. But in order to do so we shall need a concerted effort to eliminate all weaknesses in the sector and put a very big emphasis on the training of appropriate workers & other manpower and also improve the management of the companies to be suitable for the global economy.

BACI & IFAWPCA? What are they and how can these two organizations help in achieving these ambitions & targets?
The Bangladesh Association of Construction Industry (BACI) is the trade body representing the Bangladeshi contractors and is also a member of IFAWPCA (International Federation of Asian and Western Pacific Contractors Associations), where it represents Bangladesh. Recently, at the 36th Convention of IFAWPCA held at Gold Coast in Australia, Bangladesh was elected to lead IFAWPCA for the next almost two years, as Engr. Aminul Islam and Engr. Mir Zahir Hossain were elected President and Secretary-General respectively of IFAWPCA.

Also Bangladesh, i.e. Dhaka, was chosen as the venue for the next IFAWPCA Convention to be held in March-2009. BACI as the national association shall be the host of the event. The importance of such an international convention cannot be under-estimated. In fact it is for the first time that Bangladesh is hosting any international convention of such status. Indeed it is a great honor and opportunity at the same time. Reputed contractors and construction industry professionals from all across Asia shall be visiting Dhaka, Bangladesh, and shall see first hand the quality and extent of construction that has been and shall be ongoing during the convention. BACI’s leadership of IFAWPCA enables it to have access to the construction industry stakeholders across Asia and thus have better networking with potential clients and business partners in the region, such an opportunity will not come possibly before another decade, so we ought to make the most of it in terms of image building and business networking for our construction industry so that this sector can become the leading foreign exchange earning source for Bangladesh.

G.A. Khan
Past Secretary General
BACI

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