Addressing development challenges with electronics

Dhaka,  Thu,  21 September 2017
Published : 09 Jul 2017, 20:55:37

Addressing development challenges with electronics

M. Rokonuzzaman
Some of the development challenges facing Bangladesh are: (i) creating employment opportunities for 40 million students, (ii) increasing per capita earning, (iii) dealing with extremely high infrastructure cost, (iv) meeting mounting debt payment obligation, and (v) addressing pollution. 

In 1971, only 31,000 students were pursuing tertiary education. In 2017, the student population in tertiary education systems stands at more than 3.0 million. Although there has been full employment among workforce without having tertiary education, unemployment among university graduates has reached more than 50 per cent. Due to increasing automation and low oil price, labour price in conventional activities has been weakening. In the absence of creating jobs for the growing number of graduates in higher value added productive activities, Bangladesh's aspiration of reaching high-middle income status runs the serious risk of being unmet. 

The issues of high cost of infrastructure and growing debt burden to finance them are serious concerns for common citizens. In the backdrop of diminishing income level and growing unemployment, increasing debt payment obligation is alarming. One of the options to deal with such an issue is to pursue those productive activities which demand far less infrastructure than conventional ones like textile and garments. 

Last but not least, is the alarming level of pollution. Although Dhaka is more expensive than many western cities like Montreal or Washington, air in Dhaka and water in surrounding rivers have become badly contaminated. 

It appears that globalisation of trade in semiconductors, electrical and electronics offer an opportunity to address all these burning issues. The semiconductor and electronics industry (SEI) was born out of a remarkable invention: solid-state switch known as transistor. For this invention, Nobel Prize was awarded to three American physicists in 1956. This industry till date is a very active area of research and recipient of very high number of patents. But the value chain starting from invention to innovation to manufacturing in this industry demands diverse human capabilities-from high-end research to repetitive labour-intensive inputs. This industry creates job opportunities for virtually all categories of graduates, starting from high school graduates to PhD holders. It has been reported that without having focus on research, ASEAN member states have created a very large SEI industry, basically relying on labour and capital. Similarly, a group of workers with SSC qualification has been performing high precision semiconductor bonding at Chittagong Export Processing Zone to produce products for high-end LED lighting market of Japan. On the other hand, American firms, universities and research establishments have been generating large volume of revenue from research-based activities. For example, while sales of wireless semiconductors generated nearly two-thirds of Qualcomm's (an American semiconductor company) $23.5 billion in revenue in 2016, patent licensing accounted for the bulk of its $5.7 billion of profit. Couple of few chip design firms have also started to pop up in Dhaka, employing university graduates aimed at offering design services to globally reputed clienteles. 

Per person value addition in this industry is far higher than other manufacturing industries. For example, Bangladesh's 4.0 million workers generate USD30 billion exports in textile and RMG. On the contrary, 2.5 million workers generate USD382 billion exports in SEI in ASEAN nations, which is 20 times higher. Moreover, high value-to-weight ratio demands far less infrastructure like port and Dhaka-Chittagong highway. Air transportation is common in this industry. Another runway at Dhaka and a high-quality warehouse could be good enough to support this industry. Due to very low demand of energy and physical infrastructure in adding per unit value, capitalisation of this industry will lower the debt requirement to finance infrastructure and lessen the pollution caused by energy production as well as consumption. Moreover, activities of this industry cause minimal pollution to air, water or soil. 

Salary of the industrial workforce in Bangladesh is far less than that of ASEAN success countries. For example, the minimum wage of factory workers in Bangladesh is 50 per cent less than that of Vietnam. Bangladesh has 40 million students in academic institutions. Opportunities could be created to engage a section of these students to build a very large export oriented SEI industry. Based on education and aspiration, it is possible to offer suitable job opportunities to them starting from chip design to testing, bonding and packaging. 

The expertise of this industry has a cross cutting benefit. The potential spill over effect of this industry on all other economic activities is far higher than industries like textile or RMG. The expertise developed in this industry will form the productive knowledge base to support process innovation making Bangladesh's all other productive activities smarter. By making the production processes smarter -- whether in production of shirts, shrimps, or shoes -- we can open the door for improving the quality, reducing cost and lowering the pollution level simultaneously. As a matter of fact, many of the 17 sustainable development goals could be addressed by utilising the advantage from SEI. 

Due to high complexity, rapid technology progression and short life cycle, many segments of the SEI value chain are less susceptible to automation. It has been observed that although SEI is one of the largest customers of Robotics and Automation, there has been enormous amount of productive activities for which human inputs are far better as well as cheaper than automation. 

As every industrial product is being increasingly made smarter, the demand for SEI will keep expanding. Basically, all industrial products are target of improvement by taking the advantage of SEI. The Internet of Thing (IoT) is the code name given to up-gradation of existing products whether smoke detectors or automobiles, by adding sensors, electronics, software and Internet address making them remotely monitorable as well as operable. According to international consultancy Gartner, 8.4 billion IoTs will be in use worldwide in 2017, up by 31 per cent from 2016, and will reach 20.4 billion by 2020. Such large-scale deployment will lead to total spending on endpoints and services reaching almost $2 trillion in 2017. A portion of this spending will contribute to the ever-growing revenue of SEI. Expansion of this industry will also open the opportunity of software innovation, because basically every IoT is amenable to further improvement by adding software feature one after another. As SEI value chain spreads from labour-intensive manufacturing to intellectually demanding innovation (leading to even invention), this industry opens a relatively easier path of migration from manufacturing to innovation.

We understand that individual Bangladeshis, working in the USA and other parts of the world, have technical expertise. But such expertise often remains limited within the academic and salaried employment space. But the challenge is to harness it into business activities in generating profitable revenue. Among many issues, there has been weakness in rational decision-making among Bangladeshis to make investment and negotiate deals to turn technology potential into profitable business, particularly in the globally competitive environment. We need to increase the flow of knowledge among stakeholders, including the politicians, government officials, academics, professionals, financing institutions and business community to address this weakness. Otherwise, despite having access to technical expertise, business potential and investment capacity, Bangladesh will not be able to derive benefit from this expanding opportunity. Already bits and pieces of entrepreneurial initiatives have started, including chip design for global clients. The challenge is to scale them up to large operations, facilitate the entry of multinationals and support the development of complementary activities forming the ecosystem. It is imperative to take all necessary measures to make Semiconductor and Electronics Industry (SEI) as the core strategic building block to empower Bangladesh and turn it into a developed nation. 

Dr. M. Rokonuzzaman is an academic, researcher and activist on  Technology, Innovation and Policy, and Professor, Department of Electrical and Computer Engineering, North South University, Dhaka.
Editor : A.H.M Moazzem Hossain
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