Interview with Rabiul Alam, Chairman — Energypac
Bangladesh is one of the world’s fastest growing economies. What are the main reasons behind its sustained success?
Industry and manufacturing have been key drivers behind the success. The increasing share of GDP coming from these sectors and job creation in labour-intensive manufacturing have had a two-fold effect on growth. A key constraint in the development of the manufacturing sector was energy. Power outages result in a loss of industrial output, which some think tanks estimate at around $1 billion a year, or 0.5% of GDP.
The incumbent government has been successful in addressing this issue by increasing power generation and the number of power plants, developing distribution and transmission lines, expanding the number of consumers and raising per capita power production capacity. Over the years, this capacity has increased from 4942MW to 16,000MW. This boom in the power and energy sector has been instrumental in allowing industry and manufacturing to flourish.
Energypac’s business interests range from energy to fashion and agribusiness. Can you tell us about the company’s history and central business?
Energypac, widely regarded as a pioneer in Bangladesh’s power and engineering sector, began its journey in 1982. Over the past three decades it has established itself as the country’s leader in providing end-to-end power solutions. Years of expertise in the design and manufacture of a wide range of power products and systems has made Energypac a trusted name in the industry, not just in Bangladesh but across South Asia and Eastern Europe.
Our products are in reliable operation in power generation, transmission and distribution systems, as well as electro-intensive industries, and residential and commercial complexes throughout the Asia Pacific region. With design and international trade operations in ten countries, and manufacturing sites in India and Italy as well as Bangladesh, Energypac is truly a global business. All of Energypac’s products are tested to the highest international standards in our in-house ISO-certified testing laboratories, the only ones of their kind in Bangladesh. The company is credited with manufacturing Bangladesh’s largest transformer, currently a 80/120MVA, 132/33kV transformer. Energypac is now set to break its own record, as it is gearing up to manufacture Bangladesh’s first 300MVA transformer. We have also recently completed work on Ruppur Nuclear Power Plant, Bangladesh’s first nuclear power plant.
How has Energypac diversified over the years?
Energypac has long established itself as a stalwart in the power and energy sector. However, it is important to be wary of being pigeonholed in a single sub-sector. It not only makes the company more vulnerable to market fluctuations, but also inhibits it from realising its true competitive potential. Energypac has chosen to apply its decades of expertise in manufacturing and engineering to diversify into new labour and skill-intensive industries such as electronics, agriculture and clothing. Energypac Electronics, established in 2005, extended Energypac’s range of industrial technology into low-voltage electrical products. The company is considered a pioneer in the electronics sector, having popularised greener electronics in Bangladesh.
Energypac Agriculture Limited was set up in 2006 with the aim of promoting commercial agriculture as an engine for rural development, industrialisation and greater employment for the poor. In 2007, we diversified into the ready-made garment industry. Our aim was to target a different mix of higher-quality clothing, particularly formal dresswear, which requires greater skill and offers higher margins. The choice of each sector has been strategic, as each is an important player in Bangladesh’s economic growth. Energypac has always been an early investor in Bangladesh’s key growth sectors, and it aims to be a vital part of turning Bangladesh into an exporting powerhouse.
What role is Energypac playing in the expansion of Bangladesh’s energy market and does it have plans to expand internationally?
Before Energypac, everything was import-based. After stepping into the market with our own product, we have contributed an average of 6000MVA to our country’s own production. Not only have we minimised dependency on foreign equipment, but also we have enhanced technical expertise in the country. The government is now focusing more and more on the power sector. As a result, various new power plants are being established throughout the country. These include coal-based and heavy-fuel-oil-based facilities.
Energypac has supplied substation equipment for a 200MW substation at Ashuganj owned by United Ashuganj Power Ltd., a 400 kV substation at Bibiyana owned by Power Grid Company of Bangladesh and a 102MW heavy-fuel-oil power plant at Narayanganj owned by Summit Power.
Type testing, which proves that transformers meet customer specifications, is a pivotal and essential issue for our products. Our highest-rated product, a 120MVA power transformer, is already undergoing type tests. Especially in order to get into foreign markets, we conduct our type tests from independent international laboratories such as India’s Central Power Research Institute and Italy’s Centro Elettrotecnico Sperimentale Italiano. In the near future, we will be transforming our factory and production processes to enable us to compete with the best international companies. We invite internationally recognised consultants to come into our research and development (R&D) departments to help us improve our production. We have already supplied products and engineered solutions to countries like Italy, Yemen, Sudan, the Philippines, Vietnam, Korea, Nepal and India. Now, we are looking to go even further and to penetrate more of the African, Asian and European markets.
Can Bangladesh become an export powerhouse?
Bangladesh has the capacity to become an export powerhouse, at the same level as its East Asian neighbours, if it improves its business competitiveness and trade policies, which will help firms compete globally. A critical catalyst in Bangladesh’s economic rise has been the export-oriented ready-made-garment sector. Whilst this sector is a source of national pride, and clearly offers further potential, we must be wary of becoming a mono-focus economy. In order to push further economic growth, we must continue developing new manufacturing sectors, such as engineering and electronics, as well as raising productivity and moving up the value chain.
To truly realise Bangladesh’s competitiveness potential, we must start by focusing on improving our trade policies. The government must make it much easier for exporters to import what they need, gradually reduce tariffs and improve trade logistics. It is also exceedingly important that we concentrate on the critical shortage of industrial land. With the right set of policies enabling the right business environment, there is no reason why Bangladesh cannot become the next regional powerhouse.
How would international investors benefit from collaborating with Energypac and Bangladesh?
Bangladesh is the one of the most open and greenest markets in the world. But expertise is at a preliminary level — we need foreign investors to come to our country and share their expertise and experience, and without them, it will be very difficult to elevate Bangladesh to next level. They will benefit from cheap labour and raw material costs, as well as other intrinsic benefits.
Presently, Energypac works with a few companies and individual entities around the world. We have appointed local agents in many countries, so we get to know the upcoming and potential business opportunities in their respective zones. We also gather information from various trade sections of Bangladesh’s consulate offices in many countries. Additionally, every year we participate in international exhibitions, where we get the opportunity to meet and collaborate with foreign investors. As one of Bangladesh’s leading engineering companies, Energypac aims to be the vital catalyst in achieving our country’s ambitious growth target of 8% by 2020 by driving innovation and enhancing productivity in the manufacturing sector. Our dedicated R&D teams around the world continue to add to our growing product portfolio of industrial technology and green electronics. We believe this will help us, and in turn Bangladesh, with our steady penetration into new markets in South Asia and Eastern Europe.