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Small and Medium Enterprises ( SME ) in Bangladesh

Updated on February 5, 2014

Bangladesh is faced with a long list of complicated socio-political problems inherited from the past and very few effective measures have been undertaken by the concerned organizations to remedy these problems, to create a favorable climate for industrialization. These, in turn, have led to poor economic growth, low ca pita income and sub-human living conditions.

Though the agriculture in Bangladesh faces several adverse conditions for development, it is still the pivotal sector, around which rests the national economic development. To stimulate any development in agriculture, industrial development, particularly large scale industries are essential and this would also help the development of a sound industrial base. At the same time, contribution from the small and medium industries to the economy of Bangladesh is significant even at present and the future potential too, is great. Unfortunately, this sector of industries faces numerous bottlenecks like inadequate and inefficient infrastructure, inappropriate policies and actions of government, lack of effective implementation of policies, inefficient development institutions, inadequate financial assistance, absence of special financial institutions, and problem concerning labor, entrepreneur, technology, and market. Though such problems are common both for small and medium industries and the large industries, due to lack of power and resources, the former is affected more than the later.

Two among the innumerable problems particularly stand out, being primary elements of development. These are literacy and lack of adequate and efficient infrastructure. Government has to direct all its efforts in tackling these two basic issues as early as possible; as such efforts will pave the way for easier handling of the issues.

The BSCIC should be allowed to operate as a real autonomous body with ample resources and appropriate manpower. In spite of the several criticisms lodged against the BSCIC, it is not completely failed in discharging its responsibilities. It has all the potentials to act as a prime institution for the promotion and development of small and medium industries. Institutions for the train of workers and entrepreneurs should be encouraged to utilize existing resources to their optimal capacity and efficiency. A special financial institution for the small and medium industries should be created as soon as possible and during the transition period, the existing facilities of BSCIC and nationalized commercial banks need to be encouraged to create special units in their organizations to attend to the special needs of these industries. Consultancy and advisory services by capable people have to be created and delivery of services should be a full package of assistance covering technology, finance and marketing.

A national technology policy along with an effecting implementing institution is vital to promote technology development, assimilation and diffusion, as well as to coordinate the activities of institutions like BUET and BITAC. In the present context, promotion of technology subcontracting can be effective tool for the introduction of new technology and the improvement of existing technology. This should be a gradual process, taking into account the total integration of subcontracting industries in economy in the long run.

Due to the isolated and scattered location of the small and medium industries, they should be encouraged to form their own cooperative or associations , which will not only be able to create favorable public opinion but also service as a medium and make it convenient for the self-education of these enterprises about production, training, management, and marketing. It will not be wrong to state that because of the failure of these industries to create a strong public opinion in the country, there was never serious thought about the identification and solution of their problems.

Protected market for these industries by restricting the free flow of cheap foreign goods and at the same time ensuring fair competition within the country is essential to stimulate their production and quality improvement. Competition will also encourage the innovations of industries. Controls and restrictions should be withdrawn and processing of paper work should be improved in order to eliminate red-tape. Under the present context, these changes cannot be brought about overnight, but a beginning of the process is essential to create a favorable environment. This, in turn, would lead to the development of efficient small and medium industries in Bangladesh.

The road of development is always difficult and painful, particularly in the case of Bangladesh. Patience is required in every step in order to bring about a change in socio-politico-economic situation. The small and medium industries offer great hope for the overall national development of Bangladesh. The project report may be prepared from consultants.

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