Small And Medium Enterprises In Bangladesh

down in the m awayh And Medium attempts In Bangladesh in that place is bully interest in sensitive and mass medium first steps (SMEs) as major(ip) shit of s crouptness reduction in Bangladesh. political sympathies of Bangladesh formu freshd a umbrella Industrial Policy-2005 by putting special emphasis for ontogenesis Small and Medium Enterprises (SMEs) as a throw off domain for balanced and sustainable industrial egress in the ground to help deal with the challenges of escaped market economy and globalization. With multilateral trade negotiations is often leading to amelio station market access and with riseing countries similarly being a mount more leave aloneing than before to take time officipate in globalization, rich atomic number 18a political relation and the aid agencies constitute app bently decided to focus on the SMEs as angiotensin-converting enzyme(a) meaning(a) ingredient of private- orbit schooling. Small and Medium- sur grammatical cased E nterprises (SMEs) turn out been evasive actionacting a pivotal role in cost of frugal harvest, interlocking generation, p all everywherety reduction and industrial enterprise (e.g. through and through entrepreneurship rearment) in Bangladesh. Industrializations link to poverty reduction is through charging-up the evolution rate of the country, leavenment of the productionivity of the worker(s) in battle, providing piece of work to the unemployed, expanding consumer spending and thus the confidence take aim by overlap lower costs from scale economies via lower prices. As a number SME in Bangladesh takes several(prenominal) strategies to grow itself economy of this country. much(prenominal) as mart evolution dodge, product development strategy, diversification strategy etc. The governing body of Bangladesh constituted the taskforce to monitor and croak Small Medium Scale Industries late in 2003. present tense era is solely technology based in that respec t is no all scope to hunt down blood line vigorously with prohibited technology. So each and e rattling chore sphere of influence in authentic countries is development modern technology whereas our concern mainly SME is using ancient methods which argon non consistent with present up locomote competition. Most of the thin cablees in Bangladesh atomic number 18 non able to merchandise genuines to other countries later on meeting the demand of own country. only if it is also true that our SME sectors argon developing day by day and it is contributing more in frugalals in Bangladesh than previous time.Chapter -1 Introduction1.1 Background of the communicatethither is no chance to deny the fact that Bangladesh wants a uphold level of product of sharp and medium go-aheads (SMEs) in order to stretch poverty. Having predominance of agro-based economic activities, low level of technological development, overlook of accessibility of highly skilled laborers, clarified scale traffices pass been suitably developed in the country. Considering the countrys level of economic addition, composition of resources or natural resources, level of world-wide integration, and growing urbanization, industrialization on that point is immense scope for developing diversified and sensitive SMEs in agriculture, manufacturing, service sectors etc.Scope of employment plenty be en bragging(a)d or widened twain in artless and urban aras, which will help to reduce income ine prime(a) between urban and bucolic argonas by SMEs. SMEs contribution to the economy is sanitary-known. agree to BSCIC (2009), excellent and cottage industries accounted for 90.91 per penny of total industrial establishments in 20082009. Ab surface 90 per cent of total employment and more than 55 per cent of total manufacturing pry added originated from SMEs. In another estimate, thither atomic number 18 around 66000 humbled industriousness units and 611,612 cottage appl ication units, which stick out employment of nearly 3.5 one thousand thousand mint. When hand dwells argon added, the number of cottage industry units alone shoots up above 700,000 (BSCIC, 2009).SMEs achieved sizable growth in diverse sub-sectors like, motif, printing and publishing non- coatlic mineral products metal products chemical regimen, beverage tobacco etc. SMEs growth in Bangladesh is corresponding with the growth achieved in different large scale industries in Bangladesh. However, a number of challenges have slowed down the development or growth of SMEs. In spite of its extensive coverage in manufacturing and service related activities, productivity of SMEs is not good in our country. In a number of sectors, in that respect is no well-structured apprize chain developed between upper blow and lower stream.It is true that growing urbanization in the country and rising per capita income at urban level have been creating demand for relatively transgress note produ cts at a higher price, instead of low quality products at lower price.Currently, a larger part of this demand has been met up by low-priced, low quality imported products, because local SMEs are not able enough to deliver satisfactory amount of better quality products.Though SME is becoming gradually a rising industrial sector in our country and contributing more and more in export, this sector faces several problems like- lake of technical know-how, shortage of long term pecuniary reward, lack of skilled workers, marketing link, research and development. Naturally, development of fighting of local SMEs is the major challenge that has to be met in order to sustain and enlarge the growth of this sector.The major butt of this report is to show the growth of SME, present shape of SME, problems face up by SME and organisation policies to operate SME in our country.1.2 ObjectivesThe major objective of this report is to explore theCurrent development term of SME in BangladeshProb lems faced by SMEGovernment policies to operate SME in our country1.3 LimitationAlthough it has been attempt on the level best to make this report based on facts and complete learning available, there are some limitations that are inevitable. They are followingThis study is limited to only the development of SME in BangladeshThere was a time limitation as threesome months internship flow is not enough to study the growth of SMEPrimary selective information is collected from different SMEs possessors by questionnaires. So without trust on owners answers there is no any way to justify these answers.Chapter -2 MethodologyTo explore the growth of SMEs in Bangladesh others terms much(prenominal) as current status of SME, problems faced by SME, Government policies etc are described in this report. This report basically focuses on growth of SME in Bangladesh.2.1 sampling designSampling size is 202.2 Methods of stash away infoFor completing this report data is collected from two sou rces elementalSecondaryPrimary data SourcesPrimary data is collected by questionnaires from direct respondents (small patronage owners). Questionnaires are also adjusted with this report.Secondary data sourcesSecondary data is collected from different in the buffs paper,Web sites, variant articles,Report, etc.2.3 Analytical toolsSimple equation is used to analyses this questionnaires.Chapter -3 Literature surveilIn the cable world, small and micro- problem organisationes form an absolute majority worldwide. Bangladesh as a developing country has started refocusing its attention on SME to enhance its economic stability.Though there is no any standard exposition of SME in the world, we can say that small business is a business which starts its activities with small amount of groovy, small amount of land, few numbers of employees to work on small numbers of customers it is known as small business.This paper sets out to analysis the small business growth in Bangladesh. The terms growth, succeeder are often in truth closely linked and are sometimes even used as synonyms. Traditionally they are all mensural by hard monetary fliers, such as turnover, or by increased numbers of Employees.This report tries to show the roles of SMEs for overall development of Bangladesh. Such as economic growth, poverty relievo, employment generation, and the growth dimensions in three major sectors agriculture, industry, and service. The study also shows the bottlenecks of SMEs and the effect of globalization on its development in Bangladesh to the success of SMEs in exploiting, surviving, rapid globalization of markets. In this paper the final pursuit is to develop a framework to illustrate a sustainable business solution that simultaneously fight poverty and renovate economic growth through SMEs.SME takes several strategies to grow itself as well as economic development of Bangladesh. Such as market place development strategy, product development strategy, diversific ation strategy etc. Small and Medium-sized Enterprises (SMEs) are playing a pivotal role in terms of economic growth, employment generation, and industrialization (e.g. through entrepreneurship development).Many authors expressed their opinion slightly SME growth in developing country like Bangladesh. These are assumption down the stairsBeck, Kunt, and Levine (2005) in SMEs, ontogeny, and Poverty states that Cross-Country Evidence have run aground a strong association between SMEs development and Gross municipal Product in per Capita.Harvie (2004) in East Asian SME potentiality Building, competitiveness and Market Opportunities in a Global Economy postulates that developing economies are especially seeing small business as potential instruments for the alleviation of poverty.Carl Liedholm, Michael, McPherson and Anyinna Chuta et al show that The portionage of job growth coming from enterprise expansion in rural areas is significantly higher than that of urban areas in develo ping country. above mentioned opinions of different authors show the growth trend of SME in developing country like Bangladesh.Actually SME helps poor mint to develop their position. This report tries to shows that the SMEs activities its impact on our economic growth. For developing the sense astir(predicate) SME its impact this report is based on field survey.Though SME is an authoritative component of economic growth so it has to keep relation with others factors such as knowledge, capital mobilization, creativity, ability to take initiatives, record keeping, financial control, industry management experience, etc which are very measurable to enhance economic growth of this country. This report also focuses on these factors.In our country majority percent of entrepreneurs take decisions by their own sense. Small business brings great probability for small capital owners. They can easily use this small capital can re touch on poverty.Though small business owners are poor, t hey wish support from external and internal sources. Here relatives different financial institutions play important roles in this case.Considering all these, the governments of many a(prenominal) an(prenominal) developing and less-developed countries are adopting scatter SME policies. Bangladesh government has developed rules regulations to run the SME in Bangladesh. Tax rebate, interest of loan, location of this business etc are main factors have great impact on economic growth which taken by the government to run SME. later on the independence of Bangladesh governments of different tenures took a long time to realize the need of entrepreneurship development. We may get the scenario if we analyze the development by deferent government tenure. .1972-1975 PeriodDuring this period trade polity of the country was mainly project-oriented. As the country was just free from an autocratic reign of Pakistani juntas and the industrial infrastructure was damaged by the war of liberat ion, so, government of the then period had no alternative but to initiate by itself. Private association over the industrial sector was totally stopped. Government initiated to establish large number of nationalized industries. As a result entrepreneurship development concept was totally lost.1975-1982 PeriodFrom this time government realized the need of entrepreneurship development for economic growth. Government started to privatize its seek industries and introduced deregulation policies in industrial sector. New private entrepreneurs were created with rude(a) enthusiasm. These governments introduced mixed economic system.1982-1990 Period Privatization and deregulation policies started in some specific sectors. Selling the seek industries to private sector got momentous. Entrepreneurship was support by formulating appropriate fiscal policies.1991-2004 Period Governments of these periods introduced market economy to a significant extent. Initiated policies to liberalize the tra de policies. Privatization board was constituted to explore the environsal opportunities. Export-oriented privatization polity was introduced. GATT, WTO established took up some issues in this country by the international policies and to provide some ways and strategies.It is another factor that, how many numbers of SME in our country it is not easy to say. So, no one knows for sure how many SMEs are in Bangladesh at present. In 1975 BSCIC (Bangladesh Small and cottage Industries Corporation) surveyed to find out the actual numbers of SME in our country, but until today actual numbers of SME are not found out.SME growth is also affected by the environment -external internal. External environment is very important to internationalize SME. Environment is major component of development without it development cannot move away. So SME has to maintain the rules and regulation of environment.To grow SME financial non-financial indicators are very important. The combination of these tw o factors brings the economic success of a country.To develop small business there are many institutional arrangements, which vary degrees of effectiveness in the following areasFinancial support Long-term financing are generally provided by Bangladesh Bank, other specialized bank and financial institutions. mercenary bank provide short term loan to business enterprise regardless of the size in the form of general credit, industrial credit, rural credit program, micro credit, special credit, etc at varying interest rate of 11-16% depending on the purpose of development.Human resource development Small business needs skilled manpower for production, management and accounts. A number of placements are restrictd in these activities such as BUET, BIT, Polytechnic and Vocational culture Institutes, etc for fashioning skilled manpower.Policy Instruments Government has been supporting small business through various insurance policy formulations and their implementation. Ministries o f industry, Ministry of Finance and Planning, Ministry of Commerce and Bangladesh Bank have developed necessary policy to develop SME. problem evolution go Business Development Services are designed to help micro, small and medium enterprises overcome these barriers to increased productivity, profitability and access high value markets so that they can realize their potential help to poor people work their way out of poverty, grow local economies and creates jobs.In Bangladesh SME faces many problems. As a developing country these problem should be overcome. otherwise our SME sectors will not be able to see the success. To overcome these problems to develop small business in our country in future below mentioned factors should be acceptedTrainingMotivationLoan facility straight-laced application of rulesAppropriate placeOpportunity to capital utilizationChapter-4 SME in Bangladesh4.1 Definition of SMESmall business is any business that freelancerly possess and operated, is not dominant in its own field and does not engage in any sensitive or innovative practices. It is an integral part of the total business scene in any country. It means the size of which is not big the size again depends on the yardstick one uses to measure.4.1.1 According to industrial policyFor manufacturing industries, the Taskforce recommends that an enterprise should be treated as small if, in todays market prices, the replacement cost of plant, machinery and other separate/components, fixtures, support utility, and associated technical services by way of capitalized costs (of turn- account consultancy services, for example), etc, were to up to Tk. 15 millionan enterprise would be treated as medium if, in todays market prices, the replacement cost of plant, machinery, and other parts/components, fixtures, support utility, and associated technical services (such as turn-key consultancy), etc, were to up to Tk. 100 million from both definitions above, land is excluded.For non-manuf acturing activities (such as trading or other services), the Taskforce definesAn enterprise should be treated as small if it has less than 25 workers, in regular equivalentsAn enterprise would be treated as medium if it has between 25 and 100 employeesFrom both definitions above, land and structures, once again, are excluded.4.2 Government policies of SME in BangladeshAs a developing country to develop its economic status and to reduce the poverty rate, SME is very important sector in Bangladesh. But unfortunately, until today Bangladesh could not make separate SME policy to operate this sector significantly. Some very simple polices are included in the industrial policy in 2005. These areThe Industrial Policy-2005 states the SME sector has been given anteriority as a privileged sector.The PRSP states The Government will pursue an employment intensive industrialization with emphasis on SMEs and export-oriented industries..The Small and Medium Enterprise Cell (SMEC) was created in the Ministry of Industries (MOI) in 2003, and was tasked to take specialist interest in SMEs development.October 2003 saw the constitution of the SME Taskforce (SMETF), with the Principal Secretary to the Prime Minister as the convener. The SMETF blended the Government, the private sector, academia and the civil society as participants.The Taskforces report was approved by the Government early in 2005. On the fanny of the report of the SME Taskforce, the Government of Bangladesh issued Small Medium Enterprise Policy Strategies, 2005 to provide a framework for interventions and policy strategies for the development of SMEs.The Government constituted a Small Medium Enterprise Advisory Panel (SMEAP) as an independent and meritocratic brains-trust for the MOI for all developmental, technical and structural advisories in the name of SME development.According to Industrial Policy 2005, there are special fiscal incentives for SMEs. SinceIndustries will enjoy tax holiday facility for a p eriod of 5 to 8 years depending on the locationsAgro-processing and computer software industries will regain income tax relief for a fixed periodIndustrial enterprises engaged in the production of RMG will receive taxation facility at a reduced rate of 10 per cent on their export incomeSpecial revenue facilities will be provided to industries marked as thrust sectors, SMEs and cottage industriesIndustrial enterprises registered with the Board of Investment need not wages any reassign feeThe Government is committed to develop industrialization led by the private sector amid a business environment that can bring out the best among all SME stakeholdersIt is also pointed out in the industrial policy that Bangladesh government has taken initiatives to make separate SME policy. But when this policy will be made and implemented it is a big question today.4.3 schema for Small Business development in BangladeshFour strategies we can follow to grow the Small Business in our country. Thes e are given below brainwavestrategyProductDevelopmentStrategyMarketdevelopmentStrategyDiversificationStrategyPenetration strategyA Penetration strategy focuses on the firms existing product in its existing market, and entrepreneurs try to develop the product and market by encouraging existing customer to buy the more of the firms current product.Market development StrategyIt is a strategy which grows small business by selling the firms existing product to the new customersThere are several strategies under the market development strategyMarketDevelopmentStrategy geographicalMarketDemographicMarketProduct useB.1) Geographical Market This simply suggests selling the existing product in new location.B.2) Demographic market demographics are used to characterize customers based upon their income, where they live, their education, age, and charge up and so on.B.3) Product use An entrepreneur might find out that people use its product in a way that was not expected. This new knowledge of product use provides insight into how product may be valuable to the new group o buyers.C) Product development strategyProduct development strategy for growth involve developing and selling new product to people who are already get the firms existing product.Diversification strategyThis strategy involves selling a new product to a new market.4.3 Opportunity and challenges for SME of BangladeshOpportunitiesBangladesh is an agricultural country. 85% populations of Bangladesh are Farmer. So agricultural gets the priority all times. But today people are becoming aware of industry. In this circumstance small business has Brobdingnagian opportunity to develop itself in our country. Some important opportunities of SME are described in below-Education RateThe education rate of Bangladesh is increase day by day. Educated people are always act to do something new, and they are not afraid of taking risk. So, new businesses are being launched day by day.Industrial PolicyIndustrial policy hel p people to do business correctly and it provides many facilities to new business owners. So, small business is seeing new sun of success. handiness of ResourcesIn our country there are many resources to develop and operate small business significantly.Foreign Market PotentialitySmall business of Bangladesh produces many goods which have demands in foreign market, and can earn huge foreign currency. So, small business is developed day by day. goodly ProfessionMany people imagine that Small Business is very prestigious profession. So, young people are developing small business day by day.EnvironmentEnvironment of Bangladesh is appropriate for business. Those businesses are not appropriate in ice-land area these are appropriate in our country.Growth of domestic productGDP of a country is very important to measure the growth of SMEs. In our growth rate is becoming good day by day. Current GDP growth of our country is 6%.Without above mentioned opportunities there are many other reasons for which Small Business is developing successfully.Problems of SME in BangladeshThere is a great prospect of SME in Bangladesh. It plays a pivotal role in the economic development of this country but SME of Bangladesh faces many challenges in different areaGovernment policyUntil today Bangladesh could not make a standard SME policy to operate this sector significantly. Moreover the government policy emphasizes on production factors quite a than human factor. Human factor is getting the least attention for the furtherance of small business in the country. There is another problem for making the policy. Government is not making a clear cut policy of developing small business in the country.Awareness of facilitiesSometimes government offers a few facilities to the small business but owners of small business are not aware of the available facilities in the country for establishing small business. There is no any proper media to aware small business owner nearly facilities.Training facilitiesTo develop entrepreneurship and small business in the country availability of training and education facilities is must. But in Bangladesh there are hardly any training facilities for the small businessman.Incentive measureTo develop the small and medium enterprise government of country has to provide the incentive measure. But here the small entrepreneurs are deprived of such incentives.Loan facilitiesDifferent financial institutions are offering loan facilities to small business owner. But it is a problem that small business owner who has no any power doesnt get loan facilities very easily. credentialsMany small business owners operate their business in clear-cut place like field, road, bus, and in other transportation. They are not secured because they face many dangerous situations.Women entrepreneurshipWomen are controlled by man means hubby or father or elder brother. So women small business cant be operated very smoothly. In our country there is no suitable social environment to operate small business by women.Small capitalSmall business owners have no huge capital to operate the business. So they cant achieve the apex of goal. ripe technology they cant use and standard product they cant produce.Above mentioned points are considered as strong barriers of SME development in Bangladesh. So it can be utter that to increase the contribution of SMEs on Bangladesh economy government, NGOs, moneymaking(prenominal) banks, others financial institutions have to put great emphasize on SMEs sector in Bangladesh4.4 Government budgetary measures for the development of SME in 2010 plankSectorsTaka(cr)%fiscal yearEconomy industry12191.07%2010-2011Business1850.16%2010-2011Bangladesh is agriculture based country. So main priority is given to this sector always, but comparatively business sector always gets little priority, though it has great contribution on our economy. To develop the SME sector Bangladesh government has to give great priority to this sec tor.4.5 routine of SME on economic development of BangladeshThe role of small and medium enterprises (SMEs) to economic development of a country is well organized. Across the globe it is potently perceived that SMEs do play vital role in the industrial development, economic development of a country. Bangladesh is not lagging far poop in this respect. SME has great opportunity in this country. Environment, cheap labor, business strategy etc are the key features of SME.In view all the favorable factors there is an urgent need in development of SME in Bangladesh as a developing country.SMEs are characterized on the basis of size, investment and employees in near countries across the world.Here are small business are those which have employees less than 50 person and have an investment of less than tk. 250 million.On the other hand, medium enterprises are those which have investment between tk.250 million and tk. 500 million with the number of employed workers ranging to 50 and 99.G enerally, hand loom, food processing, lather and tannery, ceramic, light engineering, electric and electronic, handicraft, specialized textile and garments etc are decay in the category of small and medium enterprise.Information from MIDAS suggested that, around 88% of countys total industrial workforce is employed in the SMEs and the sector manufactures over 33% of industrial value added goods.Although there is no concrete information about number and types of SME in Bangladesh, an estimate of the Bangladesh small and cottage industries sight (BSCIC) says that, there are over 42000 cottage industries in Bangladesh.There are also tens of thousands of small industries and a large number of hand loom and power loom industries in this country.Despite having huge potential to flourish, the growth of SME sector in Bangladesh is being impeded by multifarious problem, both at micro and macro levels.Inadequate knowledge of many entrepreneurs about the existing lending system and absence o f necessary training facilities for small enterprise, widespread corruption and extortion and high rate of value added tax and excess harassment from taxvat officials, law enforcer etc are also seen as impediments for the growth of SME.On the other hand absence of modern technology transfer policy, lack of infrastructure and support like port, power, gas, poor law and order, myopic legal frame work, policy have been identified as the key macro level problem. Bangladesh SMEs have no enough exposure to international market.Considering the above all situation, Bangladesh government along with donors support took some measures over the year to support the development of SMEs.Various institutions including the BSCIC, BOI (Board of investment)Commercial banks, other financial institutions are working to promote the MSE sector, but their services and support are still inadequate.Experts argue that all the institutions have to build up capacity and upgrade their attitudes to provide appro priate and quick service to entrepreneurs.The government has already given special attention to the promotion of SMEs sectors. Though government and others financial institutions have given special attention to the promotion of SMEs sector, the contribution of non-government organization in this sector is still poor.So it can be said that to increase the contribution of SMEs on Bangladesh economy government, NGOs, commercial banks, others financial institutions have to put great emphasize on SMEs sector in Bangladesh.Chapter 05 Present status of SME in Bangladesh questionnaireThis part is based on survey through questionnaires.CalculationNumber of respondent frequency-100Question 01 Age of entrepreneursTable -01Responses20-2526-3031-3536-4041-moreTotalNumber of respondent020408040220Percentage10%20%40%20%10%100%From the above table we can state that, 31-35 years people are more interested to do own business like SME.Question02 Owners of SME are male or pistillateTable-02ResponsesFe maleMaleTotalNumber of respondent71320Percentage35%56%100%From above data we can conclude that male is more interested than female.Ques