Opportunities and Challenges of Sme Business in Bangladesh

Opportunities and Challenges of SME Business in Bangladesh Fazle Elahi Mohammad Faisal[1] Syed Mohammad Khaled Rahman[2] Saleh Ahmad Abdullah3 Abstract Financial crumbles worldwide has totally changed the orientation of the world financial system forcing new alignment with novel dimensions for it and fresh and naive looks into the whole economic order.

Such pattern shift and enormous change has brought to the fore once again the small and medium industry all over the world for its giving edge to the economy at large and as employer, in particular– a role unprecedentedly warranted by the financial burnout for a developing country like Bangladesh. The product of Bangladesh might not rival with hyper competition of European world but have chance to lock head with India and China due to recent labor cost hike there.

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SME comes in here to keep hope alive for Bangladesh for its ability to tone small input into big output. While the whole world appreciating aloud SME as benefactor, in our shore SME still wants a comprehensive and workable definition. Also are glitches and loops in laws, and incentives mis targeted. Still, success stories are abound and Government has to do with it though an uphill effort yet not undoable. To hit upon plans and policies, sort out labyrinth, gush incentives, pep up entrepreneurs, so to buck up the sector—is what the need of the time. Introduction No unfounded would it be saying SME the power house of an economy all over the world. The numerous contributions as a role it plays to machine the wheel of economy of a country can’t be over told. SME as an industry is such in a nascence necessitating better cuddling and nursing than heavy industry while potentate greater than that. Same is here in Bangladesh. In this milieu of great endowment to society, the overall status quo of SME in our country is in rather disarraying. While more garland should be offered to ts altar for its sobriquet, it eventuated reverse in our case — lurking as an anathema to our attention. Yet, our entrepreneurs show great zeal. That’s our strength. Capitalizing on it and framing necessary policies and assistance, we have to catapult the strength of SME to reverberate more rigorously in the economy. ( Objectives • Identify the SME’s contribution to the economy • Its potential to a developing country like Bangladesh • Find out glitches in SME definition of Bangladesh Explore existing frame work to prop SME, and current rules and regulations • Hurdles SMEs are to trounce and their profundity • How to better enhance the benefit of SME to economic progress ( Methodology Both primary and secondary data are collected for the preparation of the report. Primary data is collected through questionnaire and interview. Newspaper sources provided a great deal in constructing the report. World Wide Web also provided good insight into the grasping of the subject. (Literature Review: SME Definition

There is no unanimous definition regarding Small and Medium Enterprises (SME), but the bottom line is that SMEs account for almost 99% of business numbers globally. Bangladesh Bank defines SMEs by economic sectors like service, trading and manufacturing. As far as the Bangladesh Bank is concerned, the number of employees in this sector will be 30, 20 and 60 respectively to qualify for definition as SMEs. ([3]) The Industrial Policy of Bangladesh describes small industries as those employing less than 50 persons and having a fixed capital investment of BDT 100 million ($1. 9 million). Medium industries were defined as those employing between 50 and 99 workers and requiring investment between BDT 100 and 300 million ($ 1. 69-5. 07 million). The definition of industry has reportedly been being revised in terms of “replacement costs”, taking the cost of factory set-up and land as fixed. An industry with a replacement cost of BDT 15 million ($254,000) is expected to be termed a small industry and one with a replacement cost of BDT 15-100 million ($ 0. 25-1. 69 million) as a medium industry.

It may be noted that neither the existing nor the proposed definitions take into consideration other important factors, like technological requirements, technical complexities of production, degrees of skills required in workers and managers, degree of value addition and turnover, import requirements, need for working capital, and probable trade barriers to market access. ([4]) SME recognized by Bangladesh Bank: Different countries and organizations define SME differently. Bangladesh Bank has categorized SME into three broad classes: 1.

Manufacturing enterprise 2. Trading concern 3. Service concern |Type of |Small Enterprise |Medium Enterprise | |enterprises | | | | | | | | |Total assets(in lac tk) |No. f employees |Total assets(in lac tk) |No. of | | | | | |employees | |Service concern |0. 50 to 30. 00 Less than 30 |