Professional Documents
Culture Documents
SME Development
International Journal of
SME Development
Volume 01 | Issue 01 | April 2014
Editor in Chief
M. Kamal Uddin, PhD
Professor & Director
Institute of Appropriate Technology, BUET
Editor
Syed Md. Ihsanul Karim, PhD
Managing Director, SME Foundation
April 2014
Co-editor
Md. Mujibur Rahaman
General Manager, SME Foundation
Sub-editor
Md. Mamunur Rahman
Deputy General Manager, SME Foundation
Editorial Assistant
Akhil Ranjan Tarafder, Program Manager
Md. Joynal Abdin, Program Officer
Cover Design
Ashim Kumar Halder
Copyright @2013 SME Foundation
ISSN: 2305-7750
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ii
Editorial Board
Editorial Note
M. Kamal Uddin, PhD
Professor & Director
Institute of Appropriate Technology, BUET
K.M. Nabiul Islam, PhD
Senior Research Fellow
Bangladesh Institute of Development Studies
Razia Begum, PhD
Professor & Chairman
Department of Marketing, Dhaka University
Ijaz Hossain, PhD
Professor
Department of Chemical Engineering, BUET
Md. Ali Ashraf, PhD
Professor
Department of Farm Structure
Bangladesh Agricultural University (BAU)
Ahmed Ismail Mustafa, PhD
Chairman, Bangladesh Council of Scientific and Industrial Research (BCSIR) and
Professor, Department of Applied Chemistry & Chemical Engineering,
University of Dhaka
Toufic Ahmad Choudhury, PhD
Director General
Bangladesh Institute of Bank Management (BIBM)
Abdur Razzaq Akanda, PhD
Professor and Head
Department of Mechanical and Chemical Engineering
Islamic University of Technology
Khondaker Golam Moazzem, PhD
Additional Director, Research
Centre for Policy Dialogue (CPD)
Mr. Manzur Ahmed
Adviser
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI)
iii
Table of Contents
Articles
Women Entrepreneurship Development in the Small and
Medium Enterprises in Bangladesh: Prospects, Realities and
Policies
01
59
77
87
Abeer Khandker
Prof. M. Kamal Uddin, PhD
Editor-in-Chief
International Journal of SMEs Development and
Director (Head)
Institute of Appropriate Technology
Bangladesh University of Engineering & Technology (BUET), Dhaka.
Note
Indigenous Technology and its Commercialistion
K Siddique-e Rabbani, PhD
Development of Appropriate Technology Based SMEs in
Bangladesh: Role of Bangladesh Council of Scientific and
Industrial Research (BCSIR)
Samina Ahmed, PhD
119
vi
132
Issue 01
1. Introduction
April 2014
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
ideas, but merely because they need an income to survive. This type of distresspushed or Survival-driven self-employment is particularly diffused in the
developing countries. In these countries poverty and lack of economic
opportunities in the formal wage sector often push many people into
entrepreneurial activities ranging from street vending to traditional and personal
services in most cases within the informal sector of the economy (Maloney
2004).
Later on, Schumpeter (1943) himself modified his position since the generic term
entrepreneur may include a population of very heterogonous agents, variously
termed as progressive innovators vs replicators, superstars vs. cluster of
followers and new founders etc. Many economists (Baoumol, W.j. 1990) went
to the extent to suggest that adopting a provocative stance by regarding radical
innovation and entrepreneurship as synonymous could eliminate the word
entrepreneur and substitute it with the founder which is more general and free
from overoptimistic implications.
Indeed, entrepreneurial ventures especially in the developing countries can be
observed as a rather heterogeneous aggregate consisting of real innovative
entrepreneurs bringing in creative destruction, together with the positive
followers bringing in overoptimistic and even escapees (self-employed)
from possible unemployment. Characterizing these different varieties some
researchers tend to identify the entrepreneurs as innovating, imitative,
fabian and drone based on their post-entry performance. The underlying
theme behind these deliberations is that these are alternative ways of looking at
the concept of entrepreneurship and binding it rigidly to the notion of
entrepreneurship being synymons with innovation will be narrow.
For the purpose of this exercise, we adopt a broad operational definition of
entrepreneurship. It is defined as the process or act of identifying opportunities in
the market place, mobilising resources required to pursue these opportunities, and
investing the resources to exploit the opportunities for long-term returns. It is
thus the process of creating something new, adding value devoting necessary
time and effort, assuming accompanying risks of uncertainty and obtaining
resulting rewards of monetary and personal satisfaction and independence.
Women Entrepreneurship
The next pertinent issue is to shed some light on who is an women entrepreneur.
Are women completely different breed from men as entrepreneur having distinct
characteristics and traits of their own? No, because both as human beings are
presumed to possess commonly identified entrepreneurial traits, such as creative
mind, drive and initiative, willingness to take risks, and be independent and so
on. However, much will depend on the social circumstances and economic
environment which significantly shape individuals entry into business and their
post-entry performance. In order to fully understand the differences between
mens and womens entrepreneurial qualities, performance of both groups at firm
levels after entry into business should be objectively evaluated. Nevertheless, it is
important to remember that as women entrepreneurship is both about womens
position in the society and the role of entrepreneurship in the same society, it can
thrive better in a positive socio-economic and cultural setting (including family
circumstances) and a conducive macro-economic environment. Thus, barring any
unfavorable exogenous circumstances and applying the general concept of
entrepreneurship, women entrepreneurs may simply be identified as a women or
a group of women who initiate, organize, and run a business enterprise. A South
Korean study (included in the APEC Regional study on women entrepreneurs,
1999) defines a women entrepreneur who is a defacto owner of a business and is
involved in the day-to-day running of that business. Depending on the specific
country circumstances, some criteria may be used to identify women as
entrepreneurs. For example, the Government of India defines women
entrepreneurs as an enterprise owned and controlled by women having a financial
stake of 51 percent of the invested capital and giving at least 51 percent of
employment generated by the enterprise to women (Aggaral, M. 2012).
A similar definition of women entrepreneurship is reported (Sultana, A. 2012) to
be used by Bangladesh Bank. The Bangladesh Bank (BB) deems a women as an
entrepreneur if she is an owner or proprietor of a privately run business
organization or owns at least 51 percent of share in case of a joint venture or
company listed with the office of the Registrar of Joint Stock Companies and
Firms. The BB definition also includes micro enterprises and cottage industries in
order to include these categories as beneficiaries of its SME loan policies and
programmers. The Government of Bangladesh uses a broader definition of the
term women entrepreneur. Under this definition, an enterprise owned and
controlled by women having financial interest of 51% of the capital invested and
giving at least 51% of the employment generated by the enterprise to women is
regarded as women entrepreneurs. In fact, this is exactly the same definition used
by the Government of India as noted above.
While such a definition may have specific policy objective, it will not be without
shortcomings, as it is restrictive in nature. For this exercise, we adopt a simple
and straightforward definition. Women entrepreneurs are those who own and run
a business enterprise both as employers and own-account workers.
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
Talking about the SMEs, it can be stated bluntly that they constitute the
backbones of most economies in the countries of both developing and developed
countries. Their contributions to economic development vary roughly between 60
to 80 percent of industrial employment and 60 to 70 percent of GDP across
countries regardless of the stage of development (Ayyagari Meghana et. al 2003).
In the economies of the Asia-Pacific region the SMEs account for upwards of 90
percent of all industrial establishments and stand as dominant sources of
employment and incomes and thereby provide livelihoods for over three quarters
of the workforce in most countries including Japan (Tithapa, 2003). In
Bangladesh, the story is more revealing in this regard as the SMEs account for
over 99 % of the private sector establishments and provides more than 80 percent
of industrial employment. The country is thus rightly dubbed as the country of
SMEs which make phenomenal contributions to new enterprise creation (over 60
percent) employment generation, improvements in income distribution, poverty
alleviation, entrepreneurship development, export growth and development of the
rural economy.
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
economic growth and social change. The reasons (to be detailed in the next
section) are an overall unconducive policy environment and social and legal
barriers under which growth of women-led new firms and their expansion and
survival are difficult. However, despite various limitations women are braving
into business in increasingly large numbers and taking up challenges to flourish
and survive against all odds. It is thus interesting to explore why and how the
women entrepreneurs are entering into business in Bangladesh, and how are they
coping and performing. Let us first see who are these deviant groups of women
and what motivate them to take entrepreneurial initiatives and challenges.
Drivers of Womens Entry into Business in Bangladesh
According to standard text book approach the most important trigger factor
determining entry into business is profit, followed by other pull factors such as
economic growth and high innovative potentials in an environment of promising
technological opportunities (Szirmai, A. et. al. 2011). Further studies (Vivarelli,
M. 2012) also reveal that other than pull factors like profit expectations, there
may be various push factors such as fear of unemployment, low wages, and lack
of white color job opportunities in the formal sector job market etc. which
confront with the potential entrepreneurs personal traits to motivate entry.
Percentage of Entrepreneurs
BWCCI
SMEF
(N=100)
(N=1024)
22
48
14
10
24
10
29
12
3
10
Note:
BWCCI- Bangladesh Women Chamber of Commerce and Industries
SMEF- Small and Medium Enterprise Foundation
N- Number of observations
10
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
Percentage of Entrepreneurs
SMEF 09
BWCCI
SMEF 12
(N=1035)
(N=100)
(N=83)
43%
30%
32%
48%
40%
9%
30%
68%
Percentage of Entrepreneurs
SMEF 09
BWCCI
SMEF
(N=1001)
(N=100)
(N=76)
48.8
58.3
48.7
41.64
26.7
32.9
9.0
13.5
6.0
5.3
Level of Education
Below SSC
SSC
HSC
Graduates
Post-Graduates
Percentage of Entrepreneurs
SMEF12
SMEF12
BWCCI
(N=88)
(N=1007)
(N=100)
23.9
30.6
10.9
14.8
25.0
34.7
14.8
21.0
26.7
20.5
15.0
16.7
20.5
4.4
10.9
11
12
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
business and 26% did not receive any training. Most of them received training on
different trades such as, beauty parlor, block and boutiks, poultry rearing,
handicrafts, embroidery etc. According to the BWCCI study, more than 48%
received training before entering their business and 42% received training after
entry into business. However, more than 70% receiving training expressed
dissatisfaction regarding effectiveness of training on grounds of lack of
relevance, methodology, and processes of training. Education and training have
been found (BWCCI, 2007) to inspire women entrepreneurs to get their
companies registered which increases access to information about regulatory
procedures and availability of business development service facilities. However,
the WEs from rural areas (around10 percent) could not avail training due to lack
of such facilities in their localities.
Besides education and training, previous work experience either as entrepreneurs
or managerial positions especially in similar activities where they get involved
later as entrepreneurs is found by many studies (i.e. McPherson 1996, Goedhuys,
et. al, 2000) to have positive links with a firms post-entry performance. In the
developed countries, spinoffs (entrepreneurs leaving a mother company to
establish new business) and serial entrepreneurs (entrepreneurs who have
previously run other business) are found to enjoy comparative advantages in
founding larger sized firms than others and also having better access to relevant
information (Vivarelli, M. 2012). The serial entrepreneurs could also increase
the possibility of founding new businesses and contributing to a firms better
accomplishments.
We shall look into three issues in this context: From what occupational
background do they come? How much intergenerational occupational mobility
was there among the entrepreneurs? Has social class origin been an important
determinant of entrepreneurial supply in the case of the WEs in Bangladesh?
Table 5 exhibits different occupational categories in which the samples WEs
were engaged prior to their entry into present business. It is revealed by the table
that the WEs were predominantly housewives (roughly 49% to 64%) except for
the SMEF study where the dominant category (54%) were students who took to
business after completing their studies. Previous involvement in business appears
to emerge as the next important occupational background (44%) in the SMEF
study, followed by services including teaching as other important areas of
previous occupational background of the WEs. Those who took to
entrepreneurship as a vocation with previous experience in business of various
length in different capacities is expected to do better than others. Finally, a large
chunk (nearly 45%) of the respondents who entered directly into business after
completing their careers as students must have pursued self-employment perhaps
to avoid unemployment or lack of employment in suitable jobs with good
compensation package. Some researches (Tambunan, T. 2007) call this category
forced entrepreneurs facing financial hardships due to death of husbands and
other compulsive situations. The other categories of WEs identified by
Tambunan are created entrepreneurs who are drawn to entrepreneurship by the
pull factors such as the economic incentives, the urge to try something on their
own and to be independent etc.
In the SMEF study (2009), 44% of WEs had previous business experience of five
years, 33.4 percent had five to ten years and over 13 percent had working
experience of ten to fifteen years. In the BWCCI, study around 53 percent of the
WEs were found to have three years or less than three years of experiences in
business, 20 percent had two years experience and 18 percent had only one year
experience in business. Unfortunately we can not relate their experiences to post
entry performance due to lack of data on growth of assets, growth of
employment, and that of profits etc. which could be related to their length of
business experiences. However, termed as Serial Entrepreneurs, their
previously acquired job experiences could increase the likelihood of founding a
new business and also contributing to a firms better performance.
Occupational Background of the WEs and their Parents and Husbands
Occupational mobility in response to economic opportunities is an important
determinant of entrepreneurial development in any society. To what extent has
this been true for the WEs in Bangladesh is the issue we turn to examine next?
International Journal of SME Development
13
Table: 5
Previous Occupation of the Entrepreneurs
Previous Occupation
Housewives
Students
Business
Services
Unemployed
Note: Same as Table-1
Percentage of Entrepreneurs
SMEF
BWCCI
SMEF09
(N=84)
(N=100)
(N=990)
48.8
23.0
64.6
6.0
54.0
17.4
7.4
44.4
21.0
12.6
7.8
3.8
4.6
-
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
SMEF 2012 source also returns a figure of above 82% starting with less than 10
to 49 employees confirming start of business by WEs in Bangladesh at a modest
scale of operation. However, the average enterprise size appeared to be relatively
large (50+) in the SMEF sample due to inclusion of medium sized enterprises
with more than 100 employees.
Type of Ownership
Consistent with the enterprise size, ownership pattern (Table 7) was found to be
dominated by sole proprietorship followed by joint ownership by family
members (10 to 15 percent) and partnerships (5 to 7 percent). Partnerships being
dominated by traditional kinship relations (i.e. with mothers, sisters, brothers
and husbands) is a reflection of traditional patriarchal social values where
womens business partnership with men from outside the family is still highly
restricted. This is also noted (BWCCI, 2007) to emanate from the fear of
insecurity as well as social stigma.
Table: 7
Type of Ownership of Enterprises
Type of Ownership
Sole proprietorship
Joint family Ownership
Partnership
Others
Table: 6
Previous Occupation of Fathers and Husbands of the Entrepreneurs
Previous
Occupation of
Fathers &
Husbands
Business
Services
Agriculture
Others
Percentage of Entrepreneurs
SMEF
BWCCI
Fathers
Husbands
Fathers
Husbands
(N=819)
(N=969)
(N=100)
(N=100)
35.3
54.0
34.8
43.5
22.0
22.7
33.7
45.1
12.6
5.0
3.0
30.0
12.0
Percentage of Entrepreneurs
SMEF
BWCCI
(N=1025)
(N=130)
85.4
73.2
9.47
15.9
4.5
7.3
2.4
3.6
15
Corresponding to the WEs entry into smaller enterprise size at start and also
restricted access of such enterprises to institutional sources of capital for either
equity capital or loans, the size of start-up capital for the WEs was found to be
modest. According to information available from SMEF sources, the size of
initial capital varied between Tk 1 lac to 2 lacs for nearly 50 percent of the
respondents and for the rest it varied between Tk 2 to 10 lacs and above. In the
BWCCI study, the median size of start-up capital was found to be Tk 2 lacs.
Whether or not the small initial capital affects the subsequent performance of the
SME entrepreneurs has been explored by many researchers (Ahmed M. U. 1976).
The finding is that firms starting with small initial capital did just about as well in
16
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
terms of growth as did the firms starting with large assets. The same seems to
have been the case with the WEs in Bangladesh. Overwhelming (70 percent and
above) majority of the respondents in both surveys succeeded in raising their
current investment sizes required to diversify and expand their business. Most of
them also succeeded in making reasonable profits (gross as well as net),
increasing their annual sales and enjoying positive cash flows. However, easy
access to institutional credits at reasonable rates of interest would enable them to
expand and grow faster.
Sources of Initial Capital
Data presented in Table 8 reconfirms SME women entrepreneurs poor access to
financial resources by revealing that overwhelming majority of them met their
initial investment capital requirements from their personal savings. The next
important source of help in this respect (40% and above) was from their family
and friends (parents, husbands, in-laws etc.) who extended financial support to
enable them to make shoe-string start. On the contrary, commercial banks appear
to have provided only 3 to 4 percent reflecting their inherent anti-small and antiwomen lending policy approach. This is an universal phenomenon everywhere
including in the developed countries. For example, inherent gender-bias, rigid
lending policies etc. are noted (Barbara, et. al. 2000) not only to discourage
women to borrow debt and equity capital but also suffer from severe finance gap
in Canada. In fact, the women entrepreneurs despite being prominently present in
the SME business landscape in both Canada and USA, they remain capitalstarved from banking sources because of gender disparity affecting commercial
bank lending policies.
Table: 8
Sources of Initial Capital
Sources of Initial
Capital
Self-financed
Family
Friends
Institutional sources
Percentage of Entrepreneurs
SMEF
BWCCI
SMEF09
(N=86)
(N=70)
(N=1026)
50%
61%
87%
36%
40%
43%
20%
3%
4%
46
69
11
21
11
27
10
6
-
7
-
Percentage of Entrepreneurs
SMEF09 BWCCI
SMEF
(N=1020) (N=100)
(N=73)
27.8
13
11
16
16
10
WEs in the rural areas are a district variety who operate mostly as self-employed
categories in the informal sector including both agricultural and non-agricultural
activities. These include homestead agriculture, livestock and poultry rearing,
17
18
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
fish farming, nursery and tree plantation, fishnet making, food processing, rice
processing etc. Considerable diversification towards more profitable activities
such as tailoring, cosmetics, jewelry trading etc. as opposed to subsistence
earning activities for mere survival is now flourishing because of support
services provided by the government under poverty alleviation programmes and
penetration of microcredit operations deep into the rural areas by the NGOs.
Nevertheless, the MEs are yet to make any notable inroad into large-scale
modern manufacturing activities where capital investments, high-end
technologies, strong management competence, greater gestation gaps, and high
risks and uncertainty are involved.
the bounds of critical values 0.15 and 0.46, our chi-squared value shows only a
38% probability that entrepreneurial success and qualification may be related.
That is, there is no significant difference in the proportion of more and less
successful entrepreneurs and their level of qualifications at the 0.05 level. Most
empirical studies (Ahmed, M.U. 1977 and the reference there) show that higher
formal education does not necessarily guarantee better performance of the
entrepreneurs. On the country, entrepreneurs with longer work experience in
similar activities and having trained in technical vocations tend to succeed more
than their counterparts with formal educational qualifications. Nevertheless,
higher formal education make entry into entrepreneurial endeavors easier and
have better access to information and knowledge.
19
Table: 10
Association between Level of Education and Degree of Success
Level of
Education
More Qualified
Less Qualified
Total
Chi2
0.2685:df=1
More Successful
Less Successful
Total
9
16
25
11
26
37
20
42
62
Whether there exists any association between firm size and profitability of firms
has also been examined. Subject to data availability in the SMEF source, we
classified enterprises into two groups, i.e. small with number of workers 1 to 49
per enterprise and large with 50 to 100 workers. Based on the rate of profits
(GP/TA) in the same manner as done for exploring the relationship between
enterprise profit rates and education levels, we divided the respondents into more
successful and less successful categories. The results obtained by applying chai
square tests are presented in Table 11. The X2 value with one degree of freedom
is not significant statistically at 0.5 percent level and this shows that rates of
profits do not vary with the size of enterprises. Hence, the null hypotheses of a
positive association between size of firms and rates of profits is rejected. The
policy implication of the finding is for encouraging growth of firms of all sizes
through creating level playing fields under an enterprise size-neutral policy
environment.
20
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
The bottom line, however, is to have access to necessary resources to execute the
business plan and efficiently and profitably run the business operations in a
business-friendly environment. We cite practical examples by summarizing the
personal experiences of two national award winning women entrepreneurs who
had won national SME Women Entrepreneur Awards given by the Small and
Medium Enterprise Foundation in 2010 and 2012 to substantiate our beliefs.
Table: 11
Association between Firm size and Level of Success
Small
Large
Total
Chi2
0.0134:df=1
More Successful
8
3
11
Less Successful
17
11
28
Total
25
14
39
Other than education, training and job experience, the most commonly identified
determinants of post-entry performance are noted by most studies referred earlier
to be the firm size, type of ownership and management, research and
development works, innovation etc. and external factors like access to capital,
information and knowledge, infrastructural facilities, regulatory framework, legal
and proprietary rights, and overall macroeconomic framework.
Overall most WEs of Bangladesh included in our sample from the SMEF source
tend to exhibit dynamism in many ways. Majority of them (50 to 60 percent) are
registered with legal bodies to obtain trade licenses required to avail business
development service facilities, use professional services (i.e. accounting and
management) for proper maintenance of their books and accounts (62%), have
memberships in chamber of commerce and industries and other relevant trade
bodies (30-40 percent), travel abroad to attend business fairs and trade-shows,
and also advertise their products for market promotion. Many WEs also seem to
be strongly motivated to increase productivity and enhance current market shares
by introducing simple innovations in product designs, technology and in
production processes for cost-savings and increased market competitiveness.
The sample respondents in the SMEF (2009) study were asked to give the
opinion about the qualities entrepreneurs should possess to become a successful
businessman. The replies received, based on their perceptions and experience,
though varied widely, had some common threads. For example, 60 percent of
them emphasized honesty, 55 percent mentioned hard work and 30 percent
each noted importance of education and knowledge, access to capital,
availability of skilled personnel, and good behaviour as necessary qualities
for excelling in business. A careful interpretation of these factors would seem to
indicate that the pivotal determinants of success in business run by the WEs in
Bangladesh require boldness to take risks, determination to face challenges, hard
work and integrity, entrepreneurial mindset, selection of viable projects, good
investment plans and proper training on production, management, and marketing.
21
Tanuza Rahman (Maya), the founder of Rong Handicrafts in Jessore town had won the Best
Women Entrepreneur award in 2010 from the SME Foundation. She entered into business in 1996
with an equity capital of only Tk. 2000. Working hard and diligently to become economically selfdependent, she succeeded in establishing Rong Handicrafts in Jessore town investing Tk
7,00,000 which is now reputed as a successful business enterprise. The employment size in 2010
was 2000 workers (which is planned to be raised to 5000 workers) and net profit earned the
previous year was Tk 32,50,000. This is a story of stunning success which was a result of untiring
hard work, determination and motivation to succeed. Mrs. Rahman claims herself to be not only a
successful woman but also a successful entrepreneur and successful person, capable of solving her
own problems by herself, and bring positive changes to the environment surrounding her.
Nilufa Yasmin: Symbol of Success through Quality and Determination to Fulfill Dreams
Nilufa Yasmin had won the SME Foundation National SME Women Entrepreneurs Award of Best
Women Micro Entrepreneurs Award in 2012. She is strong believer in achieving success fighting
against odds like poverty and unfavorable social barriers such as neighbors disapproval and
indecent remarks. Daughter of a poor father, she educated herself and received training side by side
to be able to start a business. She did it borrowing a little capital from her elder brother and started
S. N. Fashion involved in making womens dresses, block and batik, and embroidery works. The
business has rapidly grown in size and captured larger market share due to producing high quality
products. A loan from a Commercial bank at a concessional rate of 10% per annuam helped her
greatly in expanding her business. She now employs 600 women contract workers and 22 Group
Leaders. Besides the factory, she has two show-rooms and dreams to open show-rooms in each
Divisional cities of Bangladesh in the name of S. N. Fashion.
The two success cases are stories of exceptional entrepreneurial drive, hard work,
diligence and business acumen among women SME entrepreneurs of
Bangladesh. Their multiplicity in large numbers in the women community in a
conducive environment may make immense contributions to womens economic
empowerment, accelerate economic growth and national development. While a
good number in the SME sample seems to be upbeat having good business plans
for future growth and expansion, they are handicapped by resource constraints,
especially lack of capital, lack of skilled workers etc. and various socio-cultural
barriers creating gender-bias and related operational bottlenecks. We elaborate on
some of these issues briefly in the next section.
22
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
4.0
23
performance. A strong resentment was voiced by many WEs against the dual
roles as entrepreneurs and mothers which basically is a reflection of lack of
enough family support. In at east 30 percent cases, non-cooperative behaviors
and adversary attitudes of men, the offshoots of patriarchal family norms still
persist to create difficult challenges facing the women entrepreneurs. This
involves a significant policy challenge towards changing mens attitude towards
women and treating them equal socially and economically.
Table: 12
Problems faced by the Women Entrepreneurs in Running Their Enterprise
Types of Problems
Lack of capital
Difficulties in Marketing Products
Lack of Raw materials
Lack of skilled workers
Lack of family support and cooperation
Social barriers arising from patriarchal attitude
Lack of security outside home while moving
Lack of information, proper knowledge and
training
Payment of illegal tolls
Payment of bribes to government officials
Others (lack of womens freedom, religious
beliefs sexual harassment etc.)
Percentage of Entrepreneurs
SMEF09 BWCCI* SMEF
(N=1009)
(N=100) (N=88)
87
90
18
21
50
5
21
75
5
14
65
5
45
20
95
24
81
5
9
52
11
45
34
10
While we have noted a long list of problems facing the WEs, elaborating on them
all in details is beyond the scope of this paper. We cannot, however be oblivious
to the most intricate problems haunting women as entrepreneurs, which they face
while trying to access bank credits. That WEs face insurmountable difficulties to
obtain loans from banks due to inherent gender-bias and rigid lending policies,
especially of the commercial banks is well rehearsed in the literature. In all our
data sources, womens access to bank credits is found to be rather scantly,
varying between 10 to 15 percent or even less (5%). While all formal credit
24
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
institutions seek tangible collaterals for loans, they are unable to provide them
because of their limited property rights. In addition, the requirement for the male
spouses co-signature or a guarantee declaration from father/husband is also
difficult. These combined with cumbersome documentation requirements,
complicated loan sanctioning procedures, and many other gender based
complicacies (i.e. lack of mobility, their low level of awareness and access to
information etc.) tend to effectively exclude women from bank borrowing.
Besides credit constraints, women entrepreneurs also complain about serious
difficulties faced in selling their products. Lack of information about potential
markets, lack of experience in pricing their products properly, intense
competition among the WEs themselves because of overcrowding in the same
sectors, credit selling and delayed payments are the major marketing constraints
facing the WEs. Thus, a lot of promotion and development functions need to be
carried out at policy and operational levels to create an overall women-friendly
and women-supportive environment for sustained development of women
entrepreneurship in Bangladesh. We briefly focus on the current policy
environment for women entrepreneurship development and make some
recommendations based on our assessment of the policy and institutional
perspectives.
Current Policies and Institutional Environment
The importance of women entrepreneurship development as an integral part of
national development is being acknowledged and priorities in all Five-Year
Development Plans and relevant Articles of the Constitution by all successive
governments, especially since 1980s and beyond. The National Action Plan
(NAP) of the Implementation of the National Women Development Policy 2011
for womens development commits comprehensive upliftment of women
emphasizing equal rights, economic self-reliance, broad-based participation in
political, social, civil, economic, and socio-cultural spheres. The creation of a
separate Ministry on Womens and Children Affairs, formulation of National
Policy for Advancement of Women-2008, and Preparation of National Womens
Development Plans, emphasis on women entrepreneurship development as a
priority in the SME Strategy and Policy 2005 etc. are leading examples of
Governments commitment towards womens empowerment and socio-economic
emancipation. In addition, a number of UN Agencies, Development Partners,
INGOs and NGOs are executing various income-generating and poverty
alleviation projects and programmes aimed at poverty alleviation and womens
welfare targeting them as the main beneficiaries for quite sometime.
25
Side by side with the Government, private sector stakeholders such as SMEF and
Chambers of Commerce and Industries (especially BWCCI) and trade bodies are
trying to address important promotional needs in various ways. Preparation of a
revised Gender Action Plan (GAP) by the SMEF and various advocacy and other
promotional activities in collaboration with other stakeholders are notable
examples. In order to identify gaps and promotional needs of the WEs, the SMEF
also prepared concept papers and women entrepreneurs profiles to influence
Government policies towards accelerating and, retention and promotion of
women entrepreneurs. Various special measures declared in the Industrial Policy
2010 as outcomes of SMEF advocacy efforts include: ensuring WEs access to
land and finance in the Export Processing Zones, reservation of 15% of total
SME lending for WEs, and inclusion of representatives from Women
Entrepreneurs Association (WEA) in the National Council for Industrial
Development.
The most notable of the programme initiatives in this direction are the special
budget provisions and Bangladesh Banks Refinancing Scheme for Women
SMEs since 2007 targeted to address the financing problems of WEs. In 20122013 National Budget, the Government allocated Tk. 1.0 billion as a special fund
to promote development of women entrepreneurship. A particularly notable step
taken by the Bangladesh Bank through its Refinance Schemes is the directive(s)
to the commercial banks to prioritise lending to women entrepreneurs through
allocation and distribution of 15 percent of the loanable funds at concessional
rates of interest (10%) to the WEs. BB also took a number of non-financial
measures to accelerate SME financing and the constantly pursuing all scheduled
banks to comply with them. For example, establishment of dedicated women
entrepreneurs desks, distribution of small loans to women without collaterals,
arrange entrepreneurship development training for them, and ensure
dissemination of adequate information about availability of these special
facilities to women entrepreneurs are some of the important areas.
All these sound encouraging, but ground reality is considerably different because
of inertia of the commercial banks to practice women-friendly banking habits.
According to the BWCCI Survey Report (2007), only 35% of 113 respondents
heard about the BB Circular but not its contents since the banks did not
adequately disseminate the information about the services made available to the
WEs through the banks. From all the data sources consulted, it emerged clearly
that the WEs continue to remain marginal as customers of bank loans, suffer
from rigid regulatory barriers, and many other institutional rigidities and policy
induced constraints which act as serious deterrents to their effective participation
and efficient operation of their businesses. The need is, therefore, to take more
26
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
27
28
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
entrepreneurship among women are varied and range from economic necessity to
wanting to add to their family incomes and the desire for their own economic
security and self-independence. WEs in Bangladesh belong to highly educated
class, but they enter into business ownership with relatively less previous job
experience than men. However, higher level of education and post-entry
performance was not found to have any positive association in our analysis of the
relationship between the two variables. Nevertheless, formal education is
important as a determinant of entrepreneurial supply, access to knowledge and
information.
Overwhelming majority of the WEs in Bangladesh start as owners of micro and
small of enterprises mostly primarily in traditional fields of activities due to
difficulties involved in raising initial capital from formal financial institutions.
Indeed, this is one of the most serious hurdles facing WEs in Bangladesh as
bankers do not consider them credit-worthy and are reluctant to finance their
business operations on grounds of gender-bias. This inertia should be removed
through constant advocacy and motivational campaigns to change traditional
banking habits. In this context, a deliberate Government initiative to increase the
proportion of female Board members in the state-owned as well as private sector
commercial banks to a mandatory figure of at least to 10 percent may be of some
help.
It is important to note here that the two case studies of successful women SME
entrepreneurs winning Nation Women Awards from the SME Foundation are
ample proofs of WEs in Bangladesh being strongly motivated and highly
innovative and dedicated to excel in their professions and contribute towards
national economic growth. Comprehensive women entrepreneurship promotion
policies and programmes and their effective implementation through regular
monitoring and evaluation through mechanisms suggested in a previous section
seem to be the possible directions for future. We must remove the glass
ceilings effects of the present policies that are in place to ensure genderequality, remove gender discrimination, and promote women to the top
management positions in industries, corporations and all other fields of business
and economic pursuits.
Besides removing distortions in the macro policies (i.e. credit rationing, nontransparent regulatory barriers etc.) micro interventions such as introduction of a
national women entrepreneurship day, development of an effective mechanism
for implementing women entrepreneurship promotion policies and incentive
structures, formulation of a national women entrepreneurship development task
force etc. must be designed and implemented in a focused manner to enable WEs
to enjoy free entry and exit into the business world and carry on business
operations with equal rights enjoyed by their male counterparts.
Whatever their reasons for entering into business, various policy distortions
resulting from market imperfections and/or market failures (i.e. credit
rationing, non-transparent regulatory barriers, rigid labour market policies and
taxation rules, bureaucratic red tapes, etc.) act as serious hurdles to new firm
growth and survival and expansion of the existing firms. Besides difficult access
to capital, other challenges facing WEs relate to access to information and
knowledge, and access to business development support networks. There is thus
a loud call from the WEs for more formal training and education in business
management issues including marketing, financing, technology, and more
importantly for releasing them from dual responsibilities of running a business
and raising a family. The implication is for changing patriarchal family norms
and social practices.
While the WEs in Bangladesh demonstrate notable individual as well as
intergenerational occupational mobility to move into independent business, build
professional carrier, do well in business, being innovative and growth seekers,
the existing social and legal barriers are still too much primitive and nonsupportive to discourage women from taking up business as independent
vocations.
29
30
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
Asian Development Bank (ADB 2011), Program Completion Report, Small and Medium
Enterprise Sector Development Program (SMESDP), Bangladesh
Tulus, T. (2008), Women Entrepreneurs in Micro Small and Medium Enterprises: Some
Evidence from Asian Developing Countries, University of New South Wales at ADFA,
Australia
31
32
Women Entrepreneurship Development in the SME in Bangladesh: Prospects, Realities and Policies
Issue 01
1.0 Introduction
April 2014
33
34
explore how the linkage program among various ranges of enterprises through
subcontracting can be proliferated and strengthened. Deliberations of all these
aspects are beyond the scope of this paper. Some pertinent aspects and
conceptual ideas have been discussed. Table 3 shows some of the subcontracting
products of the surveyed industries. The methodology adopted in the research can
be summarized as follows:
35
maker pertaining to the concerned; thus the paymaster for its implementation
may be a person or a group or an organization or government itself. The 'owner'
can perform the job by himself or may get the job done by rendering contract to
some person/organization; then it is first contract in the contractual chain for the
particular job/project; such case is termed as 'contracting'. Thus when an 'owner'
of a job/project renders contract to someone to perform the entire or a specific
task of its kind, it is called contract or main contract and the person contracted is
termed as 'contractor' or 'main contractor'. In the contractual chain, when the
contractor' or 'main contractor' for his convenience, render entire or a specific
part of the job (which has been contracted from the 'owner') to other party, then it
is the second contract in the contractual series and is called as 'subcontracting'.
The 'main contractor' this way can subcontract out entire or one or more part of
his job to one or more persons/organizations. In the contractual chain, the
subcontractor can further subcontract out his portion of the job (or part) to other
person/organization for his benefit or convenience. Outsourcing is a method or
process of getting a job/service done by other person(s)/organization(s) from
anywhere outside the organization. A person / organization embarks upon
outsourcing when it becomes difficult for the organization to get the job/service
done by them or by subcontracting. There are a number of reasons for
outsourcing on the part of a parent organization. Some of them are lack of
required facilities, or if outsourcing is deemed to be convenient, or if incurring
cost is high, etc. General motive of outsourcing is to reduce cost; a firm resorts to
outsourcing when its in-house production/job accomplishment cost is high.
Generally, it is seen that subcontracting is more formal and possesses long and
good network with the parent organization. Subcontracting is found more in
manufacturing industries, construction sectors, etc. On the other hand,
outsourcing is seen to be intermittently done by an organization whenever needed
and found suitable; involvement is usually for shorter period.
4.0 Subcontracting in Small Engineering Industrial Sector in Bangladesh
Cottage, tiny and small engineering industries are called Light Engineering
Industries (LEIs), whereas cottage, tiny, small, & medium enterprises are called
SMEs (Small & Medium Enterprises). Thus LEIs belong to a sub-sector of
SMEs. The LEIs & SMEs can cater as subcontracting co-partners to larger
industries under subcontracting scheme. The LEIs as supportive industries to
both medium & large industries play a momentous role by rendering services
both as forward & backward linkages. In the process of industrialization of
Bangladesh, the role of LEIs & SMEs as linkage industries & supportive
industries, mutually as well as to the large industries is enormous. They can play
36
37
clustering, SMEs can jointly undertake functions where economies of scale arise.
For instance, information collection & distribution, new entrepreneurship,
collection of advanced & appropriate technologies and their application, training
workers, designing new products, conducting quality control, advanced
marketing, research activity, storing and transporting goods etc. Subcontracting
to large firms is an effective way for SMEs to build on their advantages. For
support services to create inter-firm linkages or subcontracting, it is essential that
parent firms and subcontracting firms may be identified. There are mostly three
types of sub sectors as stated below, in which SMEs are active in subcontracting
operation.
(a) Machinery and equipment.
(b) Chemicals, electrical and electronic products and transport equipment.
(c) Textiles, furniture and food processing industries.
In all these sub-sectors, parent organizations exist, which are subcontracting their
components or materials production to vendor industries or subsidiary industries.
These subsidiary or subcontracting firms, specializing in production of one
component or intermediate good are SMEs. Hence one major source of growth of
SMEs is the development of subcontracting firms.
6.0 Reasons for Subcontracting
The finished product usually consists of various parts and components. Facilities
for some of the production of some of the component do not exist in the parent
organization. The costs of establishing separate manufacturing capabilities for
these components do not always justify themselves. Thus it is more desirable for
firms to establish subcontracting agreements. Since parent firms have to face
severe competition, subcontracting agreements to reduce costs becomes a
necessity. Beside this, the subcontracting firm possesses greater production
flexibility. They can add a new plant and can retain their labor force, may be by
adapting through training, in new technologies. Subcontractors are generally used
to specialize in the production of one or few components; hence they achieve
greater production efficiency and produce high quality products. Mostly, large
industries do not want to retain all the tasks and in favor of shrinking its area of
production to avoid management hassle though the industry do not run in short of
capital for neither investment nor it is devoid of technological capability. If large
firms produce all their components for the finished product, then larger labor
force has to be engaged. This can create labor management problems. In order to
avoid such problems, it is preferred that several components may be distributed
38
Electrical Add on
Raw Material
Casting
Machining
Heat
Treatme
nt
Surface
Treatment
Mechanical Assembly
Quality Testing
Modality of Subcontracting
Subcontracting
Enterprise
Machinery
Component(s)
of Production
Parent
Enterprise
Specific
Figure 2: Modality of Subcontracting
39
40
alleviation. The SMEs policy and strategy 2005 identified 11 no. of Booster
sector of SMEs. A recent estimate of IAT, BUET reveals that there are about
98,750 small industries (up to June, 12), 6,40,939 nos. of cottage industries (up to
June,12), in various sectors in Bangladesh. No of Employment is 32.28 lakh (up
to June,12) in SMEs sector. Presently, a large number of machinery and spare
parts are produced locally by the LEIs. SMEs play a vital role in the socioeconomic development of the country. Manufacturing and processing activities in
small and micro engineering enterprises contribute to the livelihood of huge
number of poorest citizen. It was declared a 'Priority' sector for development in
the mid-eighties (GOB, 1986). Subcontracting scheme in SMEs can be used as
tool that has immense potential for the growth of the sector. Viewing the
employment potential and its particular suitability for development, special
emphasis on subcontracting should be placed in government policies to produce
rapid growth in this sector. In the country, as labor cost and cost of infrastructure,
electricity, gas & water are cheaper than other countries; the cost of production
obviously can be competitive if management & marketing support in the form of
subcontracting can be provided in an appropriate planned manner.
9.0 Subcontracting Scheme of BSCIC
Due to many limitations and hindrances, the entrepreneurs of SMEs do not
succumb to be interested in achieving export market. Moreover, the influence in
the context of market economy & liberalization and backwardness of product
technology & production process, in many cases, the local products are facing
fierce competition even in the domestic market. Sometimes government has
taken some measures but overall situation was not improved. After launching
subcontracting program by BSCIC in 1986, the LEIs got comparatively more
privilege in the local market than before. Under the program, firstly the suitable
LEIs were selected and enlisted under subcontracting scheme. Later, linkages
were made between the LEIs and medium and large industries. Table 1 provides
number of the sub-contractors enlisted by BSCIC (1995).
41
Liaison with large facilities and liaison between small a large firms
Information and assistance in tendering for orders;
Marketing and design services.
42
A gazette notification was issued in 1989 that described rules and regulations of
the linkage stating that machinery and spare made of any metals, plastic,
ceramics, can be supplied to the State-Own ed-Enterprises (SOEs) by the Small
and Cottage Industries (SCIs) under subcontracting scheme. Under the
jurisdiction of this gazette, the enlisted light engineering industries (LEIs) in
BSCIC supplies various products (such as spare parts, equipment, small & capital
machinery) under subcontracting scheme. Table 2 provides a summary of
subcontracting arrangements made by BSCIC up to 1992 since its introduction of
such function. These LEIs, which are scattered all over the country, supply their
products to agriculture sector, automobile sector, gas sectors (Titas, Bakhrabad,
Jalalabad gas company), Sugar & Food Industries Corporation, Bangladesh
Railway, BRTA, BRTC, BIWTA (for ferry), BIWTC, Port Authority, WASA,
T&T, PDB, Public Health Engineering, Civil Aviation, Bangladesh Biman,
garments factory, pharmaceutical Industries, all fertilizer & chemical industries
under BCIC, industries under Engineering Industries Corporation, all industries
under BTMC, Jute Industries Corporation, paper & cement mills, other small,
medium & large industries, equipment for various laboratories, R&D institutes,
etc. Thus, firstly, the import substitute parts/products are saving foreign currency,
secondly, generating employment opportunity and thirdly, playing effective role
in technology assimilation. About 600 spare parts & other products (including
piston, liner) are supplied by LEIs to Bangladesh Railway. If some supportive
measures can be provided, LEIs are deemed to be able to supply 70-80% of the
International Journal of SME Development
43
Under the scheme, the enlisted SCls are able to produce machinery and spare
parts of large industries. Lack of investment and uncertainty of purchase by
consumer organizations give rise to deterrent circumstances in commercial
production of these products by the SCls. They are not getting required work
order from large industries especially from SOEs. Thus these SCIs can not run in
its full capacity in spite of possessing potentiality, expertise and efficiency.
Various steps are needed to upgrade the quality of the products and
simultaneously reducing the cost as well. Among other steps, subcontracting can
play a key role in merchandizing the products. To utilize the prospect of LEIs,
subcontracting scheme was launched. During 1986-91, as a part of marketing
activity, BSCIC arranged subcontracting orders amounting to Tk. 380.3 million,
while distributed credit for such purposes amounted to Tk. 11.25 million.
Marketing support such as subcontracting is an important type of support service
provided BSCIC. Unfortunately, little was known until recently about the effect
of such support. But it is obvious that Subcontracting can playa significant role in
assisting small firms to market their products. According to BSCIC annual
report, there has been an annual growth in the amounts of work order, 63.8
percent, and the number of small enterprises, 18.58 percent receiving such
marketing support during 1986-91 (GOB, 1992).
One of the very important aspects of LEIs is to serve the needs of local
consumers by supplying a wide range of products. In Bangladesh, over 90 per
cent of LEIs serve the local needs of the people and thus, they are engaged every
day in every economic sphere of the society. Moreover, it is revealed that there
are strong backward and forward linkages between the LEIs and other sectors
(such as agriculture, automobile, transportation sector) of the economy in
Bangladesh. Day by day this number of subcontracting LEIs is increasing. These
industries supply their diversified products, machinery and spare parts under
special arrangement of subcontracting scheme to different organizations, sector
corporations, and various sectors of the country.
10.0
In order to develop subcontracting among the large and small enterprises among
various countries (e.g., SAARC, BIMSTEC, ICO, other friendly countries etc.),
Subcontracting Exchange Schemes can be launched. Professional Associations
and National Chambers can set-up such an establishment. They may collect
information about engineering industry components, and what vendor industries
44
can provide such components. These way inter-firm linkages can be expanded
among the countries. The activities of these organizations for interlink ages
among small & medium enterprises and assistance to these enterprises should be
properly identified. Thereafter program of maximum utilization of their services
may be formulated. This will lay a strong foundation for promoting effective
cooperation among small and medium enterprises among the various countries. It
is generally observed that through subcontracting with large firms, small
industries possess stable marketing. Hence, linkages with firms which demand
business products is highly essential.
11.0
Division/District
No. of
Small
Industries
Enlisted
in BSCIC
Sl.
No.
A. Dhaka Division
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Links with big firms or with the network of SMEs are becoming a crucial issue.
Links with big firms are today usually in the form of subcontracting. In the case
of independent SMEs, their business associations are becoming indispensable.
Both these institutional forms make possible the process of 'learning-byinteracting'. Since technology is in essence an intangible asset, the market system
is not the best mechanisms for its acquisition ('market failure'). The network
production systems seem to have advantages in the learning process. The
reduction of the individual risk and the minimization of transaction costs are the
consequence of the network's superior learning capacity. This is confirmed by the
current processes of 'quasi disintegration' of big and multinational companies.
Instead of grouping, divisions under the strict control of a central office, big
firms form conglomerates of independent firms. Firms in these groups share
information more freely amongst themselves than with outsiders, but retain
certain autonomy. The classical case of Japan confirms the importance of close
links between big and small firms. The developed system of subcontracting
permits big firms to have a high degree of flexibility because SMEs are able to
follow them in permanent changes. Due to strong contracting, sub- contracting
and integrating links, the protection of, for example, Japanese industry was not
dependent on tariff barriers or on the yen depreciation.
Dhaka District
Gazipur District
Manikganj District
Narayanganj District
Norshingdhi District
Tangail District
Mymensingh District
KishoregnjDistrict
Faridpur District
Gopalganj District
469
38
1
17
3
6
2
1
3
1
1.
2.
3.
4.
5.
6.
7.
8.
9.
B. Chittagong
10.
Division
11.
1.
Chittagong District
145
12.
2.
Rangamati District
13.
3.
Coxbazar District
14.
4.
Comilla District
11
5.
6.
7.
Braharnanbaria
District
Chandpur District
Noakhali District
8.
Feni District
9.
Sylhet District
1
2
1.
2.
3.
1.
Division/District.
C. Rajshahi
Division:
Rajshahi District
Chapai Nawabganj
District
Natore District
Naugoan District
Kushtia District
Bogra District
Pabna District
Serajganj District
Rangpur District
Nilphamari
District
Lalmonirhat
District
Dinajpur District
Thakoregoan
District
Phanchagar
District
D. Khulna
Division
Khulna District
Satkhira District
Jessore District
E. Barisal
Division:
Barisal District
Total
No. of Small
Industries
Enlisted in
BSCIC
11
1
2
1
12
24
6
2
4
7
1
3
1
1
55
3
11
5
871
45
46
Year
1989-90
1990-91
1991-92
1986-92
150
148
163
544
109
118
157
435
134
178
94
755
29
15
189
121
160
81
709
466
207
86
1861
359
452
343
3455
51
68
61
295
345
141
100
1223
15
52
96
53
550
Types of machinery
/Spare Parts
200
600
50
100
550
550
200
50
800
150
100
15
350
50
50
3815
12.0
Sub-Sectors
47
48
13.0
Survey Data on Subcontracting Aspects
A survey was carried out on 25 nos. of selected industries in the engineering
sector. A summarized tabular scenario of subcontracting is shown in Table 4. The
complicated component that is difficult or not possible to make either by the
industry or by sub-contract is usually purchased as finished item or BOF items. A
number of spare parts of the machinery of the industries are produced in a routine
& scheduled manner by the sub-contractors. The industries that do not have
casting facility get the casting & molding job done by other industries having
foundry facility. The foundry workshops usually provide material as well. Some
specific industry who are particular about quality of the product, supply raw
materials of their own to the foundry to ensure quality of raw material. In that
case, only casting & molding charge is paid by the customer industry. In general,
major casting that is subcontracted is of cast iron (C.I). Twelve industries were
found to do C.I. casting by rendering sub-contract (Table 3). Beside c.1., other
casting such as mild steel (M.S.), aluminum, brass, gun metal, are also done on
subcontracting basis. Plastic and rubber are also molded on subcontract basis.
Two industries render subcontract on plastic items, one industry on rubber items
and other two industries on wooden components. Aluminum and brass casting
are done by three industries by rendering sub-contract. Some of the items that are
made on subcontracting basis are copper alloy bush, guide pin, wood component,
plastic component, spare parts, etc. Plastic three industries, rubber one industry,
two metal-based industries and wooden component two industries render subcontract. For die casting, die is made on sub-contract basis. One surveyed
industry was found to make die for other industries on sub-contract. Some special
machined parts were found to be done on sub-contract (from mainly Dholai
Khal) by five industries. Some surface treatments such as electroplating,
galvanization are done on sub-contract basis by two industries. This is done for
the industries that make laboratory equipment & machinery. Three industries
were found to get the heat treatment done from St. Joseph Institute, Dhaka, one
from BIT AC, on sub-contract basis. Two companies were found to get special
milling and gear cutting from other industries. Three industries for some other
special work such as polishing, hardness testing, spray painting, etc. were found
to get done on sub-contract. Two industries were found to get M.S. forging work
done from other workshop on sub-contract basis. One enterprise producing PVC
pipe extruder renders subcontracting for his electrical panel, heater making, etc.
Sewing machinery Company. Government policy was critical but largely is so far
as it protected sewing machines for home use from foreign units and made
Singer's entry into the Taiwan market conditional on Singer's establishment of
subcontracting network, the importance of Singer as a catalyst is indisputable and
the strategy Singer pursued to comply with government requirements may prove
instructive to policy makers in Bangladesh. Before Singer came to Taiwan in
1963, there already existed a group of small sewing machine producers. The
sewing machine industry, however, was stagnant. Government approved Singer's
investment for two reasons: First to save foreign exchange (local manufacturers
could not produce certain types of sewing machines), and secondly, Singer as a
technological leader could improve the quality of local parts if they were locally
produced. The government imposed the following conditions in approving
Singer's investment, in exchange for which Singer received the same 33% tariff
that other sewing manufacturers enjoyed. The Singer subsidiary should procure
83 percent of the required parts from local parts manufacturers a year after
establishment: provide them with standard blue prints and assign experience
engineers to help establish work methods, prepare material specifications, and
inspect finished products.
Collaboration in Strategic Alliances
Acquisition
AvniY
Joint Venture
h_ D`vM
49
Contracted
Coordination
Pzwe mg^q mvab
Single
Transaction GKK
Av`vb c`vb
Sub-Contracting
mve-KUvws
Strategic Alliances
KkjMZ gx
14.0
Learning from Foreign Experience
The story of how subcontracting was successfully developed in Taiwan is very
interested indeed. Almost all observers in Taiwan agree that the foundation for
subcontracting in the general machinery sub-sector were laid by the Singer
Merger
GKxKiY
50
In the neighboring country India, there are certain products that are reserved for
small-scale industries. As scheduled subcontractor, these small industries
produce the products for the parent industries. In Japan, almost all large &
medium scale Industries have cluster of industries that produce & supply
product/component only for their parent industries under long term agreement.
Product/components are produced under 'Bundling System'.
Industry
1-11
1-12
1-13
1-3
1-4
1-5
1-6
1-7
1-8
1-9
l-l0
Subcontracting Products
No item is sub-contracted
Copper alloy bush
Wood component
Plastic component
Some spare parts (from Dhaka & Madhabdi)
Motor, electrical accessories, bearing
Some spares (machining)
Casting (10 tonlyr.) (C.I)
Motor electrical accessories, bearings)
Some spares (machining)
Casting (30 ton/yr.) (C.I)
Motor electrical accessories, bearings)
Casting (18-20 T/yr.) (C.I)
Motor 30 no./ set of machine, 3-25 HP, bearing, net,
burner, electric fittings, meters etc.
Some machined spares (Dhlaikhal)
Casting (C.I) (Dholaikhal)
Boiler burner parts, water treatment resin and media
(USA, France), various instruments, motor (0.5 to 7.5 H.P.,
Singapore),
activated carbon (India) electrical
accessories)
(I.6 ton/Month) (C.I.) (C.I. aluminum and mainly brass)
Motor, bearing, V -belt, circuit breaker
Gunmetal brass, plastics, rubber items (16 ton/yr.)
Motor, bearing, electrical accessories
Electroplating & galvanizing
Heat treatment from St. Joseph School
M.S. forging (5 ton/yr.)
Switch, circuit breaker, relay pressure gauge, testing equipment,
motor, electrical accessories
Casting (C.I) 3-6 ton/day
Sub-contract
Supply
Sub-contract
Sub-contract
Sub-contract
Sub-contract
BOF Items
Subcontract
Subcontract
BOF Items
Subcontract
Subcontract
BOF Items
Subcontract
BOF Items
Subcontract
Subcontract
BOF items
1-14
1-15
1-16
1-17
1-18
1-19
1-20
1-21
1-22
1-23
1-24
1-25
Subcontract
BOF item
Subcontract
BOF item
Subcontract
Subcontract
Subcontract
Subcontracting Products
Ball bearing and shaft, motor, electrical accessories
I. Parts of die, guide pin, bush, polishing
No item is sub-contracted
C.I. casting
Heat treatment
Painting
Hardness testing
Some spares
Motor, engine and electrical accessories
Casting C.I.
Wooden component
Gear cutting
Motor. electrical accessories
Casting C.I. (50 kg/month)
Electrical panel, heater making, milling (gear cutting)
Motor, electrical accessories
Some parts
Screw
No item is sub-contracted
No item is sub-contracted
Casting, AI, Brass and C.I.
Electrical accessories, and Motors
No item is sub-contracted
Casting C.I., brass, aluminum
Sheet cutting & bending
Electrical accessories, Motors, electrical control, display
Casting C.I., copper alloys
Grinding and surface treatment
Heat treatment (from BITAC)
Casting
Forging
Heat treatment
Electroplating
Sub-contract
Supply
BOF Items
Subcontract
Subcontract
Subcontract
Subcontract
Subcontract
Subcontract
BOF Items
Subcontract
Subcontract
Subcontract
BOF Items
Subcontract
Subcontract
BOF Items
Subcontract
BOF Items
Subcontract
BOF Items
Subcontract
Subcontract
BOF Items
Subcontract
Subcontract
Subcontract
Subcontract
Subcontract
Subcontract
Subcontract
BOF item
Subcontract
51
52
that the situation was caused by obtaining the information on production capacity
needed in the near future too late. It is obvious that smooth cooperation between
sub-contractor and the main company needs constant care.
One special problem with subcontracting is to update the proper price of the
goods. In the local area, it is not possible to find competition every month or year
to find the market price. The tendency is towards long-term co-operation. That is
why both sides should agree the price according to methodological developments
over time. The problem was solved using weekly or monthly visits to subcontractors to give them advice on the latest methodological developments, and
to learn about current developments on the sub-contractor. The sub-contractors
are ranked in categories I. II and III according to their service level (quality of
parts. accuracy of delivery time. etc.). If a sub-contractor stays at the lowest
level, it is aware that it could be replaced if a better supplier is found. It is an
indicator that the company has started to look for a more reliable partner and
there should be some improvements in this sub-contractor's operation.
15.0
(2)
(3)
(4)
(5)
(6)
53
Policy Recommendations
54
(8)
(9)
(10)
(11)
(12)
55
(13)
(14)
(15)
(16)
(17)
17.0
Conclusions
56
themselves. The large units in the public sector were designed to produce almost
all the manufactured parts in-house. Even within the public sector units, there is
strong resistance to subcontracting. The impediments to the growth of metal
industries were identified in the mid-sixties as the lack of suppliers of quality
casting, forging, heat treatment, surface treatment and jigs and fixtures. The
objective behind creation of facilities in Bangladesh Machine Tools Factory
(BMTF) for such processes was to provide services to other industries as well.
However, in spite of the fact that BMTF was launched about 23 years back, it
failed to provide these services to outside units, partly due to lack of marketing
efforts. BIT AC was established in the sixties to render assistance to LEIs.
According to government notification (Ministry of Industries), it is mandatory
that sector corporations should render at least 20% of its work BITAC. Thus
BITAC is presently a competitor to LEIs on unleveled ground. The
subcontracting relationship being developed between sister organizations of
many private group industries developed recently appears to be promising one.
Many manufacturing units have also been found to subcontract out parts to other
workshops. Such subcontracting has been necessitated more due to limited
capacity rather than reasons of specialization. These units have been able to
manage orders for pumps which much exceed their capacity. While it is desirable
for the large public sector industries to develop their own subcontract supplier,
the procurement system does not permit them to promote a few selected firms
and provide technical and financial assistance to them. The operation and
management of the public sector units do not generate enough confidence in the
private entrepreneurs to invest in parts whose client is exclusively one
manufacturing unit.
Government should formulate and implement policies so that state owned and
other large enterprises give priority to local Engineering Industries (EIs) while
purchasing spares and machinery. BSCIC subcontracting arrangement, which
was designed to achieve this, should be rejuvenated. While implementing large
projects, de-packaging should be done to identify the engineering components
that can be done locally. Local EIs/LEIs, individually or in consortium, should be
given priority to participate in bidding for the appropriate components of the
projects. Some of the local EIs are reported to have worked already for
international firms as sub-contractors and proven their capabilities. Local LEIs
often complain that concerned personnel of big state-owned and private
enterprises are more interested to buy machinery and spares from abroad because
of illegal monetary gains. Buyers, on the other hand, complain about poor quality
of LEIs products. The government, as a prime stakeholder, has a definite role to
play in bringing together not only these two parties but also other stakeholders
57
58
1. Introduction
Bangladesh is a country of natural beauty. She is blessed with endowment of
almighty. The seven, Bangladeshi divisions offer a variety of natural and cultural
micro-destinations suitable for tourist attractions. The tourism industry is a sector
which effect the entire society in many ways and has a profound impact on our
social, cultural and economic life Negrusa and Gica (2008). At the world level,
the industry of tourism and travels represents the most dynamic sector of activity
and, at the same time, the most important generator of jobs (Tiberiu, 2008).
Travel and Tourism contribute to the country in different sectors of economy and
society. As per World Travel and Tourism Council (WTTC) report (2011), the
total contribution of travel & tourism to GDP was BDT 381.6bn (4.7% of GDP),
and was forecasted to rise by 7.6% in 2012, and to rise by 6.5% pa to BDT
773.0bn in 2022. In 2011, travel & tourism directly supported 1,329,000 jobs
(1.9% of total employment). This was expected to rise by 3.6% in 2012 and rise
by 2.9% p.a. to 1,840,000 jobs (2.0% of total employment) in 2022. Despite of
59
60
4. Literature Review
Tourism is one of the largest industries in the world which is an important source
of income, employment and wealth in many countries (Anonymous, 2002).
Tourism has been changed into a worldwide industry and the competition
between tourism destinations in the world is increasing. Growth of tourism is due
to the performance of global transportation and, consequently, reduction of costs
of transportation and growth welfare of a major part of world population. United
Nations World Tourism Organization (UNWTO) estimated that international
trips of 565 million in 1995 would reach to more than one and a half billion in
2020 (Anonymous, 1999). While human resource development issues are
fundamental to improving SME competitiveness, an SME development strategy
should also address issues such as sustainable use of natural resources.
Agriculture and agro-processing, including use of forest and marine resources
and tourism figure predominantly among the industries where developing
countries have comparative advantages (Anonymous, 2004). Tourism is seen to
be an important part of the economic agenda, the arguments advanced in favor of
targeting small tourism businesses are similar to those for SME in general,
namely: their ability to create new jobs at a time when major operators are
downsizing; improvements to industrial relations and working environment;
diversified and flexible structure; stimulating competition, leading to an energetic
enterprise culture; and their creativity in introducing new service products. They
can also be part of the output experience for the tourist through their ability to
effect introductions to their neighbors, advising visitors about itineraries,
providing narratives on local history, culture, folklore and landscape, as well as
playing an active role in the advancement of the community (Stephen, 2002).
The Romanian tourism is largely dominated by SME, with more than 99% of the
firms employing fewer than 250 people. Putting aside the fact that in many
remote and rural areas, as well as urban locations, tourism is seen to be an
important part of the economic agenda, the arguments advanced in favor of
targeting small tourism businesses are similar to those for SME in general
(Negrusa and Gica 2008). Because the tourism market will have a higher level of
integration, it will become more important for SME to match different quality
levels. Tourism SME can also be a source of innovation and help shape
destination development. There are celebrated cases internationally where small
businesses have created an identity for a destination that has subsequently been
harnessed by local municipalities. Moreover, many municipalities in socially or
economically deprived areas of most established member states have also
developed expertise in accessing European Union (EU) resources to support
61
62
63
64
others types of business. Here the Table:1 shows that only 1.20 % of the female
involve with the accommodation business and 4.8% of the female are involved
with restaurant business and the rest are dominated by the male . The survey
indicates that the female contribution is less than expectation.
Table: 1. Male and female participation in different types of business
Types of business
Transportation
Restaurant
Accommodation
Recreation
Others
Total
Gender of Respondent
Male
Female
11
0
19
3
4
1
5
0
17
0
56
4
Total
11
22
5
5
17
60
Our Survey indicates that 38% of the SME owners are engaged with micro
business, 22% with cottage industry, 24% with small industry and the 14% of the
people are engaged with medium size enterprises.
9.6%
Male
Male, 90.4%,
16%
Sm
Female
24%
Cot
22%
Mi
Our survey indicates that 90.4% of the owners are male and others 9.6% female
are involved with SME in tourism sector. People are involving with different
types of business like transportation, restaurant, accommodation, recreation and
65
The initial capital is a major fact to start the business. Our survey finds that most
of the initial capital comes from the personal and family sources following the
other two sources which are financial institutions and friend. Thirty seven percent
respondents said that they started the business with their own capital and 36%
started business with the capital from the family, 14% owners started the
business borrowing money from friends and others got help from the financial
66
13
Family
Friends
37
14
Own investment
36
Globalization has made the world like a village in which we cannot ignore the
modern information technology (IT) in developing our business by promoting the
business through IT and adopting with the modern IT facilities within business.
67
68
The figure indicates that 73% of the respondents have no formal training
regarding their business operation, management, promotion and use of IT. The
training can help the owners to gain competitive advantage which is always
lacked by our SME owners in tourism sectors. The training materials have been
designed so that tourism SME who attend workshops or access the Toolkit
directly are able to create a set of plans to take a more strategic outlook on the
development of their business. For example, in each module SME can develop a
business plan, a marketing plan, an IT and ecommerce strategy, and a set of
policies and plans to improve their environmental practices. It is obvious that to
be a successful entrepreneur education and skill are the main component.
Entrepreneurs must have knowledge about the industry, managerial skill and
technological knowledge to be a successful one (Anonymous, 2012)
Our survey reveals that the accessibility of the SME owners to the financial
institutions is very difficult .The respondents say that sometimes they have to
follow a long and formal procedures to get the loan from financial institution that
ultimately creates obstacle to get the loan from the financial institutions. The
following figure Indicates that 83.33% of did not get the financial support from
any financial institutions as for not matching their requirement. Reliance on the
financial institutions to get access to fund is not all that popular, as the financial
intuitions put SMEs in tight credit constraints due to stringent collateral
requirements (Meagher, 1998).
% of
Responses
19.2
17.1
7.9
% of
Cases
85.2
75.9
35.2
14.2
5.8
6.3
6.7
63.0
25.9
27.8
29.6
4.6
4.6
.8
1.7
20.4
20.4
3.7
7.4
1.7
2.9
3.8
2.9
7.4
13.0
16.7
13.0
100.0
444.4
Total Responses
69
70
7. Findings
A. Majority people are engaged with cottage and micro business where
involvement with small and medium enterprise is not significant.
B. Women participation in tourism sector is at the unexpected level
comparing to other sectors.
C. The owner of the SME in tourism industry has limited knowledge of
their business regarding business set up, management and operation.
D. Promotional knowledge, skill and facilities are limited to the SME
owners in tourism industry.
E. Knowledge of information technology as well as application of IT in
tourism sector is scarce.
F. Procedures of tourism SME loan are long and difficult.
G. Training is not provided by the respected authorities to SME owners and
employee in tourism industry.
H. Young and educated entrepreneur are not involved in tourism SME like
other SME sectors.
I. Absence of community based tourism is in our country.
J. Long and difficult procedures to access to the finance.
Strongly Agree
Strongly Agree
Neutral
Disagree
Strongly disagree
Total Respondents
Community
based tourism
6
3
7
16
28
60
Cooperative of
tourism
0
4
2
17
37
60
71
8. Conclusion
SME play prominent role in the socioeconomic development of the country
especially to the developing country like Bangladesh in which some of the
prospective sectors like tourism industry have not explored to the expectation.
Tourism is a multidimensional service industry belong some direct and more
indirect sub-sectors. So, well-developed tourism SME is a prerequisite to attain
higher growth of tourism. The prospect of SME in this sector is huge through
which development of entrepreneurship, enhancement living standard of the local
rural people, and poverty reduction by engaging more people in the industry is
possible. But the diagnosis of pros and cons of tourism sector can link to
investment, skills, unexploited potential of technology, and unawareness of the
local people regarding tourism.
72
9. Recommendations:
References
Afrin, S., Islam, N., and Ahmed, S. U. (2008). A Multivariate Model of Micro Credit and
Rural Women Entrepreneurship Development in Bangladesh, Intl. J. Bus. Manag., Vol. 3
(8), pp: 169-85.
Afsaneh, P., and Reza, D. Tourism SMEs Development: A Case of Iranian Tourism
Cooperatives. http://www.wbiconpro.com/486-Afsaneh.pdf accessed on 17th january
Ahrne, G. (1994). Social Organizations: Interaction inside, outside and between
organisations. London: SAGE Publications.
Anonymous (2007). Cuba travel and tourism: Navigating the path ahead. The 2007
Travel & Tourism Economic Research, pp:10-20.
Anonymous (2012). WTTC Travel & Tourism Bangladesh Economic Impact: 2012.
Anonymous, (2002). United Nation Environment programme (UNEP), 2002b, Quebec
Declaration on Ecotourism. www.uneptie.org/pc/tourism/ectourism/wes.html.
Avramescu, T. C. (2008), Romanian Tourism: A Regional Approach,Studia Universitia
TIS Babes Bolyal,Negotia,
Buhalis, D., and Cooper, C. (1999). Competition or Co-operation? In Embracing and
Managing Change in Tourism, edited by Eric Laws, Bill Faulkner and Gianna Moscardo.
London: Routledge, pp: 324-346.
Choudhury, T. A., and Raihan, A. (2000). Structural Adjustment Participatory Review
Initiative Bangladesh, Study Theme 2(C): Implications of Financial Sector Reforms. The
World Bank, Government of Bangladesh and Civil Society.
Greffe, X. (1994). Is rural tourism a lever for economic and social development? In B.
Bramwell & B. Lane (Eds.), Rural tourism and sustainable rural development, Clevedon:
Channel View Publications, pp. 22-40.
Gretzel, U., Yuan, Y. and Fesenmaier, D. (2000). Preparing for the new economy:
advertising strategies and change in destination marketing organizations. J. of Travel
Research, 39(2), 146-155.
Haque, E. A. K. and Mahmud. S. (2003). Economic Policy Paper on Access to Finance
for SMEs: Problems and Remedies, The Dhaka Chamber of Commerce and Industries
(DCCI),The Center for International Private Enterprise (CIPE)(CIPE is an affiliate of the
U. S. Chamber of Commerce, Washington, D.C., USA.
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74
Haque, M. and Itohara, Y. (2009). Women Empowerment through Participation in MicroCredit Programme: A Case Study from Bangladesh. J. Soc. Sci., 5(3): 244-250.
Henthorne, T. and Miller, M. (2003). Cuban tourism in the Caribbean context: A regional
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Shamsuddoha, M. (2004). Sustainability of Tourism Industry: Bangladesh Perspective Conference on Technology and management for sustainable exploitation of Minerals and
natural resources
Sharpley, R. and Telfer, D. J. (2008). Tourism and Development, Routledge, pp .205232.
Shaw, G. and Williams, A. (1990). Tourism, economic development and the role of
entrepreneurial activity in Progress in Tourism, Recreation and Hospitality Management
(eds), London: Belhaven Press.
Tambunan, T (2009). Women entrepreneurship in Asian developing countries: Their
development and main constraints, J. Dev. Agric. Econ., 1(2): 27-40.
Jensen, J.F. (2001), Tourism and Employment: Improving rining in order to upgrade
skills in tourism industry:P;13.
Wang, Y. and Fesenmaier, R.D. (2006). Identifying the Success Factors of Web-Based
Marketing Strategy: An Investigation of Convention and Visitors Bureaus in the United
States. Journal of Travel Research, Vol. 44, No.3, pp.239-249. Http://jtr.sagepub.com
Wanhill, S. (2002) Sustaining tourism SMEs. VII Congreso Internacional del CLAD
sobre la Reforma del Estado y de la Administracin Pblica, Lisboa, Portugal.
White, S. and Juan, C. (2002). Enabling Small Enterprise through a Better Business
Environment: Donor Experiences in Supporting Reforms in the Business Environment,
Committee of Donor Agencies for Small Enterprise Development, Working Group on
Enabling Environment, version 2, November, Washington D.C.
www.oecd.org/cfe/tourism accessed on 2nd February, 2013 for. Fostering SMEs and
entrepreneurship development in support of alternative tourism in Bulgaria by Thomas,
R.
www.iiste.org accessed on 23rd February, 2013
75
76
Non-availability of good quality molds is a big constraint in plastic sector. The country
lacks both the required machineries and skilled man-power in this regard. Upgradation
of mold design facilities of BITAC is recommended. BCSIR can upgrade its Polymer
Division for international certification of plastic products.
Plastics are versatile materials. They have good physical properties and economic
features such as light weight, attractive color, ease of processing, non-rusting property
and low cost. As a result, many house hold and technical items which were used to be
made of metal, wood, clay, etc. are now being made of plastics. Although the per capita
consumption of plastic in Bangladesh is 5 kg per year which is quite low compared to
the world average of 30 kg per year, it is expected to increase to 17 kg per year in 2020
current average in ASEAN countries.
The plastic industry has emerged as a vibrant industrial sector in Bangladesh during the
last two decades. At present there are 3000 plastic manufacturing units, 98% of which
belong to Small and Medium Enterprises (SMEs). The plastic sector is also one of the
thrust sectors in the Industrial Policy - 2010. Present domestic market size is Tk. 7,000
crore. The plastic sector provides employment of half a million people and constitutes
1.0 percent of the national GDP. A number of plastic items are directly exported to
different countries and total earning for both direct and deem (RMG accessories)
exports is about US $ 337 million.
Plastic replace other common materials such as metals and wood in numerous
applications because of their low cost and characteristics. Plastics offer several
advantages in production as they are easily softened or melted, and can be
molded into any shape. Manufacture of plastic goods has been increasing due to
low production costs and energy efficient production processes. As a result the
global production of plastic goods has increased from a mere 1.5 million MT in
1950 to 230 million MT in 2009. Fig. 1 illustrates this exponential growth over
the past 60 years.
250
200
Million (MT)
Abstract
Recycling of used plastics is very important form both environment conservation and
resource sustainability reasons. Availability of cheap labor has enabled this sector to
use recycling quite extensively in Bangladesh. Even then, more extensive recycling
particularly for mixed plastics using modern techniques is highly recommended.
77
100
50
0
1940
Although the future growth of plastic sector is very promising, an in-depth study reveals
multi-dimensional constraints. Lack of trained and skilled man-power, testing facilities
for operation, maintenance and mold making and international certification are the
major constraints in this sector. An institutional arrangement dedicated to plastic sector
to provide supporting services such as skilled manpower, testing facilities for quality
* Former Associate Professor of Chemical Engineering, Bangladesh University of Engineering
& Technology, Dhaka. E-mail: serajul.buet@gmail.com
150
1950
1960
1970
1980
1990
2000
2010
2020
Year
products (15%) among developing countries. Fig. 2 shows the global market
share in 2009 of plastic production for different countries.
Rest of Asia,
16.5%
Europe (WE +
CE), 24.0%
CIS, 3.0%
230 Million MT
China, 15.0%
Middle East,
Africa, 8.0%
Japan, 5.5%
NAFTA, 23.0%
and film grade machines in 1980s. Since early 1990s the plastics industry
witnessed a rapid growth due to introduction of free market economy. Since the
country does not have polymers production, required polymers are imported.
Table-1 shows the growth trend of imported polymers, the basic raw materials
for plastic goods production. Over the period of last 20 years, the polymers
import increased from around 14,000 MT in FY 1990 to 696,500 MT in FY
2011.
Latin America,
4.0%
Fig.3: Per capita polymer consumption vs. per capita GDP of selected countries (2009)
(Ref. Chemical and Petrochemical Manufacturers Association, India)
79
80
Total
14,021
15,262
22,165
39,880
66,421
11,981
103,454
51,384
86,318
59,515
--196,169
187,177
214,530
380,532
273,874
288,464
296,777
349,124
593,840
696,540
Actual d ata
Pro jected
3000
2500
Thousand MT
2000
20% Growth
1500
20 % GROWTH
100
1000
88.7
90
500
80
68.7
2025
60
44.4
50
52.3
50.6
48
38.8
40
30
54.1
2009-10
22
20
10
2011-12
2003-04
0
2010-11
2020
2008-09
2015
2007-08
2010
Financial Year
2006-07
2005
2005-06
2000
2004-05
1995
US$ (Million)
70
0
1990
Financial Year
120
100
100
80
60
40
30
30
China
World
17
20
5
0
Bangladesh
India
Asean
USA
81
82
4.0
Bangladesh does not have a proper school for plastic. To attain efficiency and
support our industry we need to have a proper polymer institute and a modern
testing laboratory for quality test (Shahedul Islam, Plastic Fair-2002).
Challenges
5.0
83
The author of this paper presented the idea of establishing an institute of plastic
named as the Bangladesh Institute of Plastic Engineering and Technology
(BIPET), in a day-long seminar of the SME Foundation attended by experts
from BPGMEA, BUET, BCSIR and BITAC in 2008. This idea to set up BIPET
was finalized in a consultation meeting of the stakeholders on October 11, 2012.
The SME Foundation has already initiated the feasibility study for the
development of Project Proposal (PP) of BIPET through Chemical Engineering
Department, BUET.
The structure of the proposed BIPET will be in line with the Indian experience
of CIPET (Central Institute of Plastic Engineering and Technology). The CIPET
has over 40 years experience with 15 full-fledged regional centres in India.
Major activities of BIPET will include but not limited to:
Academic Programs
Technology Support Services
Research & Development
84
References
Helal, S. I. (2012), Public Private Dialogue of Promoting Development of the Plastic
Sector of Bangladesh, BFCCI-FNF, Dhaka.
Helal, S. I. (2002), Concepts of Plastic in Bangladesh, Souvenir of Plastic Fair,
BPGMEA, Dhaka.
Islam, M.S. (2012), Study on the Plastic Sector for SME Foundation, Bangladesh.
Islam M.S. (2012), Necessity for an Institute of Plastic, Souvenir of International
Plastic Fair, BPGMEA, Dhaka.
Conclusion
Jahan, S.M. and M.S.N. Khan (2012), Country Study on Bangladesh using Global
Value Chain Analysis: The Plastic Industry, Annex-I in UN-ESCAP Report.
6.0
85
86
Issue 01
April 2014
1. Introduction
Small and medium enterprises (SMEs) have slightly different definitions in
different countries, but their role in the economic development is recognized in
every developing nation. Not only do SMEs provide alternative sources of
income for those who do not have access to formal sources, but the contribution
of SMEs in total GDP is ever on the increase. The SMEs also serve the domestic
demand of specific products quite effectively.
87
But business operations in any country are not without problems, especially in
the developing countries. For operating any kind of business, there is a need for
dependable and effective sources of finance, both in the form of dept capital and
equity capital. Big firms have much easier access to finance of different types
than smaller firms, since banks require different levels of collateral for various
amounts of loans. Small businesses generally do not have the goodwill or the
required amount of collateral to get loans on a large scale. So, access to finance
seems to be a big obstacle for SMEs to overcome. But this is not, by far, the
only important obstacle for SMEs in the developing nations. SMEs, like any
business, need sufficient amounts of electricity, smooth transportation systems
and favorable regulatory environment to grow at higher rates. Also, some SMEs
lack the efficient labor for reaching the full potential of any country.
Studies which identify the main constraints the SMEs face in Bangladesh, India
and Pakistan using rigorous quantitative methodologies seem to be a rarity.
Studies commonly available are generally qualitative in nature and tend to focus
on the growth of business activities and their effects on economic growth, with
little focus on Small and Medium Enterprises. The World Bank, however,
administers surveys each year under its Enterprise Surveys program to find out
the constraints firms face in each country. The sample size of these surveys is
generally more than one thousand, including firms of all sizes and of almost all
sectors. These data themselves do not provide insights on the constraints faced
by SMEs, but some general statistical analysis of the raw data collected by the
World Bank from SMEs can help in deriving the main problems the SMEs
specifically face.
This paper, therefore, aims at providing a comprehensive conclusion about the
constraints SMEs in Bangladesh, India and Pakistan are facing and how they are
affecting their market performance. This conclusion would be derived through
firstly, determination of the constraints faced especially by the Small and
Medium Enterprises (SMEs); secondly, analyzing the opinions of the SME
owners about the constraints using simple statistical techniques; and finally,
econometric techniques would be used to find out the impact of the constraints
on the sales. Section 2 reviews the literature which deals with almost similar
issues, section 3 provides an overview of the SME development scenario of
India, Pakistan and Bangladesh, section 4 provides a detailed picture of the
methodology used in this study, section 5 discusses the results obtained from the
analysis, section 6 provides the major findings derived, section 7 discusses the
policy implications, section 8 describes the limitations of the study and the final
section concludes.
88
Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
2. Literature Review
Many studies have highlighted the growth and development of the SME sector
in Bangladesh, India and Pakistan and the factors responsible for it. According
to many of these studies, SMEs contribute between 40 60 per cent of the total
output or value - added to many South Asian developing economies, and also
account for over 70 percent of total employment (Fan et al 2005; Nepal et al.
2004). However, a number of studies find that SMEs are frequently faced with
constraints and challenges (Bannock et al. 2002; Batra and Mahmood 2001;
Beck et al. 2004; Brunetti et al. 1998). The common constraints for SMEs
typically include financing, overcoming institutional, legal and administrative
barriers and accessing network support.
Among the studies highlighting the problems and prospects of SME sector in
Bangladesh, Bhattacharya and Hossain (2006) reported that the complex
documentation processes, lengthy releasing and clearing goods from ports,
corruption in the customs department, lack of automated customs procedures act
as major problems obstructing the growth of any business in Bangladesh, let
alone SMEs. This also makes trading across borders difficult. Ahmed(2002)
also highlighted the same sort of problems. However, Lester and Terry (2008)
commented that as SMEs started becoming involved in export activities, these
barriers became less severe, and the business environment and internal
capabilities emerged as stronger barriers. Overcoming these barriers has become
the key factor in developing the SME sector in Bangladesh, and the necessity
for trade facilitation has become prominent. It is in this context that Prasad
(2006) mentioned that trade facilitation initiatives had significant positive
impacts on the private sector by increasing the volume of exports and imports,
as well as through helping exporters find new markets. In addition, the
Organization for Economic Co-operation and Development (OECD)
emphasized that improved and simplified customs procedures had a
significantly positive impact on trade flows (OECD 2005a).
A global survey on Removing Barriers to SME Access to International
Markets by OECD-APEC (Asia-Pacific Economic Cooperation) identified a
range of barriers that were detrimental to access by SMEs to international
markets. Based on the survey results, Lester and Terry (2008) summarized four
barriers as the most serious impediments to SMEs access to international
markets, which are: (a) a shortage of working capital for financing exports; (b)
identifying foreign business opportunities; (c) limited information related to
locating/analyzing markets; and (d) inability to contact potential overseas
customers. These findings complement those of Duval (2007) which suggested
89
that the focus of the multilateral trade facilitation agenda would ultimately need
to be broadened to address the need of developing countries in Asia and the
Pacific.
Wilson (2007) estimated that all countries could benefit from more efficient
customs and administrative procedures, with the greatest benefits accruing to
those countries with the least efficient customs and administrative procedures.
Wilson et al. (2004) found a significant positive relationship between trade flow
and port efficiency, customs environment, regulatory environment and service
sector infrastructure. The study estimated that global trade in manufactured
goods could gain as much as USD 377 billion from improvements in trade
facilitation measures. Most of these gains would benefit developing countries in
relative terms. Duval (2006) also concluded that the long-term benefits of trade
facilitation would exceed the perceived implementation costs for all measures
considered.
Schware and Kimberley (1995) focused on worldwide experience and
identification of factors that make way for trade facilitation through the
successful application of IT. The study found that accessible information and
communication technology (ICT) could significantly improve trade
performance. However, this technology must be accompanied by simplification
of documentation, reengineering of procedures, appropriate training and
availability of local expertise, and a reliable and cost-effective communications
infrastructure. Automation has, therefore, been considered to be making sense
only if it serves as a tool to support customs management practices (OECD
2005b). Duval (2006) and ESCAP (2006) made similar recommendations when
emphasizing the establishment of an IT-based single window system and a
modern risk management system for ensuring higher gains from trade
facilitation. This holds particularly true in the context that trade and transport
facilitation has become critically important for developing countries with a view
to reaping the benefits from the opportunities of global production and changing
trade patterns (UNCTAD 2005).
Among the more recent studies, Muhammad et al. (2010) in their study on SME
development of Malaysia found that economic downturns mostly affected small
SMEs with few working capital, skilled workforce, etc., especially those
involved with trading and supplying products or services to other businesses.
The major challenges faced by the SMEs during the bearish period thus became
lower cash flows and limited financing. Ahmed, Rahman & Haque (2011)
attempted to identify the constraints of development of manufacture based
SMEs in Bangladesh. According to their study, lack of infrastructural support,
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
political unrest, shortage as well as price hike of raw materials, high financing
cost and inadequate utility facility are some of the key factors for the slow
development of manufacture based SMEs. Nagaraju and Vani (2013) in their
study on India showed that commercial banks being the largest source of
financing for SMEs, more participation in lending can result in excellent
opportunities by proving a wide market to serve and make SME lending a
profitable banking operation. Chowdhury et al. (2013) attempted to identify
problems of SMEs in Bangladesh and potential solutions to that. The study
surveyed 100 SME consumers and the problems identified by them were long
waiting period for getting initial finance from banks because of tedious paper
works, inability to provide collateral to get loans, inexperience in preparing
sound financial systems for getting loans. As remedies the respondents advised
financial incentives for sound business plan and public-private partnership in
providing effective training. Another study (Khan et al., 2012) also reported
similar problems faced by SMEs like lack of training for workers, harassment of
government officials and poor supplementary utility facilities and sought
integrated steps from government.
These studies mainly are of a qualitative nature, and lack rigorous quantitative
analysis. Also, these studies mainly deal with the barriers impeding the growth
of exports of SMEs. However, the Enterprise Surveys program of the World
Bank has been recently conducting surveys worldwide on different firms, whose
data are available on request. These data provide deep insights to the constraints
the SMEs face in India, Pakistan and Bangladesh, but they have not been
analyzed in detail as yet. This study aims to fill in this gap in the existing
literature.
91
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
shows that small scale manufacturing industries have shown only minor
increases from the 1st quarter of 2008-09 to the 2nd quarter of 2012-13.
Figure 3.2: Quantum Index of Small Scale Manufacturing Industries (4 digit
level)
the gross output is evidently increasing each fiscal year, and the increase is quite
significant. In fact, from 2006-07 to 2011-12, the production of these enterprises
has been increasing at around 6 percent per annum.
The Pakistan Bureau of Statistics and Ministry of Finance records data on two
broad categories: large scale and small scale. Large industries fall under the
large scale category, while the rest fall under the small scale category. So, all
the medium and small enterprises automatically fall under the small scale
category.
Figure 3.4: Production of Small Scale Industries in Pakistan (in billion Rs.)
Figure 3.4 shows the production of small scale industries for different fiscal
years. The figure clearly indicates that the production of small and medium
enterprises is slowly increasing, and the rate of increase is almost constant, at
around a rate of 8 percent per annum. So, if the growth rates of SMEs are
compared, the growth of SMEs in Pakistan is the most impressive. However,
there are definitional differences among the countries, so these figures cannot be
directly compared.
4. Methodology
Source: Ministry of Micro, Small and Medium Enterprises (MSMEs), Government of India
The figure shows a sudden jump in the production of MSMEs from 2005-06 to
2006-07, caused by the inclusion of MSMEs of some other sectors as well. Still,
International Journal of SME Development
93
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
4.1 Data
This study has made use of secondary data, collected by the World Bank under
its Enterprise Surveys Program. Now, the World Bank has collected and
compiled data from different countries in different years. The latest firm level
survey the World Bank conducted in Bangladesh was in the year 2013. But for
India and Pakistan, World Bank didnt conduct any firm level survey after 2010,
and these surveys were interim surveys, which did not use the full questionnaire
of the enterprise surveys program. These data, however, do highlight the
constraints faced by the SMEs in India and Pakistan. So, 2010 data for India and
Pakistan and 2013 data of Bangladesh have been used for this analysis. The
Enterprise Surveys data includes data on all types of firms, so this analysis
would use data specifically on SMEs. By using the statistical software STATA,
all the analyses presented in this paper has only been done using data on SMEs.
This means that the sample of enterprises used for the analysis in this paper
includes only SMEs, and does not include large scale enterprises; hence, the
sample used for the analysis of this paper is a sub-sample of the Enterprise
Surveys Program database of the World Bank.
Since this paper is an analysis of Small and Medium Enterprises (SMEs), the
definitional complexities need to be clarified. The definition of SMEs differs
from country to country. The Industrial Policy of Bangladesh, 2010 defines
small and medium enterprises as: In manufacturing, small industry will be
deemed to comprise enterprises with either the value (replacement cost) of fixed
assets excluding land and building between Tk. 5 million and Tk. 100 million,
or with between 25 and 99 workers, and medium industry will be deemed to
comprise enterprises with either the value (replacement cost) of fixed assets
excluding land and building between Tk. 100 million and Tk. 300 million, or
with between 100 and 250 workers. For services, however, small industry
will correspond to enterprises with either the value (replacement cost) of fixed
assets excluding land and building between Tk. half a million and Tk. 10
million, or with between 10 and 25 workers, while medium industry will
correspond to enterprises with either the value (replacement cost) of fixed assets
excluding land and building between Tk. 10 million and Tk. 150 million, or
with between 50 and 100 workers. According to the Pakistan SME Policy,
2007, enterprises which employ upto 250 workers or have a paid up capital of
Rs. 25 million or lower are categorized as SMEs. The Government of India
enacted the Micro, Small and Medium Enterprises Development (MSMED) Act,
2006, and according to that act, A small enterprise is an enterprise where the
investment in plant and machinery is more than Rs. 25 lakh but does not exceed
Rs. 5 crore; and a medium enterprise is an enterprise where the investment in
plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.
95
For comparison purposes, the World Bank employs its own definition of Small
and Medium Enterprises. For the sake of generating Enterprise Surveys data, the
World Bank defines Small and Medium Enterprises (SMEs) as enterprises
which employ maximum 99 workers; enterprises employing 1 to 19 workers are
defined as small enterprises and enterprises employing 20 to 99 workers are
defined as medium enterprises. The World Bank does not base its definition on
amount of investment, because currencies differ from country to country, and
exchange rates change over time. Hence, it becomes difficult to define SMEs for
the World Bank, especially since comparisons between countries have to be
made through their Enterprise Surveys data.
Using the World Bank definition of SMEs is useful for comparison among
countries, because use of country specific definitions may give misleading
results. More precisely, Bangladesh, India and Pakistan all three countries have
different definitions of SMEs. So, an SME in Bangladesh may not be regarded
96
Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
as an SME in India or Pakistan, and since one of the purposes of this paper is to
compare the opinions of SME owners of all the three countries, using country
specific definitions would hamper comparability. So, the definition of SMEs
used by the Enterprise Surveys Program of the World Bank has been used in
this paper, so that the same kind of firms can be compared across countries.
4.3 General Statistical Analysis Methods
on SMEs have been separated, which includes data on 1065 small and medium
enterprises (according to the definition of World Bank). This data was used to
identify what the constraints were which troubled the SMEs in the three
countries. When the respondents of India, Pakistan and Bangladesh were asked
to rank the constraints, one or two of the constraints were identified as the most
severe by many of the respondents, as shown in tables 5.1, 5.2 and 5.3.
Table 4.1: Major Constraints in Bangladesh
The general analysis of the data in this study includes tabulating and grouping
the data according to the opinions of the respondents. The data on constraints of
SMEs have been firstly separated from the rest. After that, each of the
constraints is grouped according to the number of respondents who identified
that particular constraint as its main barrier. Furthermore, the main constraints
are analyzed further by viewing and grouping each of the responses according to
categories, i.e. whether each of the constraints is viewed as very severe, major,
moderate, minor or no obstacle. The results have been presented in tables and
pie charts (whichever applicable), which further elaborate the importance of
each of the constraints.
Percentage of Respondents
0.19
0.09
19.62
3.1
0.47
4.41
1.22
1.31
26.48
2.54
0.56
34.55
1.6
0.47
2.16
100
Table 4.1 shows that most of the respondents of Bangladesh ranked tax rates as
the number one constraint they face, and political instability was ranked as the
most severe constraint by the second largest number of respondents. This means
that the SME owners, who would be identified as small business owners
according to the Bangladeshi definition of SMEs, find tax rates to be their
biggest hurdle. The importance of political stability also is reflected through
their opinions.
4.5 Results
The data collected by World Bank through their enterprise surveys program has
been firstly grouped according to different categories. From those groups, data
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
Unlike India, the opinion of the Pakistani entrepreneurs regarding the most
severe constraint for operating SMEs seems to be unanimous. Table 5.3 shows
that almost 67% of the respondents think that lack of electricity is the major
problem of operating SMEs in Pakistan. Among the rest, 20% identified
political instability as the main constraint. Pakistan has been facing political
unrest for a long time, and the industries there do face shortage of electricity a
lot, and these opinions of the respondents reflect these facts.
Percentage of Respondents
13.23
7.38
5.85
4.31
0.62
3.69
28
1.23
4.92
0.92
10.15
0.62
5.85
6.77
100.0
Percentage of Respondents
1.7
2.0
0.3
2.0
4.3
1.0
66.4
0.7
19.9
1.0
0.3
0.3
100.0
According to World Bank Enterprise Surveys data of 2013, 1065 SME owners
of Bangladesh, who were the respondents of the survey, ranked corruption
according to their preferences. The results are mixed, since 27 % reported
corruption to be a major obstacle, 26 % reported it to be a moderate obstacle, 14
% reported to be a very severe obstacle and 19 % reported it to be a minor
obstacle. It is a bit surprising result, since corruption is rampant in Bangladesh,
but the SME sector does not face it as much as the large scale industries and
firms.
99
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
The Indian SMEs do think that corruption is an important obstacle, but are
divided in opinion about the importance of the obstacle. 17 %, 20 % and 25 %
view corruption as a major, moderate and minor obstacle. 34 % do not consider
it to be an obstacle and 4 % consider it to be a very severe obstacle.
obstacle, while the rest of the respondents ranked electricity as a minor obstacle
or no obstacle. So, approximately 50 % of the total respondents thought that
lack of electricity is either a very severe or major obstacle towards smooth
functioning of their firms.
The Pakistani SMEs surveyed were divided in their opinion about corruption as
an obstacle. Almost equal percentages of respondents (16 % each) indicated
corruption as a major obstacle, very severe obstacle and a moderate obstacle. 28
% think it is a minor obstacle and 24 % do not think it is an obstacle.
Figure 4.3: Corruption as an Obstacle in Pakistan
4.6.2 Electricity
Electricity is ranked as a major obstacle or a very severe obstacle by most of the
respondent firms of the survey in Bangladesh. 31.95 % of the respondents
indicated electricity, or rather, lack of electricity as a major obstacle, 18.79 %
respondents ranked it as a very severe obstacle, 33.8 % ranked it as a moderate
101
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
Among the Pakistani SMEs surveyed, a little less than half (46 %) did not
consider access to finance to be an obstacle, while another 27 % think it is a
minor obstacle. 14 %, 9 % and 4 % indicated it to be a moderate obstacle, major
obstacle and a very severe obstacle respectively.
Figure 4.9: Access to Finance as an Obstacle in Pakistan
103
The respondents did not consider transport to be a very important obstacle, since
29 % and 34 % of them considered it to be a minor obstacle and a moderate
obstacle respectively, while 19 % respondents did not consider it to be an
obstacle at all. Only 6 % considered it to be a major obstacle and only 4 %
considered it to be a very severe obstacle.
104
Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
Among the Small and Medium sized firms of Bangladesh surveyed by the
World Bank, a little less than half of them didnt consider labor regulations as a
constraint and 29 % consider it to be a minor obstacle. So, around 80 % of the
respondents did not consider labor regulations as an important obstacle towards
operating business properly. Only 4 % of the respondents considered labor
regulations to be either a very severe or a major obstacle, while the rest of the
respondents (20 %) considered it to be a moderate obstacle.
Figure 4.13: Labor Regulations as an Obstacle in Bangladesh
105
The Indian SMEs surveyed by World Bank were mostly divided in their opinion
about transportation system as an obstacle to enterprise growth. Almost the
same percentages of people (28 %, 23 %, 23 % and 24 % to be exact) identified
this as a moderate, major, minor and no obstacle. Only 2 % indicated it to be a
very severe obstacle.
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
has been included from among the factors of production as one of the main
independent variables. Since the constraints are dummy variables, the
interpretation is mainly done from a relative perspective, i.e. relative to a base
category. Moreover, all the categories cannot be used as dummy variables due
to collinearity problems. Here, transport has been used as the base category for
the constraint dummies. The area dummies have been included to control for
any effects of the area of operation, and the values of those variables are 1 if the
SME belongs to a particular area, 0 otherwise. The area dummies are used to
control for access to market, since access to market mainly varies from area to
area.
107
108
Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
Independent Variables
Log of labor
Ownership
Tax Administration
Practices of Competitors
[95% Confidence
Interval
0.997002 1.15445
0.444018 0.975581
-1.08628 1.339826
-0.94542 0.573104
Political Instability
-0.54147
0.220895 -2.45
Labor Regulations
Inadequately Educated
Workforce
Electricity
Customs and Trade
Regulations
Crime, Theft and Disorder
-0.67422
0.56931 -1.18
-0.34165
0.326452 -1.05
-0.71045
0.224859 -3.16
-0.0946
0.40527 -0.23
-0.49637
0.415762 -1.19
Corruption
Business Licensing and
Permits
Access to Land
-0.47971
0.287952 -1.67
-0.82875
0.681549 -1.22
0.224 -2.16615
-0.80692
0.311471 -2.59
Access to Finance
-0.62396
0.229756 -2.72
Dhaka
0.663233
0.146242
4.54
0 0.376262 0.950204
Chittagong
0.923335
0.163344
5.65
0 0.602805 1.243865
Khulna
0.879063
0.207956
4.23
0 0.470991 1.287135
Constant
12.7355
0.273714 46.53
0 12.19839
0.50865
Table 5.5 shows the results of applying the same regression technique on data
collected from the SMEs of India by the World Bank. The table reveals that
access to land, customs and trade regulations and practices of competitors tend
to be significant variables in determining the amount of sales of the SMEs.
Here, the base category is transport services, and compared to this base
category, the previously mentioned constraints only have statistically significant
differences. This result is not in line with the result derived from the earlier
general analysis on India, and also it does not have any similarity with the
econometric findings of the data on Bangladesh.
109
P > |t|
0.924812
0.373414
0.988316
Standard
Error
0.101951
0.343115
0.405161
9.07
1.09
2.44
0.000
0.277
0.015
[95% Confidence
Interval
0.724152 1.125471
-0.30191 1.048736
0.190876 1.785756
0.630453
0.45419
1.39
0.166
-0.26349
1.524392
0.538801
-0.16238
0.50428
1.1097
1.07
-0.15
0.286
0.884
-0.45372
-2.3465
1.531328
2.021739
1.666455
0.547118
3.05
0.003
0.589613
2.743296
0.501881
0.300075
1.67
0.096
-0.08873
1.092491
1.039391
0.915124
1.14
0.257
-0.76176
2.840544
0.692418
0.691895
0.443251
0.90482
1.56
0.76
0.119
0.445
-0.17999
-1.08898
1.564826
2.472766
1.023597
0.392496
2.61
0.01
0.251084
1.79611
1.108141
1.048664
-0.0579
0.688136
1.961681
0.812781
12.41847
1.124679
0.442305
0.28031
0.280917
0.303629
0.27516
0.393788
0.99
2.37
-0.21
2.45
6.46
2.95
31.54
0.325
0.018
0.836
0.015
0
0.003
0
-1.10546
0.178117
-0.60961
0.135232
1.364076
0.271209
11.64341
3.321742
1.919212
0.493807
1.241039
2.559287
1.354352
13.19352
13.2726
R-squared: 0.4166
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
Coefficient
1.253171
Log of Labor
2.561849
Islamabad/Rawalpindi
-0.50732
Karachi
0.276843
Political Instability
Inadequately Educated
-1.57568
Workforce
-1.12983
Electricity
-5.75066
Customs and Trade Regulations
0.385166
Crime
0.224887
Corruption
-2.68254
Business Licensing and Permits
-1.21333
Access to Land
-0.51634
Access to Finance
13.7323
Constant
Number of Observations: 156
Standard
Error
0.195736
0.530469
0.572904
1.799389
t
6.4
4.83
-0.89
0.15
P > |t|
0.000
0.000
0.377
0.878
[95% Confidence
Interval
0.866262 1.640081
1.513275 3.610423
-1.63977 0.62514
-3.27999 3.833681
2.95222
4.25995
1.831052
2.219433
1.903996
2.270957
3.096424
2.125833
2.445723
1.999005
2.489595
-1.36352
4.14878
4.71387
3.438135
2.988786
4.318102
17.68372
The analysis of the data has proved that there are a number of constraints which
are hampering the growth of SMEs in Bangladesh, Pakistan and India.
However, some constraints are more severe than the rest, at least according to
the respondents of the survey administered by the World Bank under its
enterprise surveys program. Moreover, the severity of the constraints may vary
from country to country.
The general analysis also showed that compared to the Bangladeshi and
Pakistani respondents, a smaller percentage of Indians identified electricity and
access to finance as the most severe constraint for operating SMEs. This is
indicative of the fact that in India, the financial institutions along with policy
initiatives of the government have managed to make SME financing more
available for entrepreneurs. Also, India has been able to provide better power
supply to its SMEs than the other two countries under study.
Customs and trade regulations in both India and Pakistan are having negative
and significant impacts on sales, as shown by the regression results. This means
111
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
that the countries need to follow pro SME policies and eliminate any kind of
tariff or non-tariff barrier for promoting and developing the SME sector.
6. Policy Implications
Also, this study makes use of the definition of SMEs used by the World Bank in
conducting the surveys under the Enterprise Surveys program of the World
Bank. Country-specific definitions could not be used for the analysis presented
in this study due to problems of comparability, as described in section 4.1.
Although the study may not be the most comprehensive study of all, it still has
some strong implications for policy. One of those implications is that, the
development of SMEs in the countries under study, especially in Bangladesh
and Pakistan, depends largely on how the governments of those countries deal
with the ever growing demand of electricity. If the countries cannot ensure
proper electric supply to the SMEs, then this sectors growth will most certainly
be hampered.
The lack of adequate data on SMEs is another drawback of this study. The only
comprehensive firm level data on the constraints faced by the SMEs was the one
used in this study. The rest are either qualitative studies providing little or no
data, policy notes and limited data on the number of different SMEs and their
productions.
Another very clear policy implication is that the access to SME financing needs
to be improved. There are many banks in India, Pakistan and Bangladesh which
give SME loans, and many Microfinance Institutions (MFIs) also give loans
under easy conditions for starting and operating SMEs. Their outreach needs to
be expanded dramatically, and governments need to focus on better policy
initiatives to help this thriving sector in availing better sources of financing.
Bangladesh, India and Pakistan are three different countries situated in South
Asia, with varying levels of economic development. But the SMEs of these
three countries seem to have some common problems. One of them is lack of
electricity, another being lack of access to finance. These constraints not only
are identified as one of the main constraints hampering the growth of SMEs in
the three countries under study, but also these constraints seem to have negative
impact on the growth of the sales of the SMEs, as revealed by the econometric
analysis. Now, these three South Asian countries have been plagued by power
shortages for decades now. The governments of these countries have taken
many steps to ensure proper power supply in many cases, but this problem is
sustaining. Another problem lack of access to finance has also been a matter
of concern for SME development. Banks and Microfinance Institutions have
developed much in the recent decades in these countries, but that has not
dramatically improved the situation, as many SME owners still believe access to
finance as one of the major problems of SME development, especially in
Bangladesh and Pakistan. Therefore, since these countries share some common
problems which hamper SME growth, maybe it is time for a collective and
concerted effort to eradicate these constraints and help boost the development of
SMEs in South Asia.
Among the other constraints, trade barriers and customs regulations are having
significant impacts on sales. So, these trade related policies need to be pro-SME
policies, so that SMEs can grow enough to export in the foreign markets.
Political instability and tax rates came out as the most severe problems in
Bangladesh, so these problems need to be handled carefully.
7. Limitations of the Study
The main limitation of this study is that it is based on the surveys conducted by
the World Bank, and so this study has only considered the measurable
constraints which were considered by the World Bank in their questionnaires.
The World Bank, however, included these constraints only because they are
easily measurable and because, according to them, these are the basic problems
any business could face in any part of the world. Still, the limitations of the
study include not being able to quantify the effect of lack of technology, lack of
access to market, lack of access to raw materials, etc. Only partial effects of
these constraints were measured. For example, area dummies represent one
dimension of access to markets, since access to markets varies according to area
of operation. But lack of technology is mostly not measurable due to
unavailability of data, and quantifying lack of raw materials is a difficult task as
well.
113
8. Conclusion
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
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Constraints and Challenges of SME Development in the Developing Countries: A Case Study of .
and adapted them while some designed the circuits themselves. They had to
innovate and improvise devices and gadgets needed for the manufacturing
process as well, as importing such things would be much beyond their project
costs. Possibly some of them took some help from foreign designs, but had to use
their own talents in improvising the product using components that are available
in the local market, whether imported or locally produced. These electronic
industries can be termed indigenous technology based as against Television
assembly industry, though outwardly the final working of both would look
similar; therefore, policymakers find it very difficult to distinguish between the
two.
Similarly when a car or a truck comes out of the production line of an assembly
Industry in Bangladesh, there is no touch of local technological innovation. It
imports all the parts for a vehicle in a package and just fixes them at the
designated places. On the other hand the three wheeler vans and passenger
vehicles, in the name of Nasimon, Bhatbhatia, etc., that the local small
innovators developed using diesel engines meant for shallow water pumps are
indeed indigenous technology based products. The whole design of the vehicles
are indigenous, there have been many ingenious improvisations in using parts or
components made out of locally available raw materials, not necessarily meant
for making vehicles. Unfortunately there has been a strong negative media
campaign against these vehicles, and these are now officially banned in
Bangladesh, thanks to the rich vested interest groups which see these as potential
competitors and which exercise a great influence on the national policymakers.
The quality of these vehicles is not as bad as the media portrays them, otherwise
they would be facing accidents every day, since thousands of them ply around the
whole of the country in spite of the official ban. Some of these vehicles are
much better than the Mercedes Benz of the 1930s.While we should have taken
steps to support these semi-educated innovators in improving the quality and
finishing of these vehicles employing educated engineers of the country, we have
taken the opposite step of banning them altogether. If we had promoted them as
suggested, we would now be exporting these vehicles to other Third World
countries. Unfortunately, almost all of our policymakers are without technical
background and they do not understand the importance of indigenous technology
based industry. This is how our Government policies play a negative role
sometimes.
2. Why is indigenous technology important?
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common people. Usually local innovators face a problem in their own lives or in
the lives of people around, and they try to innovate a technological solution to
that problem. Soon this becomes a product and if commercialized, can reach
many more people as there is a ready market. It also creates an economic activity
in which many followers can join later.
From the above scenario one can guess that since the technology is locally
innovated, when such an industry grows it creates a network of backward linkage
for supply of component parts. Since these rely on local expertise and locally
available raw materials, the technology is usually within the grasp of many
others, and the network builds up quickly. This has not been possible with foreign
technology based industries in the past in our country since a huge technology
gap exists with the western world. Philips electronics can be cited as an example,
which started in the nineteen sixties. A condition was given that gradually they
will have to include components made locally into their products, but it never
happened, since we did not develop any homegrown industry that can supply the
components with the quality they need. India, on the other hand made strong
policies to support home grown technology based industry right since partition in
1947, which allowed local industrial infrastructure and expertise to grow. Now
when Suzuki wanted to establish a car assembly line they could choose some
parts from local producers resulting in Maruti-Suzuki cars. We have not been
able to integrate local technology with any foreign technology based industry set
up in our country till now.
An indigenous technology based industry hardly needs a capital to start. Usually
the innovator makes a prototype using his/her own resources, and sells a few at
first. With the return s/he makes more, and corrects and modifies the design if
necessary based on customer feedback. No technology can work perfectly from
the first day that it is developed. It is true even for the West. If one sells a large
number of products and finds out later that there was a serious fault, think of the
consequences; it will be the end of that enterprise. So through limited marketing
the entrepreneur builds up confidence and grows. When such an industry grows
the entrepreneur learns the tricks of the trade through real life feedback, which is
adapted to the particular socio-econo-political situation, unlike foreign bred
management practices which cannot be applied here directly. Most of the time
such an industry builds itself into a network which patronises each other and
there is very little requirement of formal bank loans at the early stages. It is only
when such an industry acquires sufficient experience with successful
entrepreneurship and confidence in their products that it may want to expand and
go for bank loans. Therefore finance is not really a problem for initiation of such
indigenous technology based industries. Customers and other entrepreneurs
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support such nascent innovative enterprises due to an innate cultural urge which
the modern economic theorists could never comprehend.
It needs to be emphasized by repeating the scenario in the industrially developed
West. The backbone of their economy is still innovative technology based small
industries. Microsoft, Apple computers, Hewlett Packard, Ford all started from
garage sized endeavours.
Among the Third World countries, India and China are coming to the global
scene in terms of industrial contribution in a big way. This has been possibly only
because they did not listen to the advice of international experts or banks or
donors in the past sixty years or so, rather they took policies in their own way, to
strengthen their own technology base through nurturing home grown technology
based industry. It takes a long time, 30 years or more, to incubate such
enterprises, and it is really difficult for most policy planners in the Third World to
have such deep understanding and foresight. The five year term is the maximum
that an elected Government can look forward to and therefore they look for short
cuts, which in effect go in the interest of the multinationals and their promoters
which influence the policies of these countries. India and China had some
personalities who could lead the nation to come out of such influence, and the
results are there for all of us to see.
3. Commercialisation by innovator necessary
When an innovator designs and develops new equipment from scratch its
manufacture and marketing can successfully be done only by the innovator, the
technology designer, no one else. No established businessman, however
successful he or she is, how much money he or she puts into it, will not be able to
carry the project through to success. This is an important message that I want to
put across which I learnt the hard way, through my own real-life experience. Now
when I look back to industrial development in the West, the same picture
emerges. If one looks at all the giants in industry like Sony, HP, IBM, Intel, Ford,
Toyota, Honda, Marconi, General Electric, and going further back into the great
players of the industrial revolution like George Stevenson, Cartwright,
Wedgwood, Arkwright and others, all successful business ventures were initiated
and piloted by the technology innovators themselves.
Why? To understand we need to discuss the processes that need to be followed in
order to take a new technology based product from the laboratory to a successful
business. Briefly the steps, together with the challenges, can be summarised as
follows.
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V.
I.
Based on the user feedback the design should be modified and improved further.
Often the cabinet design (housing of the equipment) and user interface to the
product becomes more important than the technology of the product itself.
The first step is in designing and developing a basic working model of a product
that the designer feels can get a market. Here the designer's ability to understand
the people, their culture and habits, market dynamics, etc. plays a very important
role. Choosing a wrong product may lead to wastage of money and effort.
Besides, the challenge is very daunting in the Third world since the people have
become used to high standards of products imported from the industrially
developed world. The customers will tolerate a few defects in products from
developed countries, but not a single one from an indigenous product. Therefore
the challenge is more than that faced by early developers in the industrialised
world.
II.
Next the working prototype should be tested in the laboratory, home or office of
the designer or at the premises of technically sound close friends. This is needed
so that the continuous performance of the product may be monitored. Many
weaknesses of the design will be revealed at this stage. Unless these are
addressed to and improved upon, the product cannot be taken for commercial
marketing. The effort will have to end there.
III.
Upon feedback of the above initial trial the product have to be redesigned in a
user friendly way for use by general people, which can be manufactured with
available production technology at an affordable price. In some situations the
production processes and technology for these may also need to be innovated and
developed. This is a very important industrial design step.
VI.
If everything goes well, the product may now be manufactured for limited
marketing. It will be found that the product failed to perform properly at some
places, due to situations or due to manners of use that the designer never
imagined of. Sometimes serious problems arise which have to be addressed
urgently and solved in order to keep the reputation of the product and of the
manufacturer. This creates a very challenging situation. Sometimes the problems
are very subtle and sophisticated and the innovator finds it difficult to solve it.
S/he may need the assistance of other experts which presents a very difficult
situation, and an innovator without sufficient funds may find it almost
impossible.
VII.
At this stage much information will be available that will have an important
bearing on the decisions related to the product. In the worst case the product may
not get any buyer, or the technical challenges cannot be solved, and it may have
to dropped totally. In a less unfortunate scenario the product may need to be
redesigned to make the product more attractive at the price asked for. In the best
case scenario if the designer took care of the issues properly beforehand, the
product will need only a few modifications to carry it along further. After such
modifications, the product will still need further limited marketing. Only when
the return of products from customers due to manufacturing defects,
malfunctioning or inability to use, etc., falls below 1% that it can be taken up for
large scale manufacture and marketing.
IV.
Limited field trial should be given to the industrial prototype by distributing to a
limited number of users who will cooperate by providing the designer with
important feedback. Therefore, users should be chosen who have sympathy and
trust in the designer, and with whom the designer has direct contact, and who will
bear with failures and interruptions in service. There may be situations when the
product may cause harm and injury to people and their property, and one has to
be very careful about the safety aspects in the product design.
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VIII.
In most probability the processes for certain manufacturing steps, and quality
testing of the product will not be available off the shelf. Even if it is available
from an industrially developed country, it is likely to be prohibitively expensive.
So the designer has to innovate, improvise and develop these items too.
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Third World. They can make such equipment and sell them within their own
countries profitably at fraction of the prices of the comparable imported ones.
The functionality of such professional equipment is more important than the
flashy outlook, and this is a favourable point for the Third World designer.
Therefore one should keep the above points in view while choosing a product for
local designing.
b. Assessing own ability
One has to assess ones own capability sincerely and realistically; whether he/she
is technically sound enough to handle the problem, and to improve the product
when need arises. Just copying an existing product without having the basic
technical expertise will not lead one far, and the entrepreneur is sure to fail when
faced with competition. Therefore, one has to go for a product in which he/she
has a sound technological base to start with.
c. SWOT analysis
Since there are many products in the market already, one has to be extra careful.
One needs to find out whether there are similar products elsewhere and whether
the one in mind can stand a competition if there is. This calls for a SWOT
analysis. SWOT is an abbreviation standing for, "Strength, Weakness,
Opportunity, and Threat". The words speak for themselves, and one has to assess
the SWOT of the product with an open mind. Discussing it with sympathetic but
critical friends and experts would be useful, because an innovator may find it
difficult to see the oppositions and threats to his/her own products.
Of course sometimes one has to take risks, and the intelligence and experience of
the innovator is of prime importance here, since others may not understand the
value of an innovative product. Well known examples are the Computer and the
Photocopying machine. At one point, IBM, the giant in business machines,
discussed in its board meeting that 10 or 15 computers can solve the problems of
the whole world, so it is not worth going into this product. They had to reverse
their decision within a few years. Rank Xerox employed a market survey team to
assess the marketability of their new innovation - a photocopier machine. The
report was highly negative, that people would like to copy by writing instead of
investing in such an expensive machine. Since the innovator was in a decision
making position, the company went ahead with the product in spite of the
negative market survey report. The result is before all of us. Conventional market
survey does not always work when the product is entirely new. Therefore trial
marketing is your best bet. When I developed a new product, Over and Under
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Voltage Protector (OUVP), later termed Volt Guard, in 1981 after all our
household appliances were damaged due to a sustained 400volts on the 220volt
line, I talked to a few local industries. No one got interested; they were scared to
invest in a new product that is not known in the world market. In 1989 I turned
myself into an entrepreneur, side by side with my University job, together with a
couple of ex-students. We personally met people at their homes and offices
carrying a variable transformer to produce high voltage and to demonstrate the
protection that the new device offers at a low cost. We tried to convince people
that we need such protection very much for all our appliances because of the
extreme abnormalities of power lines experienced in Bangladesh, which is not
experienced in the industrially developed countries, and that this was the reason
for its absence in the world market. I wrote educational advertisements and
articles in the media to explain the necessity of such a product, we presented our
products in exhibitions and fairs, and gradually the new product established well
in the Bangladesh market, with others making similar products of late. Even there
were brief introduction of similar foreign products in the market but they could
not survive the power abnormalities here, and the local voltage protectors, and
stabilisers with built in voltage protectors still reign the market.
d. Going slow, and going for quality
It is not a good idea to go for a large scale production using a newly developed
product right at the beginning. One should go slow; in phases, which will give
valuable feedback whether to continue with the product or not. Of course, in a
small scale one will be limited by many things. Procuring good quality raw
materials, making a good housing or cabinet become difficult challenges. One
may have to test each individual parts or components at procurement. This may
add some cost, but quality is the best bet, without this one cannot sustain for long.
People are prepared to pay a bit more for quality. Besides, in the Third World
cost of intelligent manpower is much less than that in the West, so such testing
will not increase the price significantly.
One should not worry too much that a product cannot be given a nice looking
finishing as the imported ones. It is impossible in a small scale production, and in
a Third World setting. Here again, the role of the innovator comes into play.
Making the best of whatever facilities and materials are available one can try to
design and give the best possible finishing. If the inner quality and performance
are good and the cost is competitive one may succeed even with less attractive
finishing.
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As mentioned before, one first starts selling the products to people known
personally and who have trust in the innovator. Gradually when the small
enterprise starts to grow and wants to sell to a wider population, to people who do
not know the innovator personally, this poses a new challenge. Here there is no
alternative to advertisement and a brand name. Apparently it appears as a load
on the limited resources, but it will soon pay off. If one can maintain a good
quality of the products, people will be ready to pay a higher price for that, but one
needs advertisement for people to know, and to opt for the quality product. Once
the brand name is established in the market, things get easier.
Many small manufacturers in our country start off selling their products to
wholesale distributors, but they will mostly squeeze the small entrepreneur out.
This will also not allow the improvement of the quality of the products, because
that will need putting a higher price tag, which the wholesalers dislike. Therefore
one should start with ones own marketing campaign, wholesale people and
distributors will flock to the manufacturer when a product and a brand name is
established. Then one can dictate ones own terms for the business. It is a game
of establishing pecking order, who can peck whom as in community of chickens.
If one cannot be in the commanding position, he/she is ruined.
g. Growing bigger, borrowing from banks
As one gets bigger and gets more confident on the quality of the products and in
his/her ability of managing more people and the organization, one may think of
borrowing from banks to expand the business. Getting bank loans before one has
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made oneself ready may pull down the earlier success. It is a new challenge, and
unless one has developed the capability, chances of success are remote. This is
the reason for so many failed enterprises.
h. Creating network
As one establishes in the market and starts to produce more, one will have to
learn to sub-contract manufacturing of some of the components of the products.
There will be enterprises which are already in the trade, even some of the
manufacturers own workers may start such enterprises. One has to use this
facility well, co-operate with the others, and give them necessary feedback to
improve on the quality. Sometimes one may have to help the sub-contracting
enterprises with technological solutions as well. Such a network help minimize
the size of ones business which may go beyond grasp if one tries to manufacture
everything.
i.
Exporting
When one has created a large infrastructure for manufacture and for marketing all
throughout the country, the entrepreneur is automatically ready for export. If a
product has a demand at home, it must have a demand abroad, particularly in
Third World countries having similar economic and social conditions. There is a
very good chance that such efforts will succeed, since it comes with a strong local
background. Besides, in such technology based products one will not have to beg
for quotas from other Governments, as often happens with labour oriented
industries.
7. Conclusion
I have tried to present a picture of the scenario that will help both the technology
innovator and the policymakers to understand the direction of industrialization
that we need. There is no alternative to indigenous technology based industries
that cater to the improvement of the quality of life of the common people.
Although many policymakers suggest that technology can be purchased, in fact,
this is never possible. One has to go through the whole process of R&D to be in a
position where he/she can even copy a foreign product by understanding its
basics. No one in the current world gives out industrial technology, one has to
develop ones own. Exploiting cheap labour for products used by people in
economically advanced countries remote from us makes us completely dependent
on them. Ready-made garments based on foreign designs and foreign raw
materials, computer data entry and handicrafts, all for foreign consumers, may
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look attractive at present, but will not take us very far in sustained
industrialization. We have to appreciate that there goes on a process of
establishing a pecking order globally as well, and unless we increase our own
inherent strength, no amount of shouting and invoking of words like kindness and
humanity will not get the desired actions from the world community in the short
or long term.
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Abstract
This paper highlights and assesses the role of Bangladesh Council of Scientific and
Industrial Research (BCSIR) in exploring the small and medium enterprises (SMEs) in
our country. BCSIR, as the prime public research organization is obligated to perform
scientific and technological research works to explore industrial development. In tune
with the objective, so far BCSIR has contributed to boost up appropriate technology
based SME sectors to some extent. However this contribution is not significant and the
motto with which it started its mission has not yet been fulfilled to the fullest extent. It
could have done further provided adequate R&D allocation on one hand and
magnanimous support from the entrepreneurs on the other hand.
Keywords: Appropriate technology, SME, BCSIR, R&D.
1. Introduction
In this 21st century small and medium enterprises (SMEs) particularly stapled
with need based appropriate technology have occupied the front line in
controlling the lively economy of developing countries. Appropriate technology
based SMEs can easily penetrate into local market to accelerate the economy by
speedy but low-cost employment generation, lucrative revenue earnings as well
as controlling export and trade. Indeed being the prime driver of long-term
sustainable escalation of socio-economic condition, SMEs globally have emerged
as an obligatory component of the supply chain in all key industrial sectors.
Bangladesh as a developing country is striving to turn into a middle income
country through underpinning a healthy economic base by 2021, the 50th
*
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Principal Scientific Officer, Institute of Glass and Ceramic Research and Testing (IGCRT).
E-mail: shanta_samina@yahoo.com
technologies related to the industries as well as useful to the current needs of the
country. Prioritizing the socio-economic condition, BCSIR always pays attention
on developing appropriate technology with a motive to assist and explore SMEs.
Thus the key issues considered for choosing R&D projects are:
i)
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Brake oil.
ii.
v.
Water filter
vi.
Oral saline
The success of any R&D project is measured in terms of its output and outcome;
i.e. nos. of processes developed, patents registered as well as scientific
publications have been set as accountable criteria on one hand while on the other
hand successful commercialization of developed processes is also considered.
Hence aiming the establishment of SMEs, economic feasibility, technical
feasibility, operational feasibility etc. get top priority to assess a developed
process. Nonetheless, as break-even point (BEP), payback period, internal rate
of return (IRR), net present value (NPV) and profit volume ratio (PV ratio) etc.
act as the key norms for a process to be commercialized as successful and
sustainable one, these factors are taken into account while developing a process
in BCSIR.
2.3 Commercialization of developed technologies or processes to explore
SMEs
Successful commercialization is one of the key performance indicators (KPI) to
assess the contribution of BCSIR particularly in accelerating the economy and
International Journal of SME Development
iv.
135
x.
xi.
It should be mentioned here that BCSIR transport pool as well as the government
transport pool is using the developed brake oil which is of international standard.
However, during the last 10 years 234 lessees came forward to join their hands
with BCSIR in commercializing the developed processes and thus over this
period BCSIR contributed to generate revenue of 1.6 million BDT. A pictorial
representation as illustrated in Figure 2 portrays the percentage of BCSIR
lessees/entrepreneurs during this phase.
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Elements
(i) Strengths
However, still BCSIR has about 560 processes in its credit which are ready to be
leased out for commercialization and among these processes some important
ones are:
(ii) Weaknesses
(iii) Opportunities
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
xiii.
xiv.
xv.
(iv) Threats
Indicators
Competitive human resource
Technical efficiency and expertise
Significant number of developed processes in credit
Lack of proper dissemination of developed technologies
Cultivate new and emerging technologies for the
expansion of SMEs
Create competition in local market
Create job opportunities
Explore cost-effective technologies as import substitute
Accelerate countrys economy
Conflict of interest
Aggressive competition
It is clearly evident from this SWOT analysis that the strengths and opportunities
related with the R&D innovations are in favourable position for industrialization
by exploring SMEs and this could be materialized to a considerable extent with
the openhanded support particularly from the entrepreneurs who would minimize
the weaknesses and threats.
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138
3.
Conclusion
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The Editorial Board reserves right to change any clause of this guideline without any prior
notification.
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