Problems and Prospects of Smes in Bd

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Problems and Prospects of Small and Medium Enterprises (SMEs) sector in Bangladesh

Abstract: Small and Medium Enterprises (SMEs) have been recognized as one of the important means for providing better economic opportunities for the people of least developing countries like Bangladesh. The objective of this paper is to portray the present picture and provide some recommendations of SMEs sector in Bangladesh. The study was based on secondary data e.g. published journals & research articles. Financial and policy constraints are the main obstacle for the development of SMEs sector in Bangladesh. Although the Government of Bangladesh has recently taken up programs to provide financial assistances to expand SMEs through commercial banks, financial assistances and credit facilities are insufficient compared to demand and necessity of the SME entrepreneurs. Again policy level, legal and regulatory constraints are rarely being concentrated by the Government.

1.0 Introduction:

The Small and Medium Enterprises (SMEs) are recognized worldwide as engines of economic growth. The commonly perceived merits often emphasized for their promotion especially in the developing countries like Bangladesh include their relatively high labor intensity, dependence on indigenous skills and technology, contributions to entrepreneurship development and innovativeness and growth of industrial linkages. The case for fostering SME growth in Bangladesh is irrefutable as these industries offer bright prospects for creating large-scale employment and income earning opportunities at relatively low cost for the unemployed especially in the rural areas strengthening the efforts towards achieving high and sustained economic growth which are critically important prerequisites for triggering an exit from endemic poverty and socio-economic deprivation.

According to the European Union (2003) SMEs are defined as enterprises which have at most 250 employees and an annual turnover not exceeding 50 million Euros. Further there is the distinction of small enterprises they have fewer than 50 staff members and less than 10 million Euros turnover and micro-enterprises (less than 10 persons and 2 million Euros turnover). According to the World Bank (2006) medium enterprises are defined as enterprises which have at most 300 employees and an annual turnover not exceeding 15 million US dollars. Further there is the distinction of small enterprises they have fewer than 50 staff members and up to 3 million US dollars turnover and micro-enterprises have up to 10 persons and $100,000 turnover.

In India the Small Scale Industries (SSIs) are industrial undertaking in which the investment in fixed assets in plant and machinery, whether held on ownership terms or on lease or by hire purchase does not exceed Rs. 10 million. The Small Scale Service And Business (Industry related) Enterprises (SSSBEs) are industry related service and business enterprises with investment in fixed assets, excluding land and building up to Ps. 1 million. (Ministry of trade and Industry, Government of India)

In Bangladesh Industrial Policy 2009 defines SMEs as follows:

|Basis |Manufacturing activity |Non-manufacturing industrial activity | | | | | | | | | |Industry classification | | | | |Value of fixed assets |Number of manpower |Value of fixed assets |Number of manpower | | |excluding land and building...
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