SME in Bangladesh: Prospects & Problems

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SME in Bangladesh: Prospects & Problems
1.0: Introduction:

There is no denying of the fact that developing countries of the world are now recline under the brunt of acute shortage of capital & alarming problems of unemployment. From this universal realization today, Small & Medium Enterprises (SMEs), with their inbuilt attributes of low capital intrusiveness & enormous employment generation potentiality are considered as propelling agents to break the vicious circle of poverty. The growing recognition of the social & economic value of small & medium enterprises (SMEs) throughout the world, has led to a major growth of in many special programs & institutions, most of which have been established in developing countries like Bangladesh during the last couple of decades.

After a many experimentation of development policies over the last few decades to alleviate poverty in most developing countries, financing SMEs is now considered as a “new paradigm” for bringing about development & eradicating acute poverty. It is said that the global economy of the 21^st century will be dominated by small & medium sized players.

Despite our economy is highly dependent on agriculture, other sectors are growing significantly. Over the years, share of agriculture in GDP is declining as services being the drivers of growth. SMEs in manufacturing & service sector have about 19% share of GDP. A nationwide survey claims that Micro small & medium sized enterprises (MSMEs) value addition accounts for about 20 to 25 percent of Bangladesh’s GDP whereas a 30 million of people are being accommodated here. Therefore, SME sector describes more attention & focus to foster growth & to generate employment. However, various constraints such as inadequacy short & long term credited limited access to market opportunities, technology, expertise & lack of information prevented proper development of SMEs.

After admitting the contributions of SMEs in the overall economy, now-a-days, our financial institutions are fueling the sector to march forward for boosting up economic growth. Today, a good number of BFIs & NBFIs in our country are successfully operating the SME credit scheme while the other market players are coming faster in the center with the same. Government & other non-Government institutions are providing supports & incentives to the SMEs. Nonetheless, the role of SME in employment generation & poverty reduction has well been recognized in the PRSP (Poverty Reduction Strategic Paper-GOB, 2002).

1.1 : Main purpose of this report:

With these above-mentioned situations, this report is aimed at:

1. Defining the SMEs & classifying its nature.

2. Identifying the Government & private supports & incentives for SMEs.

3. Prospects of SME in Bangladesh

4. Problems of SME in Bangladesh

5. Suggestions for developing of SME sector

6. Profile of five successful SME entrepreneurs

1.2 : Methodology of the study:

In preparation of this report, we have visited, physically, some small & medium enterprises & also interviewed some successful entrepreneurs of this sector. Comparing the current status of business with the initial status we have identified five of our visited firm as successful. These five entrepreneurs have been experiencing in different fields as RMG backward linkage, fast food & bakery, dairy firm & dental clinic since the commencement of business. We have also collected some relevant data from Bangladesh Bureau of Statistics & Bangladesh Bank that is graphed here.

1.3: Limitations:

The major shortcoming of this report enumerates from the lack of relevant data. Most of the authorities, like Bangladesh Bank, SEDF, Ministry of industry, were relevant to give us necessary information causing that those are exclusively for internal audience. In his situation we worked just on the markedly available information.

The information provided by the entrepreneurs was also to some extent confusing. Their success history, total financial position & performance presented here are simply the reflection of the sounds that they made at the time of interview, assuming that they were true with all the respects.

Another problem that we faced was the variation in defining SMEs in line with authorities. So, in this report, we use different definitions in stages, no unique definition is adopted.

2.0: Defining SMEs & Their Nature:

The key problem in dealing with SMEs is the absence of an universal definition. Different reports, different authorities & different institutions define SME from their own point of view. The different bases like investment, ownership, valued added or employment sizes are considered to define SME. Here is a set of definition of SME of different authorities.

1. Authority: World Bank / USAID

Base: Employment size

Definition: Enterprises employing up to 50 workers.

2. Authority: Ministry of Industry

Base: Employment size & fixed capital

In Industrial Policy – 1999

Nature	Base	Definition
Manufacturing Industry	Fixed Capital	Medium-Having a capital between tk. 1 crore to tk 3 crore Small–Having a capital less than tk1 crore.
Service/ Non-manufacturing industry	Employment size	Medium-Employing between 50 to 99 workers. Small-Employing less than 50 workers

This definition of 1999 gets a different dimension in the NIP of 2005.

Nature	Base	Definition
Manufacturing	Fixed Capital Excluding Land & factory building	Medium– Having a capital between tk. 1.5 crore to tk 10 crore Small– Having a capital lass than tk. 1.5 crore.
Service/ Non Manufacturing industries	Employment size	Medium– Employing between 25 to 100 workers. Small– Employing less than 25 workers

3. Authority: Bangladesh Bureau of Statistics

(In economic census 2001 & 2003)

Base: TPIE (total person engaged)

Definition: Small enterprise: Employing between 11-49 workers.

Medium enterprise: Employing between 50-99 workers.

4. Authority: Bangladesh Bank:

Base: Both employment size & total asset excluding land & building.

Definition: Small enterprises means an entity

(a) For manufacturing concern: not employing more than 60 persons & with a total assets from tk. 50,000 to tk. 1 crore.

(b) For a trading concern: not employing more than 20 persons & with a total asset from tk. 50,000 to tk. 50 lakh.

(c) For a service concern: not employing more than 30 person & with a total asset from tk. 50,000 to tk, 30 lakh.

This definition of Bangladesh Bank was given through BRPD Circular No. 7, dated November 3, 2004 to define SE’s (small enterprises). But there is no specific definition for medium enterprises.

5. Financial Institutions:

With all these complexities, with the definition of SME, private banks & lending institutions have developed their own criteria. When a proposal for SME loan appears to them they classify that proposal on their pre-established concepts that differ from institutions to institution. Here, the criteria of SME are presented, as per Premier Bank circular no. 43.

SME refers to those enterprises:

1. Where goods are produced, repaired or traded in traditional way.

2. Where bank investment totals is limited between 1 lakh & 75 lakh.

3. Where 20 or less workers are engaged on wages or commission basis.

4. The net fixed assets (exuding land & building) of borrowers may not exceed tk. 1.5 crore.

2.1 : Scope & Nature of SME:

Any type of business enterprise can be treated as SME if it falls under the definition. But in our country, there are some enterprises that are namely operated as SME i.e., with low capital & with a tiny employment size. Our large-scale industries are in a limited sector where as most of rests are small & medium sized. However, industrial policy- 2005 has mentioned some small & medium sized enterprises in both manufacturing sector & service sector. These are:

Manufacturing sector: Backward linkage of RMG, food processing & food linked industry, leather, ceramic, paper printing & publishing, non metal mineral products, battery, electronics, tea gardening & processing artificial flower making, floriculture, agro forestry etc.

Service Sector: Construction industry, transportation, film & photography, pathological laboratory, cold storage, furniture, computer software, fast food & frozen food etc.

These are the scope of SMEs in our economy. Financial institutions when financing SMEs also look on the nature of the business. Their preference to finance differs from institutions to institutions.

3.0: Prospect for SMEs

Since independence, our countrymen are working independently & have engaged themselves in different activities to earn as per their demand. Our businesses come from an infinite period. But the distinction & classification appears in recent couple of decades. We have classified some of our enterprises as SME. Though our distinction process is different, our intention is almost similar; we have to give support to these. Support for SMEs comes both from Government side & from the private side to fuel the growth.

3.1: SMEs in Bangladesh:

Information regarding SMEs in our country are yet to be published publicly. Apparently, there has been no census or survey on SME. Bangladesh Bureau of Statistics (BBS) sometimes publishes some result on economic performance that also carry some information for SME. But the difficulty arises with the definition which is only based on TPE (Total Person Engaged).

Economic census of 2001 & 2003 defines small enterprises as employing 11-49 workers & medium enterprises as employing 50-99 workers.

As per that census:

Size	Worker	Total Establishments	Total person engaged	Average person engaged
Small	11-49	74,629	13,75,223	18
Medium	50-99	5,125	3,42,737	69
Total (SME)	11-99	79,756	17,17,960	¾

The economic census 2001 & 2003 also presents SMEs by category.

	SME (11-99 worker)
Category	Establishment	TPE
Mining & Quarrying Manufacturing Electricity, Gas & Water supply Construction Wholesale & Retail trade Hotels & Restaurants Transport, Storage & Communication Education Real Estate & Renting Health & Social works Others	167 28,296 291 484 6,817 3,501 1,991 20,067 981 2,542 14,615	5,641 6,44,232 9,299 13,201 1,18,257 62,984 43,053 3,87,215 24,072 66,848 3,43,158
Total	79,754	17,17,960

Source: Economic census 2001-2003, National Report (Preliminary), BBS

3.2: Government Support for SMEs:

Small & Medium Enterprises have a significant role in generating growth & employment & reducing poverty in Bangladesh. Government of Bangladesh is also looking for a smart & sustainable growth in SME sector. In spite of some limitations, Government is always monitoring these enterprises in various ways. Here is some of the incentives of the Government favoring SMEs:

Financial Support:

There was a government directive that 5 percent of Bank’s loan portfolio be set aside for small & medium enterprise financing. A separate Bank, namely the Bank for Small Industries & Commerce (BASIC) was setup in 1988 with objective of financing the small & medium enterprises. Government has already taken initiative to channelize funds received from international agencies to the SME sector through private & public banks. In this regard, the central bank has introduced a refinancing scheme of Tk. 250 crore, that will be extended to the lending institutions at only bank rate (currently 5%).

Facilitation Support:

Infrastructure & facilitation support services comprising industrial estate, EPZ’s electricity, Gas, Water, Telecommunication, Communication, port facility etc. are provided in a limited scale by Government Bodies like BCSIC, BEPZA, EPB & private sector trade bodies, PDB, Petro-Bangla, WASA, Railway etc. But it is matter of regret that these facilities from the Government are hardly reached to the appropriate party in time.

Human Resource Development Support:

Human Resource Development is another crucial factor for the development of SMEs. Skill development also depends on imparting of technical knowledge. Technical & skill development education is provided to most SME entrepreneurs through Government authorities like, BUET, BET, BIM, SCITI etc. Some other institutions are providing technological support directly to the SME entrepreneurs. These are Bangladesh Council of Science & Industrial Research (BCSFR), Bangladesh Industrial Technical Assistance Center (BITAC), and Bangladesh Computer Council (BCC) etc.

Policy Support:

In industrial policy-2005, it has been declared that Government is going to formulate a separate ‘SME Policy’ that will carry all types of guidelines & strategies to strengthen this sector. Industrial policy-1999 included only 16-thrust sector while Industrial policy-2005 carries 21 & most of these business are in operation as SME in our country. So, extending the scope of thrust sector also opens a new door for SME.

Export Policy 2003-2006 also identified 5 highly prioritized sector & most of them are still considered as SME in our country. The current export policy claims to provide special support to these highly priority area.

3.3: Private Support for SMEs:

Like Government authority, different non-government & private bodies are giving realistic supports to the SMEs, financially or technically. Most of them are financial institutions providing financial facility to the enterprises. The numbers of institution providing non-financial benefits are a little. One of these is SEDF.

SEDF: The South Asia Enterprise Development Facility (SEDF) is a multi-donor facility managed by the International Finance Corporation (IFC) of world Bank Group launched in 2002. SEDF is based in Dhaka, Bangladesh. SEDF focuses on the need of small & medium Enterprises (SMEs) in Bangladesh, Bhutan, Nepal & North-East India. The objective of SEDF is to reduce poverty through SME development.

Usually, SEDF deals with the non-financial facilities for SMEs. This organization delivers facilities to the enterprises through online & off-line. The South Asia SME Toolkit of this organization is almost a popular one that focuses on seven core business areas:

1. Accounting & Finance

2. Business Planning

3. Human Resource

4. Legal & Insurance

5. Marketing & Sales

6. Operations &

7. Technology

SEDF is intended to develop viable small & medium sized, private sector enterprises in Bangladesh. It is now working with other local business organizations & business associations like, FBCCI, DCCI, MCCI. In collaboration with DCCI, SEDF & World Bank have jointly established ‘Knowledge center’. This knowledge center is aimed to disseminate knowledge & information to Small & Medium Enterprises (SMEs) & other audiences.

To march forward, SEDF has recently formed Financial Markets Group (FMG) to strengthen the financial sectors in this region through technical assistance (TA) & capacity building. FMG has arranged numerous training sessions since 2003 for bankers as well as for potential SME borrowers. And in many cases SEDF is arranging different training programs for the stakeholders like banks, SME’s, Enterprises & potential individual.

4.0: Problems of SME:

Bangladesh is a potential country. Our economy has numerous weaknesses & they are confining our development. But SME opens the door to the immense possibility of higher economic growth. We have discussed the opportunities of SME in Bangladesh but there are some drawbacks also which should be overcome to strengthen our economy. Some important threats are as follows-

ð The Government does not give proper attention to this sector; instead they give more emphasis on heavy industries. But SME is the best way to make the poor & landless people self-reliant.

ð Government loans are not adequate enough to support the small industries poor people all over the country. Moreover for the corruption of some greedy officers many entrepreneurs do not even receive the loans.

ð It is also quite impossible for the NGO’s or the private institutions to finance all the people. Sometimes it becomes a burden for the small entrepreneurs to pay their loans as the interest rate is higher in the private sectors. So the Financing institutions should keep the interest level within the reach of poor people. So more & more people will be encouraged to start their own business.

ð The poor workers are deprived of their profit as the wholesalers do not pay them well enough for the goods produced. But they sell those products in the retail markets with the price about five times more than their buying cost. But the laborers receive not even one third of this profit. This discrimination should be checked immediately or else it will be a great threat for the development of SME.

ð At present people are more attracted to foreign products. It is having an adverse affect on the demand of our local products. So the producers of these local products can not compete with the importers of foreign products which leave them with no scope of extending their business. We should buy more local products & give these small entrepreneurs more opportunities to flourish

ð Their creativity & earn their livelihood.

Greater competition under more open and liberalized market economy regime

ð Withdrawal of subsides in SME financing

ð Anomalies in the existing import duties on raw materials and finished goods

The above are considered as some major threats for SME in Bangladesh. These problems can not solve over night. The Government as well the private sector must work together for the welfare of our local industries. If this sector is given proper support & good environment it can bring in a great deal of foreign currency.

5.0: Financing the SMEs:

Bangladesh Bank Guidelines:

The support for small & medium enterprises (SMEs) development has remained an enduring theme in the conventional wisdom of development. Development of SMEs is now seen as an important element of restructuring the economy. Government & private bodies are working on this theme to fuel our economic growth. Bangladesh Bank, the ruling body of the money market, is also responding to the Government & Non-Government facilities through its guidelines & refinancing schemes.

Bangladesh Bank has recently issued some important regulations through its circulars. The remarkable circulars are:

BRPD Circulars NO. 7; prudential guidelines for small enterprise financing. ACSPD circular no: 1; refinancing scheme for small enterprises sector.

ACSPD circular no: 2; refinancing scheme for small enterprise sector.

5.1: Prudential Regulations for Small Enterprise Financing:

(BRPD circular no: 7; Dated 03 November 2004)

Apparently, this circular provides general guidelines for the financing institutions favoring small enterprises. This regulation defines small enterprise as:

In terms of employment: Less than 30 (Service concern) Less than 20 (Trading concern) &

Less than 60 (Manufacturing concern)

In terms of Total Asset (Excluding land & building):

From Tk 50,000 to Tk 30 lac (Service concern)

From Tk 50,000 to Tk 50 lac (Trading Concern) From Tk 50,000 to Tk 1 Crore (Manufacturing concern)

Part A of this regulation includes some fundamental definitions & requirements for Small Enterprises (SEs) financing. It provides 7 Pre-Operation & 5 Operational regulations for the banks that are required to follow by the banks while undertaking small enterprise financing. The pre-operation regulations require the banks:

Ø To establish separate Risk Management Capacity;

Ø To prepare comprehensive credit policy duly approved by the board of Directors;

Ø To develop a specific Product Program Guide (PPG);

Ø To put in place & efficient computer based MIS;

Ø To develop comprehending recovery procedures for the delinquent loans;

Ø To prepare standardized set of borrowing & recourse documents &

Ø Are encouraged to impart sufficient training on an ongoing basis.

Part A of this regulation also makes some disclosure requirements for all the important terms & conditions, fees, charges & penalties including interest rate & pre-payment penalties. It also encourages publishing brochures regarding frequently asked questions.

Part B, presents thirteen prudential regulations for the banks. The important regulations are highlighted here:

Regulation 2: Personal Guarantees: All facilities to SEs shall be backed by personal guarantees of the owners of the SEs, in case of limited companies all directors will be the guarantor.

Regulation 3: Per party Exposure Limit: The minimum & maximum exposure of a bank on a single SE shall remain within the range of Tk 2 lac & Tk 50 lac respectively.

Regulation 4: Aggregate exposure of a bank on small enterprise sector:

The aggregate exposure shall not exceed:

% Of classified SE advances to Total portfolio of SE advances	Maximum limit
a. Below 5 %	10 times of equity
b. Below 10 %	6 times of equity
c. Below 15 %	4 times of equity
d. Up to & Above 15 %	Up to the equity

Regulation 5: Limit on clean facilities: Banks are free to determine security requirements for loan up to Tk 5 lac.

Regulation 6: Securities: Consequent to regulation 5, loan to SEs should be secured as for amount exceeding Tk 5 lac.

a) Hypothecation on inventory, receivables, plant & machinery.

b) Equitable mortgage over immovable property.

c) Personal guarantees of family members.

d) One, third party personal guarantee.

e) Post dated cheques for installments & one undated cheque for full lone value.

Regulation 7: Loan Documentation: Before extending loan , bank should obtain the following documents:

1. Loan application form signed by customer.
2. Acceptance of terms & conditions.
3. Trade license.
4. For partnership firm

-Copy of registered partnership deed.

5. For limited company:

a) Copy of M/A & A/A,

b) Copy of Board resolution of the company for availing credit facilities.

c) Copy of last audited financial statements up to last 3 years etc.

6. Demand Promissory note.
7. Charge on fixed assets.
8. Personal letter of guarantee etc.

Regulation 8: CIB clearance: At the time of considering a proposal, bank should obtain credit report relating to the borrower & his group from Credit Information Bureau (CIB)

Regulation 9: Proper utilization of loan: The bank should be ensured that the loans have been property utilized & for the same purposes for which they were acquired. An appropriate system for monitoring the utilization should be implemented.

Part C of the circular, BRPD cirular-7, is for the development guidelines which are aimed to provide directional guidelines to the banks. This part is partitioned into three sections- Policy guidelines, prudential guidelines & preferred organizational structure & responsibilities. This part, in detail, carries the guidelines that will assist banks to develop & implement pragmatic & value added products, efficient credit approval & Risk Management process, sound organizational structure & strong credit administration.

5.2: Refinance Scheme for Small Enterprise:

(ACSPD Circular no: 2; Dated 19 August 2005)

Small & Medium Enterprises are financed by the financial institutions. To encourage financing in this sector & to gear up the speed of extension of loan, Bangladesh Bank has taken refinancing scheme in recent couple of years. In 2003-04, Bangladesh Bank (BB) set up a Tk 10 crore refinancing scheme for credit to SMEs & the notice was circulated through ACSPD Circular no: 1.

Development partners, especially both world & Asian development bank have offered funds to finance the needs of the SMES. ADB is supporting the Government efforts to develop this sector through a US $50 million SME Sector Development Program (SMESDP) loan. This program includes $15 million for policy reforms, $30 million for credit to SMEs & $15 million for technical assistance. The World Bank wing IDA has also provided $10 million loan to Bangladesh Bank under its Enterprise Growth & Bank Modernization Project. In the national Budget 2004-05 Bangladesh Bank portion of refinancing has been raised to Tk 250 crore. A new circular also comes out in August 19, 2005 from ACSPD. The new one is almost similar to the earliest one. The following section presents some important features & conditions from the circler concerning refinancing:

1. Small enterprise is defined as an enterprise having fixed assets not exceeding Tk 1 crore.

2. Refinancing will be available up to 100 % against both working capital & term loans to SEs. A single loan amount should not exceed Tk 2 lakh to Tk 50 lakh.

3. Interest on the refinancing scheme will be charged at prevailing Bank Rate (currently 5%).

4. Banks & institutions should apply for refinance to BB in the prescribed forms & it will be available on “First come first serve basis.”

5. Refinancing will be available for short-term working capital (WC) loans as well as for medium & long-term loans. WC loans will have a maximum maturity period of one year while medium & long-term loans will have maximum maturities of 3 years & 5 years respectively.

6. Refinancing against WC loan, medium term & long term loan should be repaid within 1 year, 3 years & 5 years respectively.

7. Failure to repay any installment of outstanding loan will cause a debit to the current account of the concerned organization maintained with Bangladesh Bank.

8. Any financing organization having more than 10 % classified loans on their small loans portfolio will not be eligible for refinance.

9. Receiving refinancing money on the basis of any false statement will cause a penalty at the rate of 5% above Bank Rate on the refinance scheme.

These are some of the sections of ACSPD Circular no: 2 issued for refinancing the small enterprises scheme. This provides the institutions with the scope of attempting for lending SMEs without real estate based collateral and they can accommodate any additional cost of loan administration through appropriate spreads between the borrowing & leading rate.

5.3: SME Schemes Refinanced By BB:

Since its declaration, BB is refinancing the SME schemes through its fund. Here is the information regarding SME refinancing till 24 October 2005.

Amount Financed (in Million Tk)

	Working Capital	Medium term	Long term	Total
BB	177.579	674.63	222.0	1074.21
IDA	97.849	339.80	49.57	499.96
Total	275.428	1014.4	271.56	1574.17

Enterprise Financed

	Industry	Trade	Service	Total
BB	267	1451	204	1922
IDA	149	634	19	802
Total	416	2085	223	2724

As of 24 October 2004, these were refinanced through 8 Banks & 10 Non-Banking Financial Institutions (NBFIs)

6.1: Profile of Md. Abdus Salam

1. Name of the organization: Salam Dairy Firms

2. Owner & Entrepreneur: Mr. Md. Abdus Salam

3. Business Type: Dairy Firm, Sweetmeat producing & selling centre, Bakery.

4. Initial Scenario: Year of commencement: 1988

Initial capital invested: tk 35,000

No Of workers: 5

No. Of cows: 4

Business type: Only dairy firm.

5. Present scenario: Current capital: tk 70 lakh

No of workers: 95

No. of cows: 200

Business type: Dairy firm, Sweetmeat center & Bakery

Income per day: Tk 1,00,000 (Approximatey)

6. Important landmarks: Md. Abdus Salam, a pioneer in the horizon of SME, started his business with a tiny sized firm that currently turns to be a glittering example to all. Here we have enlisted some enthusiastic pace of the entrepreneur.

Year 1988: Start of business with a loan of Tk. 15,000 from Krishi Bank, having only 4 cows.

Year 1990: Taking a loan of Tk. 5, 00,000 again from Krishi Bank of Jurain Branch to buy 20 cows. Number of workers increased by 20.

Year 1997: Again he took a huge loan from the same bank, for about 40 lakh to buy a total of 120 cows. The firm size became triple in this year.

Year 1999: After the devastating flood of 1998 he expanded his business by entering into the sweetmeat project. Currently he has 3 sweetmeat selling center.

Year 2005: Successful launching of the new part bakery with about 20 workers.

7. Nature & extent of financing:

	Year	Nature	Amount (tk)	Lending institution	Purpose
A	Initial (1988)	–	35,000	Self Financed	–
B	1988	Short term	50,000	Krishi Bank, Jurain Branch	–
C	1990	Short term	5,00,000	Krishi Bank, Jurain Branch	–
D	1995	Medium term	6,50,000	Krishi Bank, Jurain Branch	Expansion
E	1997	Medium term	40,00,000	Krishi Bank, Jurain Branch	Expansion
F	2004	SME loan	15,00,000	BASIC	Opening of new selling centers

8. A current issue, reality not myth: On 12^th of October 2005, the Mobile Court team of BSTI came to the factory to observe the internal environment. The team highly appreciated Mr. Salam for maintaining a cleaned & hygienic environment. In spite of fining the firm, the court gives a Tk 200 as reward to the workers for their devotion in maintaining such a work place.

6.2 Profile of Md. Rais Uddin

1. Name of the organization: Golden Food & Bakery.

2. Owner & Entrepreneur: Mr. Md. Rais Uddin

3. Business Type: Bakery & Fast Food Shop

4. Initial Scenario: Year of commencement: 1982

Initial capital invested: Tk 10 lakh

No Of workers: 50

Business type: Only Bakery.

Branches: 01

5. Present scenario: Current capital: Tk 1.2 crore

No of workers: 130

Business type: Bakery & Fast Food

Branches: 05

6. Important landmarks: Since, its inception, in 1982, Golden Food has been spreading its wings through introducing different food items & opening its demanding new branches. Here, is the year of commencement of all the branches:

1982: Uttara Bread & Confectionary.

A/2, Mouchak Market, Dhaka.

1982: Mouchak Snacks Corner

A/1, Mouchak Market, Dhaka.

1988: Golden Bread & Biscuit Factory

1/B, Mirbagh, Dhaka.

1988: Golden Food.

93/A, New Circular Road, Mouchak.

1991: Uttara Bread & Biscuit Factory

143/3, Shar-e-Bangla Road, Mohammadpur,

1993: Golden Food

1, New Baily Road, Dhaka.

7. Nature & extent of financing:

	Year	Nature	Amount (tk)	Lending institution	Purpose
A	Initial	–	–	Self Financed	–
B	1991	Short term loan	9 lakh	Agrani Bank	Opening of new Branch
C	1993	Medium term loan	6 lakh	Islami Bank	Opening of new Branch
D	2005	SME loan	15 lakh	Premier Bank	Expansion though product line

6.3 Profile of Dr. Abu Hena Helal

1. Name of the organization: Himel Detal Care

2. Owner & Entrepreneur: Mr. Dr. Abu Hena Helal Uddin Ahmed.

3. Business Type: Dental Clinic.

4. Initial Scenario: Year of commencement: 1997

Initial capital invested: Tk 15 lakh

Number of clinic: 1. Himel Dental Care Unit – 01.

At North South Road.

Number Of Doctor: 1 (excluding himself)

Number Of Staff: 2

5. Present scenario: No. Of Units – 2, Unit 1 at North South Road (1997)

Unit 2 at Shajanhapur (2001)

Capital invested: Tk 50 lakh; In unit 1: Tk 20 lakh

In unit 2: Tk 30 lakh

Doctor & staff: 13; In unit 1: Doctor –2, staff –3

In unit 2: Doctor –3, staff- 5

6. Nature & extent of financing:

	Year	Nature	Amount(tk)	Lending institution	Purpose
A	Initial	–	–	Self financing	–
B	2001	Short term loan	8 lakh	Agrani Bank	Installation of new unit
C	2004	SME loan	5,50,000	The Premier Bank Ltd.	Expansion

6.4 Profile of Md. Tariqul Islam

1. Name of the organization: 3 bis Ltd.

16 Shah Ali Bagh

Mirpur-1, Dhaka

2. Owner & Entrepreneur: Md. Tariqul Islam

3. Business Type: Backward linkage of RMG (Embroideries)

4. Initial Scenario: Year of commencement: 1993

Initial capital invested: Tk 50 lakh

No Of workers: 15

5. Present scenario: Current capital: Tk 1.5 crore

No of workers: 40

6. Future Plan:

¨ 3 bis Ltd. is aimed to expand with a total investment of tk 50 crore within 5 years ¨ 3 bis Ltd. with its embroidery & fabrics expertise, is intended to form of a composite group with the same line enterprises within 2 years.

7. Nature & extent of financing:

	Year	Nature	Amount (tk)	Lending institution	Purpose
A	Initial	–	–	Self Financed	–
B	1998-2000	Short term loan	–	–	Import of New Machines
C	2004	SME loan	38 lakh	Premier Bank Ltd.	Expansion

6.5 Profile of Md. Mizanur Rahman

1. Name of the organization: Sun Tex

Tongi, Dhaka

2. Owner & Entrepreneur: A.K.M. Mizanur Rahman (Dhali)

3. Business Type: Backward linkage of RMG: Knitting & waving.

4. Initial Scenario: Year of commencement: 2000

Initial capital invested: Tk 20 lakh

No Of workers: 9

5. Present scenario: Current capital: Tk 70 lakh

No of workers: 32

6. Nature & extent of financing:

	Year	Nature	Amount	Lending institution	Purpose
A	Initial	–	–	Self Financed	–
B	2001-2003	Short term loan	–	Islami Bank	Expansion
C	2003	SME loan	16 lakh	Premier Bank Ltd.	Expansion

7.0: Conclusion

Like most other developing countries, Bangladesh suffers from lack of employment opportunities for the population. In the last two decades, Bangladesh has achieved reasonable success in slowing down population growth. But the rate of unemployment was mounting due to a slow growing rate in industrialization. This severe problem with unemployment has lead to some other consecutive problems that ultimately encircle a family, a society within the vicious circle of poverty. SMEs are currently treated as relievers in this scenario as they are being more labor intensive, having linkages to traditional industries & contributing to the development of entrepreneurial skills & the spread of new technologies.

There are many small & medium entrepreneurs in our country who have innovative ideas spirit & potentiality to do something productive for the local & foreign consumers. But the reality is that, such type of entrepreneur can’t go a long way for want of financial support because of having no access to institutional credit facilities, as they can’t provide collateral security as demanded for such credit facility. In this regard, most of our financing institutions have introduced & is introducing credit scheme for SMEs. Currently, many private commercial banks & financial institutions have extended this facility & is using the BB’s refinancing scheme for this project.

Besides, this financing problem, some other problems are regularly emerging in this sector. Those should be ruined at the earliest sounds. Apparently, diversification of the industrial production system will be needed to increase the purchasing power of the teeming millions of rural & urban poor using goods from the SMEs sector. The neglect of SMEs on the grounds of inefficiency & non-optimal use of productive factors compared to the larger industries can’t be a suitable pedestal to ignore the sector. The units in this sector have greater dependence on labor intensiveness, production techniques, lower requirements of imported input and better geographical dispersion that are more favorable to structure an emerging economy..

The SMEs need nursing to become strong enough to struggle in the competitive market. Once, an economist had rightly said that is also suitable for our SMEs is, “Nurse the Baby, Protect the Child & Free the Adult”. SMEs are like our baby in the business society and we have to nurse and protect them till they are being adult.