BSCIC Main Body

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1. Introduction

Bangladesh Small and Cottage Industries Corporation (BSCIC) is the prime mover organization

in Bangladesh to support industrialization process through creation of an entrepreneurial society.

BSCIC was established by an Act of the Parliament in 1957. Its development activities are

motioned, catalyzed and supported by promotion and extension services to the small and cottage

industries (SCI). SCIs contribution to GDP (2012-2013) is about 5.27 percent which is 19.54

percent of the industries (manufacturing) sectors contribution. For human resource

development, it has a number of institutes like Small and Cottage Industries Training Institute

(SCITI), 15 Skill Development Centers (SDC). One Design Center and a well- equipped

Computer Lab in the Head Office. These institutes are the centers of excellence and work for

capacity building through training and consultancy services. BSCIC maintains lean staff with

interdisciplinary expertise that has pioneered innovative solutions to entrepreneurship

development and enterprise creation. They are growing with experiential learning and

demonstrate how an entrepreneurial society can fight against poverty. Besides, as govt.

organization, BSCIC always committed to put its effort for implementing govt. decisions and

agenda for the interest of the country through its capacity under the guidance of Ministry of

Industries. Accordingly, BSCIC has been contributing its efforts to implement the govt.

initiatives regarding Vision 2021: Digital Bangladesh by enhancing its capacity building through

ICT arrangement. BSCIC developed ICT based infrastructure and services to deliver services

quickly to the entrepreneurs for the interest of SCI sector.

2. Background

Bangladesh Small and Cottage Industries Corporation (BSCIC) is a public sector enterprise with

autonomous character entrusted with entire task of promotion and development of small and

cottage industries in Bangladesh. It is the successor organization to the former East Pakistan

Small industries Corporation (EPSIC) which was established by an Act of the parliament in

1957. Main role has been to assist the promotion of small manufacturing enterprises by- (a)

developing infra-structural facilities for industry, (b) providing technical assistance and

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counseling services, (c) financing industries in the private sector and (d) setting up industries for

which private investors were reluctant. Under the direct or indirect initiative of BSCIC a plenty

of entrepreneurs has been created and enterprises has been set up in the country. But the

influence of globalization and the free economy impacts upon the traditional manufacturing

enterprises. This situation for marketing of small and cottage industries products is a major

constraints facing by the sector. BSCIC is to provide facilities to the existing and new

entrepreneurs to expand and develop their markets and to stay and sustain in the competitive

environment.

3. Definition

Small Industry means an industrial undertaking engaged either in manufacturing process or

service activity whose total fixed investment excluding the prices of the land, expenses for inland

transportation and commissioning of machinery appliances and duties and taxes , is limited to

taka three crore i.e. Tk. 30 million (including initial working capital).

Cottage Industry means an industrial unit either engaged in manufacturing or servicing

generally run by the family members either as full time or part time and the total investment is

limited to taka five lacs (Tk.500, 000).

For the development and expansion of Small and Cottage Industries, BSCIC will be responsible

for the registration, determination of import entitlement of raw materials and packing materials,

issue of import pass book recommendation for local raw materials, allotment of land in its own

industrial zones, and also for providing assistance in all other matters.

Small Industries of the textile sector will enjoy similar facilities as those of small and

cottage industries from the Bangladesh Small and Cottage Industries Corporation.

In addition to the existing facilities, the following special incentives and facilities will be

provided to intensify the expansion of small and cottage industries:

a. Small Industry Credit Guarantee Scheme will be introduced with joint collaboration of

Bangladesh Small and Cottage Industries Corporation, Government / Private General Insurance

Corporation, Government / Private General Insurance Corporation / companies.

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b. Based on the recommendation of the BSCIC, the National Board of Revenue will provide tax

holiday to appropriate small and cottage industries.

c. To assist the sub-contracting banks and financial institutions will make provisions for funds in

accordance with their rules; the sub-contracting industries shall enjoy incentives and facilities

similar to those provided in the SCI sector irrespective of their locations.

4. Organizational Profile:

Organization Name- Bangladesh Small and Cottage

Industries Corporation (BSCIC)

Type- Public(With Autonomous Character)

Established- By an Act of the Parliament in 1957

Main Function To Protect Small and Cottage

Industries.

Working Unit 74(As per 2014)

Employment Around 35 lakhs

5. Mission Statement:

Vision of this corporation is to accelerate the industrial growth through promotion and

extension of small and cottage industries.

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6. Organogram:

7. Objectives of BSCIC

There are some important objectives regarding Bangladesh small and cottage industries Limited.

These are given below:

1. To ensure accelerated growth of the SMC industries in Bangladesh:

For ensuring rapid growth of the SMC industries in Bangladesh, BSCIC promote the

establishment of industrial units, with priority for agro-support, agro-processing, import

substitution and export oriented enterprises utilizing indigenous raw material.

2. To increase productivity:

BSCIC has tried to increase and expand productivity in other areas of the Bangladesh. In order to

get this target it would expand and give investments to other sectors. It assists existing enterprise

to operate at optimum capacity.

3. To provide counseling and extension service:

BSCIC provides services including in plant advisory services, group services and training

program on technical ability, marketing and financial management export.

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4. To ensure optimum utilization of resources:

BSCIC provides advisory services to the entrepreneurs to proper utilization of financial

resources of their industrial units.

5. To provide infrastructural facilities:

BSCIC setting up the infrastructure such as industrial estates and common facility centers, design

center etc. and optimum utilization required by the industrial unit. BSCIC also maintains the

other facilities such as electricity, gas, water for uninterrupted production of the units.

6. To create and develop marketing facilities:

BSCIC assist the creation of market facilities both local and foreign, through effective sales

measures.

7. To innovate product process and technology:

BSCIC collects and disseminates on new and innovative technology for the sector as whole.

8. To promote research work:

BSCIC promote the new idea of product and technology, make and supply the design for the

proto-type of the product design and machinery.

9. To ensure development of skills:

BSCIC develops skills of the artisans or craft, technicians and managers through training.

10. To help socio-economic development:

BSCIC works for promotion of pilot projects in association with private entrepreneurs in area or

fields of national interest.

11. To create social welfare:

BSCIC create linkage with youth welfare, women affairs, social welfare and other organization

engaged in the promotion of income generating activities, with the aim of achieving integrated

rural development.

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12. To generate income among disadvantage people:

It generates income among disadvantage target people and geographically under-developed areas

of industrial units.

13. To create healthy business environment:

BSCIC creates a healthy business environment that promotes and supports the establishment and

growth of SMCIs.

14. To nurture high growth:

BSCIC nurture high growth, resilient, innovative SMCIs that adopt best business practices.

15. To enhance the technological, managerial, marketing, financial and entrepreneurial

capabilities :

BSCIC enhance these areas of capabilities of SMCIs to become globally competitive.

16. To encourage enterprises and entrepreneurs:

BSCIC encourage enterprise and entrepreneurs to harness technology and knowledge in

developing high value-added products and services and moving up the value chain.

17. To facilitate and assist SMCIs:

BSCIC gains access to market by forming linkages and business opportunities network, both

locally and internationally.

18. To foster FDI:

BSCIC foster the formation of a competitive and vibrant supply base to attract FDIs into the

country.

8. Strategy of BSCIC

There are some specific strategies which are following.

Strategy 1: Upgrade technological and management capabilities of

SMCIs.

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BSCIC develops an enterprise diagnosis system as a tool for the promotion of SEMCOs. It

enhances consultancy system for business improvement and problem solving. It also Support the

adoption of modem facilities and management systems such as ISO 9000 and TQM. It improves

the efficiency of R&D institutes and facilitates their networking with private companies.

Strategy 2: Develop SMCIs entrepreneurs and human resources

BASIC foster new entrepreneurs and incubate existing entrepreneurs. It also enhances the

efficiency and flexibility of training services. It improves the efficiency and coverage of

industrial skill standards, certification systems; improve educational curriculum and teaching

methods to meet industry needs.

Strategy 3: Enhance SMCIs access to markets

BSCIC improves SMCIs access to government procurement systems and promote

subcontracting and linkages with large enterprises both domestically and internationally. BSCIC

strengthens the export promotion activities of SMCIs

Strategy 4: Strengthen financial support system for SMCIs

BSCIC expand and develop credit guarantee system for SMCIs. It establishes venture capital

funds for the development to SMCIs. It establishes SMCIs Promotion Fund and strengthen

financial advisory services for' SMCIs.

Strategy 5: Foster an environment conducive for business development

BSCIC establishes and strengthen local information center for SMCIs, mechanism to review and

revise laws, regulations and administration procedures to redress problems facing SMCIs. It

strengthens the support to equip SMCIS to prepare for the IT revolution.

Strategy 6: Develop micro-enterprises and community enterprises

BASIC incubates strategic micro-enterprises and community enterprises. It promotes

commercialization of indigenous know-how and upgrades the managerial capabilities of micro-

enterprise and community enterprise.

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Strategy 7: Develop networking among SMCIS and clusters

BSCIC conducts a study of various industrial clusters to promote their efficiency collectively. It

support pilot projects to develop industrial cluster in each region and encourage the formation of

business associations to serve as platforms of fostering cooperation among members.

9. Activities of BSCIC

1. Institutional Networking

2. Training Program

3. Credit Program

4. Salt Production

5. Bee keeping

6. Industrial Estates

7. Annual Development Program

8. Marketing Division

9. Technology Division

10. Development of SCI in Chittagong Hill Tracts Region

11. Development of SCI in Dohogram and angorpota Region

12. Sub-Contracting Activities

1. Institutional Networking:

BSCIC has its institutional network throughout the country. Being its Headquarters at Dhaka it

has 4 Regional offices, 64 District offices (Industrial Service Centre), 74 Industrial Estates and

15 Skill Development Centers at different places of the country, Moreover; it has some project

offices at Upazilla level also.

Design Centre

Design Centre is one of the important departments of Bangladesh Small & Cottage Industries

Corporation (BSCIC). It was started in 1960. Since 1960 Design Centre has been disseminating

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the services to the general people, unemployed artisans, craftsmen, entrepreneurs particularly to

the women and clusters of Cottage level people specially working by heredity.

Design Centre is a pioneer organization which works for traditional crafts and cottage level

products designs and prototypes development. It also develops the products and creates new

designs & prototypes for competitive local and export market.

Handicrafts or cottage level products are national asset & heritage. These also carry the cultural

heredity of the nation. Design Centres collection & research on rare type of crafts for

development of different products are enriching the culture and tradition.

Design Centre arranges the training courses on skill development programs for the unemployed

people to create self-earning capacity. It also train up the artisans, craftsmen, entrepreneurs and

crafts & Cottage level products relevant people for development of designs, prototypes and

technical knowledge. Design Centre organises countrywide training programs.

Design centre works through the 13 subjective departments and also conducts 12 training

courses; the training courses are as follows:

(1) Batik (2) Block (3) Screen printing (4) Cane and Bamboo products (5) Ceramics ( clay

pottery) (6 ) Metal crafts (7) Leather crafts (8) Weaving (9) packaging ( Leaves and Straw) (10)

Jute Crafts ( 11 ) Doll making ( 12) Fashion Design (13) Another one department is General

Design. This department is for providing technical help and design distribution.

Design Centre has another tow supporting departments:

Research & publicity:

This department specially gives the support for crafts collection; disseminate the designs and

information, Organize crafts exhibitions, Fairs, Melas & Publicity Related Works.

Accounts & Administration:

A separate accounts & administrative department is there which deals with finance and

administrative matters.

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Activities of Design Center:

The various activities performed by Design center are as follows:

Selling

Design centre has a sale centre at the ground floor of BSCIC main building. This centre sells

crafts and cottage products and also sells all types of training forms, catalogues, information

books, leaflets and design catalogues etc.

Design centre organizes several types of fairs (crafts exhibition)

Every three months alternately a fair takes place at the ground floor of BSCIC head quarter.

Yearly a big fair Baishaki Mela ( New Years Bengali fair ) takes place, Sometimes, Design

Centre organises several types of fairs according to the national day or cultural special purposes.

Design centre is always helpful for technical co-operation, skill development advice for designs

& prototypes development, design information and distribution to the concerned people.

2. Training programs:

BSCIC provides training on various activities like small trading, food processing, Cottage sector

etc. Design Centre organises training programs on twelve subjects which were described before.

Duration of all the training courses is three months and weekly two days `but Fashion Design

course is for 4 days weekly. Price of each training course form is Tk. 50/=, training course fee is

Tk.300/= per trainee. But Fashion Design course fee is Tk. 3000/= (per trainee).The trainees bear

the all cost of training materials

Skill Development Center(SDC)

To create new skill manpower and improve the existing skills of the artisan with a view of create

employment opportunity for drop-out school/college students as well as unemployment youths

BSCIC has introduced skill Development training programme in nineties. Earlier this programme

was organized by DRI (Development of Rural Industries Project) with the financial assistance of

UNDP/ILO & GOB. After completion of DRI Project in 1992, Skill Development Centre (SDC)

activities merged with Technology Division of BSCIC. At now 15 skills Development centre are

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working in different district of Bangladesh. Location of centre, facilities for skill development

training given below:-

Name of the Trades/training courses of SDC

3. Electrical House wiring & motor winding (4 months )

4. Fitting cum machine shop practices & welding (6 Months)

5. Radio & Television repairing (6 Months)

6. Refrigerator and Air conditioner repairing (6 Months)

7. Computer

Small & Cottage Industries Training Institute (SCITI)

Small and Cottage Industries Training Institute (SCITI) started functioning in January 1985. This

is the only Institute in the country to support the entrepreneurs in SME sector and their

employees in the development of their entrepreneurial & managerial skill. Besides, the institute

also provides training to the promotion and extension officials of both public and private sector

agencies on different SME related areas.

The Institute Provides Training in the development of their entrepreneurial & managerial skill in

areas such as Entrepreneurship Development, General Management, Industrial Management,

Financial Management and Marketing Management; as well as project appraisal & industrial

estate management etc.

Consultancy and information services are extended when requested by other agencies and

entrepreneurs. Some areas are:

Course materials development for entrepreneurship and other SME related courses.

Socio-economic evaluation of development project.

Investment project preparation (feasibility studies for industrial and development project,

project proposals.)

Diagnosis of industrial sickness and subsequent business management counseling.

Area potential study.

Sub-sector study

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Research on relevant issues, problems & prospects of the SME, as well as independent studies on

different SME related areas. A main area of research is the assessment of training needs in order

to improve the programs of SCITI. Carryout Researches on SME and extends services as

Business Development Service Provider (BDSP).

o Objectives of SCITI :

The Government of Bangladesh attaches great importance to the development of small and

cottage industries sector in its industrial policy.

The objectives of the institute have been framed in conformity with the national aim for

industrialization of the country.

SCITI aims at providing its services to:

Private SME entrepreneurs (both existing and potential) and their employees;

Promotion & extension officials of both public and private sector agencies, such

as Bangladesh Small & Cottage Industries Corporation (BSCIC), Banks,

Development partners/Donor agencies, and international organizations, engaged

in promotion and development of SME

To develop trainers skill conduct different types of ToT (Training of Trainers)

courses, especially related with SME.

o Organization :

SCITI is managed by the Principal. It carries out its activities through the following six faculties:

i. Entrepreneurship Development.

ii. Marketing Management.

iii. Financial Management.

iv. Industrial Management.

v. General Management.

vi. Research and Consultancy.

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3. Credit Program:

For the promotion and extension of small & cottage industries BSCIC arranges credit facilities

with the help of banks and other financial institutions.

On the other hand BSCIC has some credit programmes .These are:

Development of rural industries

Poverty Alleviation through Income Generation Programme

Self- employment through small & cottage industries

Women Entrepreneurship Development Programme

Revitalization Of Rural Economy Through Development of rural industries

4. Salt Production

To attain self -sufficiency in the production of salt BSCIC delivers various types of extension

and promotional services to the salt growers . Under the assistance of BSCIC two projects-

one in Cox s Bazar and other in Khulna -Shatkhira region are being implemented. There two

projects cover about 70 toughened acres acres of land.

5. Bee keeping:

Bee keeping is the art of caring for, management, nursing and manipulating colonies of

honeybees (Apies sp.) so that they will collect and store a quantity of honey above their own

instant and/or present requirements.

6. Industrial Estates:

BSCIC provides infrastructural facilities by establishing industrial estates throughout the

country. The names of the industrial estates already established are given bellow:

Barisal

4 Industrial Estates up to Mar, 2015

Chittagong


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Dhaka


Khulna


Rajshahi


Sylhet


7. Annual Development Programme:

BSCIC has been implementing a good number of development projects in small and cottage

industries sector in consistence with the aim and objects laid in the national planning of the

govt. For the implementation of these projects required fund is being allocated in annual

development programme (ADP) yearly . The allocation of funds gradually increased with the

increasing number of potential development projects taken by BSCIC for socio-economic as well

industrial development of the country. Year-wise allocation or size of ADP for BSCIC for the last

five years is as follows:

Year-wise allocation for

Annual Development Programme of BSCIC

Year GOB

(TK in Cr.)

Project Aid

(TK in Cr.)

Total

(TK in Cr.)

2012-13 226.36 5.00 231.36

2011-12 149.89 2.15 152.04

2010-11 39.88 0.30 40.11

2009-10 58.30 0.80 59.10

2008-09 50.24 1.20 51.44

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8. Marketing Division:

It is the division to create market for the products of small and cottage industries.

To arrange promotional activities.

To help Selling activities

To analyse the current market situation,

To make efficient in distributing product with the pace of free market.

9. Technology Division:

Industrial development specially expansion of small & Cottage industries is very much essential

for the socio economic development of the country. The main tools for the expansion of industry

are to create, develop and adaptation of appropriate technology, in this contest technology

division of BSCIC was established in 1990. Technology division has two wings: Technology and

Sub-Contracting Cell

Activities of Technology wings:

Assimilation and dissimilation of technological information

Publication of Technology Bulletin

Training programs through skill development centres

Arrangement technology & environment related workshop / seminar / exhibition

etc.

Other Activities:-

Service facility centres of wind up DRI projects

Service facility centres of wind up DANIDA projects

Activities of Information and Communication net working

10. Sub-Contracting Activities:

BSCIC has started Sub-contracting activities since1986.The main activities of this programme

are;

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Identifying the Small and Cottage Industries those are complementary to medium

and large Industries and establishing linkage between them.

Create environment to signing the memorandum of understanding (MOU) of sub-

contracting with medium and large industries.

Provide assistances in signing the Memorandum of Understanding for

subcontracts and their implementation.

Implementation of the Gazette the notification of the Peoples Republic of

Bangladesh dated 1st October 1989 regarding sub contract.

10. Services of BSCIC

The BSCIC provides the following services to the private sector entrepreneurs of the four

clientele group (educated solvent, semi-literate and skilled people):

1. Pre investment counseling.

2. Industrial information dissemination.

3. Extension services.

4. Entrepreneurship development.

5. Project appraisal (technical, financial, economic and management).

6. Credit arrangement.

7. Feasibility study.

8. Scouting for entrepreneurship.

9. Sanction for enterprises.

10. Supervision of project implementation.

11. Infrastructure development.

12. Management and skill development.

13. Product development.

14. Raw material arrangement

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15. Diagnostic studies.

16. Sub-contracting arrangement.

17. Innovative production process and technology.

18. Quality control.

19. Market survey of products.

20. Marketing (including export) arrangement.

21. Design and prototype development and distribution.

22. Research and development.

23. Inter-organization co-ordination.

11. Importance of BSCIC:

BSCIC plays the significant role to the overall development of Bangladesh. There are many

importance of BSCIC in Bangladesh. Those are given below:

1. Economic solvency:

The BSCIC helps to improve the economic condition by providing various types of helps that are

really helpful.

2. Entrepreneurship development

BSCIC provides various kinds of services to develop the idea of entrepreneurship. It is very

urgent need to give job to others than seeking job from others.

3. Poverty alleviation:

By providing training and services BSCIC helps to alleviate the poverty problem of our country

that is the main problem of our country.

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4. Employment creation:

BSCIC is creating many areas to work that helps to alleviate the unemployment problem of our

country.

5. Development of rural industries:

BSCIC works basically with the rural people who have the potentials to the innovative works.

So, that task is helpful to develop the rural industries.

6. Develop the skill:

There are various types of training programs, those helps to develop the skills of the people

especially to the rural women.

7. Utilization of the resources:

There are many resources in our country. The proper utilization is needed to get the benefit from

that. BSCIC helps to that purpose.

8. Utilization of human resources:

BSCIC provides various types of skill development training to the rural people. BSCIC tries to

utilize the human resources properly.

8. Help to gain confidence of the rural women:

BSCIC especially works with the rural women. It provides training and work with them. With

the help of BSCIC the rural women gain confidence to be independent.

9. Help to the small industries:

BSCIC provides various types of services regarding the small business. Such the small industries

get benefits to run the industry successfully.

So we can obviously say that BSCIC is one of the most important keys to the economic as well

as social development of our country.

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12 Present Status of BSCIC

At a glance the present status of BSCIC is given below:

Number of small industries ( up-to June 2013)

103685

Number of cottage industries ( up-to June 2013) 830306

Number of employment in the SCI ( up-to June 2013) 36.14 lakh

(Salient features of Small & Cottage Industries in Bangladesh)

Contribution of Industry Sector to GDP (in %)

Type Fy07-08 Fy08-09 Fy09- 10 Fy10-11 Fy11-12 Fy12-13

Industry 29.45 29.93 30.33 31.26 32.36

Med. & large

Ind.

12.63 12.71 12.68 13.12 13.75 14.28

Small &

Cottage Ind.

5.14 5.18 5.26 5.29 5.26 5.27

Total Industry

(Mfd.) 17.77 17.90 17.94 18.41 19.01 19.54

Nation 100.0 100.0 100.0 100.0 100.0 100.0

(Industry Included minerals, Industries (mfd.), electric, gas & water resource, construction) Source: Bangladesh Economic Review -2013

Growth of Industry Sector to (in %)

Type Fy07-08 Fy08-09 Fy09- 10 Fy10-11 Fy11-12 Fy12-13

Industry 7.21 6.68 6.50 9.45 9.76 9.34

Med. &

large

Ind.

7.26 6.58 5.98 10.94 10.78 10.32

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Small &

Cottage

Ind.

7.10 6.90 7.77 5.84 7.18 6.76

National 6.19 5.74 6.07 6.66 6.32 6.03

(Source: Bangladesh Economic Review -2013)

Size and Growth Rate of Manufacturing Sector (Taka in crore)

Type of

Industry

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2012-13

Small &

Cottage

13551.5 14865.1 15920.0 17018.9 18091.1 19411.90 48836.0

( 9.21) (9.69 ) ( 7.1 ) ( 6.90 ) ( 7.77 ) (5.84) ( 6.76 )

Medium

& large

33268.2 36507.1 39157.2 41735.0 44229.8 49069.9 127196.0

( 11.41 ) ( 9.74 ) ( 7.26) ( 6.58 ) ( 5.98 ) ( 10.94) ( 10.32 )

Total 46819.7 51372.2 55077.2 58753.9 62570.7 68481.8 176030.0

( 10.77) ( 9.72) ( 7.21) ( 6.68 ) ( 6.50 ) ( 9.45 ) ( 9.34)

(Figure in brackets indicates the rate of growth) Source: Bangladesh Bureau of Statistics as cited Bangladesh Economic Review -2013

To assist private entrepreneurs for establishing new Small, Medium & Cottage Industries (SMCIs) unit:

1. Total 0.409 million unit

2. Small Industry 0.086 million unit

3. Medium 0.008 million unit

4. Cottage Industry 0.315 million unit

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To create labor force employment facilities through new Small, Medium & Cottage Industries (SMCIs):

1. Total 3.06 million

2. Small Industry Sector 1.54 million

3. Medium 0.52 million

4. Cottage Industry Sector 1 million

5. Percentage of new labor force employment (Total

L/F 2005-2025, will raise 59-80 million)

3.80%

6. Percentage of total labor force employment 8.28% (6.63 million)

Contribution to GDP: 30% (Tk.1050 billion).

Raising GDP in Small, Medium & Cottage Industries sector from 5% to 30%.

Raising daily income of employed poor labor force people in SMCIs sector from 1 US$

to 3 US$ through poverty alleviation programme projects undertaken by BSCIC and

through private sector investment.

Cumulative Small, Medium & Cottage Industry unit and employment will reach by

2025 (figure in million) is given below:

Category of Industry Unit Employment

Small 0.171 2.915

Medium 0.013 0.863

Cottage 0.904 2.852

Total 1.088 6.630

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Programme (indicative investment outlay)

1. Impart Entrepreneurship Development

Programme (EDP), Total

1.00 million nos.

2. EDP(Management) 0.91 million nos.

3. Skill development(trade-base) 0.09 million nos.

4. Total investment outlay Tk. 247.5 billion

5. Private sector investment on SMCIs (through

entrepreneurs equity, NCB, Private Foreign

Commercial Banks, Financial Institution and

Leasing Company)

Tk. 200 billion

6. Public sector & private investment (SMCIs

sector projects through ADP, fund from GOB

& Donors participation)

Tk. 47.5 billion

13. Future Challenges of BSCIC:

Bangladesh is mainly an agricultural country. Agriculture has always been given priority and as a

result small industries have been ignored. Recently some agro-based industries have been set up.

There are some reasons for which the country has lagged behind in heavy and medium-level

industries. Small & Cottage Industries in Bangladesh faces some challenges due to some

structural constraints that hindered industrial growth. Let us now consider the challenges faced

by this sector in general:

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1. Lack of adequate capital:

Bangladesh being a poor country, peoples saving is insufficient. As saving is poor, investment is

also low. Again peoples per capita income is not adequate. So their consumption is also low.

Consequently local market oriented industries are also very thin here.

2. Weak investment base:

Due to long colonial rule, economic discrimination and postliberation nationalization of

industrialization, the growth of entrepreneurship has been slow in Bangladesh. Besides, due to

bureaucratic red-tapes and lack of investment climate, capital investment has not been developed

here.

3. Insufficient Infrastructure:

Infrastructural facilities in our country are insufficient. Power supply, telecommunication,

transport, gas, water supply etc. All facilities are not adequate which have hindered process of

industrialization in Bangladesh.

4. Technological know-how:

Lack of proper technological know-how is also another reason of our industrial backwardness.

5. Lack of adequate resources:

Lack of adequate raw materials and natural resources are also unfavorable for our

industrialization.

Weak investment base

Lack of adequate capital

Technological know-how

Insufficient Infrastructure

Growing incidences of

crime and extortion

Lack of adequate law and order

conditions

Competition from dumped and

smuggled imports

Lack of adequate resources

Shortage of Energy

Unskilled human resources:

Political instability

Limited access to credit

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6. Shortage of Energy:

Acute shortage of energy and unreliable supply of power and other utilities such as gas and

water.

7. Unskilled human resources:

Though Bangladesh has a huge population, most of them are unskilled. Country lacks skilled

labor, specialists, professionals and technologists which also hamper our industrialization.

8. Political instability:

A good govt. policy and political stability are precondition for industrialization. Unfortunately

political instability has always been a common phenomenon here. This is a major hindrance

towards the advancement of the industry sector of Bangladesh. Frequent strikes result in

disruption of daily business. This hampers the smooth running of industries, they are unable to

procure raw materials in time hence their production and even transportation is delayed. The

politicians only think about themselves. As such, our industry cannot progress and compete with

the outside world.

9. Labor Unrest:

There is a lack of trained workers in this country. Thus, there is a decline in the efficiency of the

company. The companies also need to provide training (apprenticeship) to these laborers and

hence quite an amount of money and time is spent on them. This challenge is faced by every

company or firm in Bangladesh.

10. Limited access to credit:

Its high cost, legal or illegal, and procedural complexities in obtaining credit from banks.

11. Competition from dumped and smuggled imports:

It reduces the demands of local industries products which are produced by indigenous workers.

12. Lack of adequate law and order conditions:

Relative law, acts regarding small & cottage business are insufficient which hindrance the

business growth & profit.

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13. Growing incidences of crime and extortion:

At every stage starting from production to distribution and marketing of the products sudden

raise of crime, extortion hinders the business expansion.

14. Problems of BSCIC

There are a huge number of problems in the question of developing small scale enterprises in

Bangladesh. Maximum small scale enterprises are owned by the individuals and an individual

has obviously some limitation. Per capita income of our people is low and for this reason our

people are not being able to generate adequate capital to run the business efficiently. Those

problems are given below:

1. Excessive import of foreign products:

In our country it is another reason because when the people of the country will be mainly

dependent on the imported product then the entrepreneurs will lose their interest to develop small

scale enterprises.

Excessive import of foreign

products:

Imperfect market:

Lack of proper business

knowledge:

Frequent policy changes:

Natural Disasters:

Inadequate infrastructure

facilities (power, water)

Lack of governance:

Corruption: Bureaucratic

hassle: Unskilled

labor:

Poor access to credit:

Tax structure: Poor law and

order situation: Political

instability: Quality of Raw

Materials

Lack of efficient

distribution channels:

Lack of connectivity:

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2. Inadequate infrastructure facilities (power, water & gas):

Infrastructure is always a big headache for the urban and rural businesses. To fuel

her ambition of maintaining a growth rate of 7%, Bangladesh will need to add 2000 MW

additional energy each year. In 2007t h e p eak d e m an d fo r e l e c t r i c i t y s t oo d a t 4 50 0

M W whereas generation was stagnated at 3,717 MW. The result is service

disruptions and blackouts on almost every single day of the year.

3. Poor access to credit:

This is one factor that has been continued to be pointed out as one of the major reason that is

holding the local entrepreneurs back. Its a nightmare for a fresh-blood to get access to credit.

The48 bank rich banking sector has 30 private commercial banks; most of them target the urban

market. The private players are uninterested to move to the rural settings. But fortunately this is

changing, due to the Bangladesh Bank regulations and strong remittance growth from the

migrant workers these banks are finding the opportunity in this market and making a move for

rural expansion. But the access to credit is not getting easier.

4. Lack of efficient distribution channels:

Bangladesh has one of the flattest land structures in the world. The lack of obst acles

(hills, deserts) & presence of cheaper transportation option (waterway) makes the

c o un t r y an y s u p p ly ch a n n e l m an age r s d re am. Bu t unfortunately the real

picture is somewhat different. The businesses lose near 40% of the perishable items due to

lack of efficient distribution channel.

5. Imperfec t mar ket:

M ar k e t im p e r f ec t ion b l e eds t h e bu s i n es s es s p e c i a l l y t h e sm al l p l a ye r s t h e

m os t . Dominance of the middlemen in the value chain often cost price distortion. It

is a common scenario for the product to be sold at a significant premium while the

producers take on a huge loss. Lack of information and th e con t r o l ex e r c i s ed b y t h e se

f o r ces c au se s ev er e problem for the local producers.

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6. Lack of governance:

In a world bank online debate a commentator said, Corporate governance is not only relevant

but essential for low-income countries. The problem is not the stringency of rules but of the

governors themselves. Governance is a serious issue with Bangladesh from the very beginning.

Poor governance is one of the key points what makes the firm unattractive to investors. The

existence of nepotism in the business circle is also something which makes a firm weak. It is a

common trend among the business community to fill up the existing position switch in the firm

with their relatives who may not be suitable for the post. By separating ownership from

management businesses can create a better and effective venture.

7. Tax structure:

The tax structure of Bangladesh offers little intensive for a business. According to the JETRO

survey Bangladesh holds the second highest corporate tax rate among the Asian countries (even

after the government has cut the rate to 37.5%).

8. Lack of connectivity:

The world has moved on to connect itself to the World Wide Web whereas Bangladesh is lagging

far behind. Across the world innovative business are emerging using a clicks and mortar business

model. They are leveraging the full potential of the World Wide Web. As the access to high-speed

internet connection becoming cheaper by the day around the world the story is quite different for

Bangladesh. Businesses have to pay a handsome amount in fact one of the world steepest fees to

get access to the web. But the scenario is changing in the consumer front. Consumers now have

access to the web through their cell. There is a huge opportunity to cater to the foreign customers

by displaying the product in the web. But the high-speed internet connectivity is yet to reach the

acceptable standard.

9. Lack of proper business knowledge:

Most of the entrepreneurs of Bangladesh apply the traditional hit and miss approach with their

businesses. They have little institutional knowledge and have little access to training as very few

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organizations offer quality facility. In absence of know-how relating to general accounting,

branding, taxation, law etc. the businesses tend to miss the opportunity that the regulatory

environment offers. Internet can play vital role here for knowledge dissemination but the access

to the net is not that easy.

10. Corruption:

There is very little to add in this point since there is so much uproar from every kind of media

about how corrupt the country is. Corruption is probably one of the biggest problems faced by

the organizations. The recent drive against corruption is encouraging but unfortunately this is

focused around the urban centers whereas the rural corruption is still rampant.

11. Poor law and order situation:

Having a sound law and order situation help flourish business. But the situation has deteriorated

over the years. Recent drive to improve the situation has helped but it has done damage to the

business communities confidence

12. Frequent policy changes:

Policies formulated get changed with the government. As there is serious antagonism between

the main two parties, they tend to undo the work done by their predecessors. This causes pain to

the business community as the high investment projects require serious policy consideration and

longer payback period and such changes can create havoc for the project.

13. Bureaucratic hassle:

Bureaucracy and red-tapism has taken its toll for Bangladesh business

environment. O p en i n g a b us i n es s on an av e r age t ak es 7 4 da ys . Getting a license

takes a staggering 252 days.

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14. P o l i t i c a l i n s t a b i l i t y :

A c c o r d i n g t o a U N D P r e s e a r c h strike has led to 3-4% GDP losses during the

1990s.There are about 611 strikes during 1995 to 2002. This creates immense burden on the

business firms as the shops often get vandalized during strike violence.

15. Natura l D isasters:

S h ee r d en s i t y o f t h e co un t r ys population- 2,639 people per square mile- makes any

natural disaster a crisis. Among the time magazines list of top 10 natural disasters

of 2007 Bangladesh is the only country to be featured twice. These disasters d i s ru p t

s up p l y ch a in , d am age b us in es s and c r ea t e untold suffering for the consumers.

16. Unskilled labor:

Bangladesh may be the land of cheap l a b o r b u t t h e y a r e u n s k i l l e d . T h e

t r a i n i n g i n s t i t u t i o ns a r e no t s u f f i c i en t t o p r ov i d e t h e qu a l i t y labor force the

businesses need.

17. Quality of raw-materials:

The material used to make a product lacks consistent quality. The country has to go miles to

achieve the structured type of business that w e f i n d c o m m o n i n t h e

d e v e l o p e d w o r l d .

William Shakespeare in Julius Caesar wrote the fault, dear Brutus, is not in our stars- but in

ourselves. The statement is allegorical for Bangladesh. Except for natural calamities all the

problems mentioned here are caused by our own fault. This is also a thing of hope as the most of

the problems are caused by man-made reasons, they can be solved with proper persuasion.

15. Solutions of the problems:

To solve the problem of developing small scale enterprises in Bangladesh the following policies

may adopt to overcome the problems. As capital is the major problem for Small Business

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development in Bangladesh special emphasis should be put here. Commercial banks should

finance Small Business by giving them loan in low interest and for long term.

1. Initiatives: Government should take the necessary initiatives to develop this sector.

2. A Clear Policy: Government should have a clear policy about the small scale enterprises

in Bangladesh.

3. Easy Loan: Loan and this short of facility should be making available.

4. Control the inflow: Control the inflow of importing such product which has the

opportunities to produce in Bangladesh.

5. Extra Tariff: Adopt extra tariff on importing the product which are producing in our

country.

6. Stable Economic Situation: Make the economic situation stable to increase productivity,

growth & sustainability.

7. Securities: Provide both social and economic securities to the people.

8. HR Improvement: Improve the human resources to increase productivity, growth &

sustainability.

9. Making more entrepreneurs: Making more entrepreneurs through proper training and

loan facilities.

10. Motivation: Make the people interested to start their own or family business.

11. Support: Provide possible support to the small scale enterprises in Bangladesh.

12. Mutual Dependence: Combine the smaller enterprises into one through the cooperatives

and so on.

13. Long Term Planning: Developing small scale enterprises in Bangladesh through a proper

long term planning.

14. Increase Export: Make arrange to export homemade product or domestic product into

foreign countries.

15. NGOs Role: NGOs are very active in this sector. Their activity should be spending all

over the country.

16. Coordination: Special ministry can be made to coordinate all this.

17. Taxation rules: Taxation rules should be more flexible for Small Business.

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18. Sufficient Raw Materials: It should be assured that the Small Business firms will get

sufficient raw materials in lower cost.

19. Political Instability: Political and social instability should be maintained.

20. Terrorism: Terrorism must be sustained and keep under control.

21. Abolished Red Tapism: Red tapism must be abolished. Corrupted officials need to be

punished and replaced.

22. Public Utility Service Connection: It must be assured that the Small Business firms will

get public utility service connection without any delay and bribe.

23. Helpful Syndicate: A syndicate can be made to help the entrepreneurs and to support this

sector.

24. Increase Foreign Direct Investment (FDI): Develop and implement a good investment

friendly environment so that foreign direct investment increases here.

25. Backward linkage and forward linkage industries: Backward linkage and forward

linkage industries should be set up in garments sector with state support

26. Wages of worker: Wages of worker should be increased to contribute to higher value

added activities

27. Public Private Partnership (PPP): The emphasis on Public Private Partnership (PPP) in

the proposed industrial policy is laudable but the concept is still in a rudimentary stage.

Government will need to act expeditiously to devise a transport mechanism and frame

well-defined rules for participating in and mobilizing funds for the PPP projects.

16. Conclusion

Development of entrepreneurship, new business creation and development of inter-sectorial

linkages should be given top priority. The government should define a secure and pragmatic

policy for the development of BSCIC in the country. In order to frame a policy for BSCIC, data

collection needs to be updated. Provision should be made to develop separate and specialized

institutions in three areas: (a) finance, (b) technology, and (c) skill development, in addition to

rationalizing existing policies and institutions. An enabling economic environment comprising of

sound macroeconomic and structural policies, good infrastructure, fair policy of competition, and

efficiently functioning financial institutions also need to be created and strengthened.

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Reference:

1. Transcript of The Bangladesh Small and Cottage Industries Corporation

(Amendment) Act, 1990

2. Definition of Small Industries in Various Countries

3. Monitoring Urban Poverty at the Bangladesh Bureau of Statistics

4. BSCIC Document

5. www.ministryofindustry.gov.bd

6. www.bscic.gov.bd

7. www.wikipedia.org

8. Cottage industries in Bangladesh from Banglapedia

9. Entrepreneurship in Bangladesh from Banglapedia

10. Investment opportunities in Bangladesh

11. Public-Private Dialogue Case Study: Bangladesh

12. The New Age reports on BSCIC

13. www.sciti-sme.gov.bd

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Multiple Choice Questions (MCQ)

1. Which type of organization BSCIC is-

a. Private Owned

b. Public Owned

c. Autonomous

d. Public with Autonomous.

2. In which year BSCIC has established?

a. 1960

b. 1975

c. 1957

d. 1980.

3. What is the full meaning of BSCIC?

a. Bangladesh Small Cottage Industries Co- ordination.

b. Bangladesh Small Cottage Industries Co-operation.

c. Bangladesh Small and Cottage Industries Corporation.

d. None of these.

4. BSCIC functions under which Ministry?

a. Ministry of Economics.

b. Ministry of Social welfare.

c. Ministry of Industry.

d. Ministry of Commerce.

5. Till 2014, how many working Unit are there in BSCIC?

a. 77

b. 75

c. 74

d. 78.

6. What amount is required in small and cottage industries?

a. 5 crore

b. 7 crore

c. 10 crore

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d. 3 crore

7. Which point is not an objective of small and cottage industries?

a. To assist entrepreneurs and enterprise

b. To assist FDI

c. To create social welfare.

d. To create women empowerment.

8. Which corporations develop micro enterprises and community enterprises?

a. BSCIC

b. BCSI

c. BSTI

d. BRRI

9. BSCIC helps many industrialists providing----?

a. Loan facilities

b. Infrastructure facilities

c. Advisory services

d. All of the above.

10. Which one is establish local information center for SMPS?

a. BCIB

b. BARI

c. BSCIC

d. BSTI

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