Essay 4

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Offline zafrin.eng

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Essay 4
« on: March 25, 2018, 02:53:45 PM »
SMEs in economy of Bangladesh/Role of SMEs/Status of SMEs in BD
ACCORDING to the National Industrial Policy 2010, any firm employing more than 10 but less than 25 workers is called a micro-enterprise. If the number of workers employed remains between 25 to 99, the enterprise is identified as small. A medium enterprise employs 100 to 249 workers in Bangladesh. Small and medium enterprises (SMEs) are expected to play a pivotal role in achieving the goals of poverty alleviation as envisaged in the current development paradigm.
SMALL and medium enterprises (SMEs) are treated as the engines of growth and drivers of innovation worldwide. They play a significant role in driving economic growth and generating jobs.
In Bangladesh, the sector is actually changing the face of the economy. SMEs are playing a vital role for the country's accelerated industrialization and economic growth, employment generation and reducing poverty. SMEs now occupy an important position in the national economy. According to the available information provided by Bangladesh Bureau of Statistics, They account for about 45 percent of manufacturing value addition, about 80 percent of industrial employment, about 90 percent of total industrial units and about 25 percent of the labor force. Their total contribution to export earnings varies from 75 percent to 80 percent. The industrial sector makes up 31 percent of the country's gross domestic product (GDP), most of which is coming from SMEs.  The total number of SMEs in Bangladesh is estimated to be 79,754 establishments. Of them, 93.6 percent are small and 6.4 percent are medium. The 2003 Private Sector Survey estimated that there are about 6 million micro, small and medium enterprises, with fewer than 100 employees. About 60 to 65 percent of all SMEs are located outside the metropolitan areas of Dhaka and Chittagong.  The country's SME sector has created 15 lakh jobs between 2009 and June 2014. Now, private and foreign banks disburse half of all farm loans and a third of these are going to SMEs.
Central banks role - The central bank has been at the forefront of SME development in Bangladesh.
The government has rightly identified SMEs as the priority sector for transforming Bangladesh into a middle-income country. In line with government's thrust, BB has been instrumental in designing and implementing SME sector development initiatives as part of its development financing agenda.
BB has shown the world that a central bank can successfully manage its traditional role of monetary authority while playing the complementary role of development driver. BB has already become the role model in SME financing in the international arena within a span of only five years. Its initiatives are being studied by other central banks of the world. The central bank is regularly receiving delegates from other central banks who are looking at the country's success stories.
The central bank has launched target-based credit activities for banks. Between 2010 and 2015, about 18.35 lakh SMEs got loans to the tune of BDT 262,340 crore. Loans of nearly BDT 100,000 crore are going to SMEs every year. BB has launched a number of refinancing schemes involving BDT 2,100 crore from its own fund as well as funds from development partners.
SMEs in Bangladesh should see whether they could be part of this new phenomenon. It is worth noting that SMEs that invest in technology and those with high labor productivity are more likely to be part of the GVC (global value chains)  . Bangladesh needs to maximize the benefits derived from the SME sector, as this sector plays a pivotal role in promoting and sustaining the industrial as well as overall economic growth.