Abstract
Small and medium enterprises (henceforth, SMEs) play a key role in economic growth and industrial development of a country. They make vital contributions in improving economic and social sectors of a country through stimulating large scale employment, investment, development of indigenous skill and technology, promotion of entrepreneurship and innovativeness, enhancing exports, and also building an industrial base at different scales. SMEs worldwide have been benefited from the combined interactions of forces of product mix, location factors, and market advantages. However, evidences also suggest that there are cases of SME failures. Growth of SMEs is constrained by many factors. Many SMEs occasionally go on growing into large firms. This paper looks for identifying such constraints of manufacture based SME Development in Bangladesh. From the study, it has been identified that, lack of utility facilities, for example, electricity, gas and water, frequent changes of the prices of raw materials as well as shortage of raw materials, political unrest, high interest rate on borrowings, high transportation cost, lack of financing for ongoing concern, and inadequate infrastructure are the major constraints of manufacture based SMEs Development in Bangladesh. The researchers assume that few initiatives like developing necessary infrastructure, ensuring utility services, reducing bank rate and ensuring consistent supply of raw materials can change the total scenario and thus can help the manufacturing sector which in turn will result the industrial development of the country and thus will be able to contribute to the economic development.
Highlights
Bangladesh is a country where supply of raw materials, cheap labor and a large domestic market is abandon
Simple random sampling technique was used to select the Small and Medium Enterprises (SMEs) of Khulna and Rajshahi by using two sets of SMEs lists collected from the Bangladesh Small and Cottage Industries Corporation (BSCIC). 51 SME owners/managers from Khulna and 23 from Rajshahi were interviewed
This study aimed to explore the constraints for the development of manufacture based SMEs in Bangladesh
Summary
Bangladesh is a country where supply of raw materials, cheap labor and a large domestic market is abandon. Huge amount of raw materials and human resources can create a big market for the Small and Medium Enterprises (SMEs) in Bangladesh (Ahmed, 1987). This sector has a big prospect (Sarder, 1990) and can contribute further to ensure sustainable growth of the economy. Since the government of Bangladesh started devising policy instruments to guard the sector from any sort of undue intervention This shift in prioritization of different sectors of the economy by the government did not come all of a sudden, such a discernible move was rather imminent due to the facts that on the one hand agriculture sector, the mainstay of the economy, has long been suffering from low productivity problem and was employing some 60 percent of the labor force to produce a meager one–third of the national income (McIntire, 1998). Many small firms have been developed over the years in many developing countries (Mann et al, 1989), but in most of the cases the institutions responsible to support the SMEs failed to reach and assisted a fairly small number of firms, leaving a vast majority of the firms’ untouched (Farbman and Steel, 1992)
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