The role of small and medium enterprises (SME) to economic growth of a country is well recognized. Across the globe it is strongly perceived that SMEs do play a vital role in the industrial development of a country. Bangladesh is not lagging far behind in this respect. The country has been pursuing a SME-focused growth strategy considering its immense potentials of providing opportunities for large-scale employment .red its higher labor-capital ratio.
SMEs are characterized on the basis of size; investment and employment in most countries amass the world. Here small enterprises are those which have employed less than 50 persons and have an investment of less than 11 250 million. On the Other hand, medium industrial units are those which have investment between Tk 200 million and 500 million with the number of employed workers ranging between 50 and 99.
There are also tens of thousands of cottage industrial units and a large number of hand loom and power loom factories in the country. Despite hating huge potential to flourish, the growth of SMEs in Bangladesh is being impeded by multifarious problems, both at micro and macro levels. The major problem is access to finance Joe to a rigid collateral requirement by the existing banking system and rampant malpractice in loan sanctioning process. Others include lack of material testing facilities required for quality production, inadequate skilled labor force and poor marketing know-how. Inadequate knowledge of many entrepreneurs about the existing lending system and absence of necessary training facilities for small enterprises, widespread corruption and extortion and high rates of value added tax (VAT) and unnecessary harassment 'torn the tax/ VAT officials and law enforcing agencies are also seen as impediments for the growth of SMEs.
On the other hand, absence of modem technology transfer policy, lack of necessary infrastructure and support services like ports, power, gas and telephone, poor law and order and inadequate legal framework and policy inadequacies have been identified as the key macro-level problems. The government has already given special attention to the promotion of SME sector in the country. Reduction of interest rate and offering some incentive packages for some particular SMEs are the key policy initiatives.
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