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1. Presentation
on
“Incentives and facilities for small and medium
enterprises (SME) provided by our
government.”
Prepared by
“Brainstorming Group”

2. Overview
SMEs have assumed special significance for poverty reduction
programs and potential contribution to the overall industrial and
economic growth in Bangladesh. This report focuses on
incentives and facilities for SME provided by our Government.
We have tried our best to give an overview on
 SME sector in Bangladesh
 Government Organizations’ activities for SME development
 Bangladesh Small and Cottage Industries Corporation (BSCIC).
 SME Foundation
 BASIC Bank
 Bangladesh Bank
 Bangladesh Krishi Bank
These play important roles for implementing Government
policies by adopting strategies and programs efficiently for SME
development. So we have made a study on these organizations to
identify the activities and programs for SME development.

3. Definations of SMEs
According to “Industrial Policy 2010” of Bangladesh
the definations of SME:
Manufacturing enterprise:
Small enterprise: An enterprise would be treated as small
with capitalized costs excluding land and building, is
between BDT 50 lacs to BDT 10 crores.The number of
workers is between 25 and 99.
Medium enterprise: An enterprise would be treated as
medium with capitalized costs excluding land and
building, is between BDT 10 crores and BDT 30 crores.The
number of workers is between 100 and 250.

4. Definations of SMEs
Non-manufacturing activities: (such as trading or
other services)
Small enterprise: An enterprise would be treated as small
with capitalized costs excluding land and building, is
between BDT 5 lacs and BDT 1 crore and it has less than 25
employees.
Medium enterprise: An enterprise would be treated as
medium with capitalized costs excluding land and
building, is between BDT 1 crore and BDT 15 crore and it
has maximum 100 employees.

5. Govt. policy under “Industrial Policy
2010” for SME
 Government will encourage SME entrepreneurs
through providing adequate loan and training
programs to create strong position of SME.
 SME will be re-financed continuously by BB through
three re-financing funds.
 Women entreprenuers will get priority for SME loan .
15% of total loan will be for them and the interest rate
will be 10%.
 ICT Industries will get priority for govt. assistance.

6. Institutional Arrangements for SME
development
 BSCIC has been the key public sector agency
responsible for supporting SME promotion for a long
time.
 Bangladesh Bank,BASIC Bank,SME Foundation,
Bangladesh Krishi Bank, Janata Bank etc.
 The private sector efforts through participation of
MIDAS and selected NGOs (especially GB, BRAC and
Proshika) have been worked especially in SME
promotion.

7. Government Organizations for SME
development
 Bangladesh Small and Cottage Industries Corporation
(BSCIC)
 SME Foundation
 Bangladesh Bank
 BASIC Bank
 Bangladesh Krishi Bank
 Others (Janata Bank, Agrani Bank, Rupali Bank)

8. BSCIC provides assistance in all other matters relating to
development and expansion of small and cottage industries (SCI).
Its major functions are as follows :
Promotion and registration of small and cottage industries
Conducting advisory and industrial promotion services including
training of entrepreneurs, skill development of artisans and
craftsmen, creation of jobs for SCIs etc.
Construction. and development of industrial estates with
necessary infrastructural facilities for SCIs.
Development of linkages between SCIs and large and medium
sized industries.
Bangladesh Small and Cottage
Industries Corporation( BSCIC)

9. Goals of BSCIC which are focusing on SME
development
A. To assist private entrepreneurs for establishing new
Small, Medium & Cottage Industries (SMCIs) unit
upto 2015.
i) Total : 0.409 million unit
ii) Small Industry : 0.086 million unit
iii) Medium : 0.008 million unit
iv) Cottage Industry : 0.315 million unit

10. Goals of BSCIC which are focusing on SME
development
B. To create labour force employment facilities through
new Small, Medium & Cottage Industries (SMCIs).
i) Total : 3.06 million
ii) Small Industry Sector : 1.54 million
iii) Medium : 0.52 million
iv) Cottage Industry Sector : 1 million
v) Percentage of new labour force employment
(Total L/F 2005-2025: 3.80%)
vi)Percentage of total labour force employment: 8.28%

11. Goals of BSCIC which are focusing on SME
development
C. Contribution to GDP : 30% (Tk.1050 billion ) (To raise GDP in
Small, Medium & Cottage Industries sector from 5% to 30%)
D. To raise daily income of employed poor labour force people in
SMCIs sector from 1 US$ to 3 US$ through poverty alleviation
programs/projects undertaken by BSCIC and through private
sector investment.
Cumulative Small, Medium & Cottage Industry unit and
employment will reach by 2025 (figure in million).
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

12. The stretegy of BSCIC for implementing proper
incentives and facilities for deveopment of SME
 Strategy 1: Upgrade technological and management
capabilities of SMEs.
 Strategy 2: Develop SME’s entrepreneurs and human
resources
 Strategy 3: Enhance SMCI’s access to markets
 Strategy 4: Strengthen financial support system for SMCI’s
 Strategy 5: Foster an environment conducive for business
development
 Strategy 6: Develop micro-enterprises and community
enterprises
 Strategy 7: Develop networking among SMCI’s and clusters

13. The BSCIC provides services to the private
sector entrepreneurs
 Pre investment counseling
 Industrial information dissemination
 Scouting for entrepreneurs
 Extension services
 Entrepreneurship development
 Project appraisal (technical, financial, economic and
management)
 Feasibility study
 Credit arrangement
 Sanction of enterprises
 Supervision of project implementation
 Infrastructure development
 Management and skill development

14. The BSCIC provides services to the private
sector entrepreneurs
 Product development
 Design and prototype development and distribution
 Raw material arrangement
 Diagnostic studies
 Sub-contracting arrangement
 Innovative production process and technology
 Quality control
 Market survey of products
 Marketing (including export) arrangement
 Literature on products and process from home and abroad
 Research and development
 Inter-organization co-ordination.

15. SME FOUNDATION
 Non-Trading organization
 To develop SME for employment creation and national economic
growth
 To implement govt. SME policy
 Policy advocacy and research
 Credit wholesalling program (9% interest rate)
 Capacity building and skilled development
 Technology development and uses
 Access to information
 Women entrepreneur development
 Business support services
 Product quality development and quality certification assistance

16. BASIC Bank limited and SME
 State owned and specialized bank
 50% fund for SMEs financing
 Maximum loan for Small Enterprises 50 lac
 Prefer 25 SME sectors
 BASIC KALYANI for women entrepreneur
 Collateral free maximum loan 5 lac @ 10% interest
rate
 Maximum loan payment period 3 to 5 years

17. Bangladesh Krishi Bank and SME
 Providing loan for SME to reduce proverty to implement vision
2021.
 Loan for women enterpreneur with simple conditions.
 Two types of loan (Project loan and Current capital or Cash Credit)
 Small Enterprise Loan limit
Service and trading 50 thousands to 50 lac
Manufacturing 50 thousands to 1 crore
 Medium enterprise Loan limit
Service and trading 50 lac to 10 crore
Manufacturing 1 crore to 15 crore
 Project loan interest rate 12% and payment period = grace period +
5 years.
 Current capital / Cash credit interest rate 12.5% and payment
period 1 year.

18. Bangladesh Bank and SME
development
 Separate SME and special programs department
 Annual SME loan target for banks
 Priority for small and women entreprenuer
 Region and sector based financing
 Training
 Three layer monitoring system
 Available information for SME loan and
promotion
 Outsourcing for SME loan program

19. Bangladesh Bank and SME
development
 Motivation for SME loan providing
 Specific funds for women entrepreneur
 Help desk for women entrepreneur
 Low interest rate for women entrepreneur(Bank
rate+5%)
 Collateral free loan upto 25 lacs for women
entrepreneur
 SME loan for ICT sector
 Help for increasing grace period

20. Key Issues and challenges faced by
SMEs.
 Liberalization and Global competition
 New Emerging Technologies.
 Skill Development.
 Finance.
 Information.

21. Recommendations
 Indigenous R&D capabilities should be developed quickly.
 Most manufacturing processes are today electronically
controlled. Hence, adequate skill has to be developed for
using and maintaining electronic components and control
devices.
 Designated financial institutions should not only be
encouraged but also be helped to develop expertise in
industrial financing, technology assessment and
acquisition of relevant sectoral knowledge.
 Free information assistance will have to be provided to
potential investors in the SME sector for developing
project proposals.

22. Recommendations
 Bangladeshi workmen are unable to produce goods from
the standard specifications. This deficiency has to be
removed quickly by establishing appropriate training and
skill development facilities.
 Selection, acquisition and application of the appropriate
technology for production.
 Compliance with Quality Assurance and environmental
friendliness standards, through adoption of TQM, ISO
9000, ISO 14000, etc., and necessary training for practicing
these.
 Institutional facilities are needed for entrepreneurship
development, including particularly capturing the high
entrepreneurial ability of the women of Bangladesh.

23. Conclusion
Success of SMEs development in Bangladesh depend
on following aspects:
 Tecnological development
 Skill development
 Up to date information
 Close co-ordination between entrepreneurs and
government institutions.