The Operational Conditions of Cottage, Small and Medium Enterprises in Bangladesh

Abstract

The paper critically analyses operational conditions of Cottage Small and Medium Enterprise in Bangladesh. It utilizes a sample of 19 small entrepreneurs, conducting field survey during July and August 2001 Necessary data are gathered using a semi-structured interview schedule from personal interview with the study entrepreneurs Analyses reveal a number of important findings. Most entrepreneurs define small enterprises in terms of investment size, suggesting a maximum tall investment of TK0.5 million. Tk 40 million and Tk 200 million respectively for cottage small and medium firm Economic environment is perceived to be relatively stable and favorable, but highly competitive due to globalization. A wide variety of medium quality products are being produced to mainly meet the rising demand from middle and lower income people in domestic market. Also there has been a growing demand for high quality products from foreign market. Infrastructural facilities are available at relatively high cost, but irregular and insufficient. Most entrepreneurs use second hand machinery, and would go for higher investment, if available, for updating technology, improving productivity and product quality, expanding market share and increasing efficiency. As such, there appears to have a bright growth prospect for development of the small business sector. Multiple difficulties, however, deter such growth potential. These problems, among others, include lack of unhindered access to institutional credit, high cost of borrowed capital, irregular supply of electricity and gas, lack of modern technology, unfair and uneven competition, absence of clear cut government policy and incentives. Most entrepreneurs need a comprehensive package of assistance, comprising both financial and non-financial support. Finally, the paper comes up with a set of policy principles, which may be of significant importance for smooth promotion and development of small firms in Bangladesh.