The New Nation - Internet Edition

SMALL and medium enterprises (SMEs) are specially suited for Bangladesh having a vast workforce and a huge number of it remaining unemployed or underemployed. Large-scale industries set up to achieve the economy of scale in most cases involve high establishment and operating costs. These are capital intensive and this factor may undermine their prospects in the first place as their likely proprietors may shy away considering that they would require a great deal of capital to build and operating capital afterwards.

SMEs, by comparison, need not worry so much about capital sufficiency or capital mobilisation. They are likely to be within the affordable range of equity investments of most potential investors. Besides, in the interests of the Bangladesh economy, SMEs are desirable because these can be expected to generate more employment Unemployment is a big problem in Bangladesh and it should be obvious that forms of entrepreneurship that can create comparatively more employment compared to ones that generate less jobs would be preferable in this country. For example, if a big enterprise with capital investment of over 100 million Taka creates only 50 jobs while a project with investment as litle as two million Taka produces an equivalent or more jobs, then the later would provide proportionately greater all round benefits to the economy.

Big enterprises with their big amounts in sunk capital and operating capital also face difficulties of exit from the scene should they start losing money. SMEs do not face exit problems in such cases as their initial investments and operating costs are much smaller than those of big enterprises. Therefore, their owners do not stand to risk so much from not sustaining in operation. The SMEs are mainly in need of banking and other facilities at their doorsteps. These producers of modest means are mostly self-made entrepreneurs. They are not the recipients of any institutional credit They never went to any bank for borrowing.

But the SME-type entrepreneurs of the Dholai Khal area are playing a valuable role for the national economy. They are a dynamic breed. They do not create problems of classified loans and other burdens for the country's financial sector. But on their own strengths they have been employing a large number of people. More important is that they produce a wide range of small machine parts and machinery which should have been imported if these enterprises did not exist At present they are not being evaluated for their real worth. Given the benefits of proper institutional credit and different forms of official supports, they can produce an economic miracle by raising substantially the country's GDP growth rate, solving considerably the unemployment problem and contributing significantly towards import substitution and improvement of the country's balance of payments position.