IITM- International Institute of Technology and Management

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SME Services

Globally SMEs (Small Medium Enterprise) are the new engines of growth. Bangladesh is no stranger to SME sector and its concurrent development. It is estimated that approximately 80% of Bangladesh’s employment in the private sectors is in the SME sector.

Therefore at IITM, we find the necessity to commit to the development of the SME sector. We focus on the following areas:

a) SME training & development

b) SME baseline surveys and market research

c) SME consulting and value-chain analysis

d) SME & CSR practices

Within our SME cell, we have dedicated resource persons who are abreast of the changing needs of the market. Our consulting resource persons have in depth market understanding and field level investigative experience.

SME Definition

Bangladesh, like other countries, has its own definition of SME based on the country’s economic activity and size of its companies. The term SME bundles Micro, Small and medium enterprises and their definition and scope vary in terms of number of employees, annual turnover, capital investment, paid-up capital, etc. from one country to the other. EU defines SMEs as independent enterprises (not owned as to 25 percent or more of the capital or voting rights by one or jointly by several enterprises) which have fewer than 250 employees and have as annual turnover not exceeding 40 million Euros, or an annual balance-sheet total not exceeding 27 million Euros. Small enterprises have fewer than 50 employees and annual turnover not exceeding 7 million Euro, or an annual balance-sheet total not exceeding 5 million Euro.

In Bangladesh (a) “Large Enterprise” means an enterprise whose cost of durable resources other than land and factory building is above 100 million taka, (b) “Medium Industry” means an industry in which the value/replacement cost of durable resources other land and factory buildings in which the value/replacement cost of durable resources other than land and factory building is between 15 million and 100 million taka, c) ‘Small Industry” means an industry in which the value/replacement cost of durable resources other than land and factory building is under 15 million taka (d)”Cottage Industry” means an industry in which members of a family are engaged part-time or full-time in production and service-oriented activities

Bangladesh small & Cottage industries Corporation (BSCIC)
BCSIR and BITAC
Atomic Energy Commission(AEC)
Technology- oriented State- owned Enterprises, like Chittagong Steel Mill, Chittagong and Khulna Newsprint Mill, Chemical factories, paper and pulp mills, Security printing, etc
State-owned Financial Institutions
Bangladesh Shilpa Rin Sangstha (BSRS) and Silpa Bank
Palli Karma-Sahayak Foundation (PKSF)and BASIC Bank

Palli Karma-Sahayak Foundation (PKSF) and BASIC Bank

These organizations are involved in financing SMEs . PKSF provides funds to NGOs which usually lends at a prohibitive rate. The success of micro-credit depends on allowing the end-borrowers to receive loan at less than 6 or 7 percent, otherwise their cost of financing is transferred into higher cost of production, setting a spiral of upward price escalation when their produces reach the city centers where a large amount of consumption takes place. BASIC bank gives banking service to SMEs as more or less ordinary commercial bank.

SME Foundation

SME Foundation is a new institution established in 2006 to arrange finance and loan to SMEs. Being a new Foundation, its impact on economy and societal well-being through supporting the SMEs in the area of induction of technology, expansion of market, product development, assurance of quality and establishment of linkages with large industries for out sourcing or sub-contract of some of their products will need to be appraised at a later stage when the Foundation matures and real life cases are in place.

Impediments to SME growth related Export growth

Traditional family business that starts with own finance and gradually becomes small enterprise, or small firms that intends to expand, or entrepreneurs who to start new ventures within the scope of SMEs face problems in growth or expansion of export, including lack of access to desirable finance due to a number of factors without state support.

SMEs growth path is strewn with difficulty; as a result many small firms, in spite of having the right products or services and technical and human resource support cannot sustain effective growth due to lack of finances. Overall the national economic growth is contained.

Some of impediments to growth are:

Constrains for SME development and access to finance
State Regulation
Administration
Trade Framework
Commercial Banks’ general perception of risk in lending to SMEs
Higher administrative cost of bank lending to SMEs
Lack of credibility of SMEs
Insufficient ability of Banking sector and high interest rate (applicable in Bangladesh)
Small and micro-enterprises’ difficulty in providing securities or collateral for their loans
Incapability in Export Marketing
Trading Cost
Lack of access to global production network and outsourcing or OEM market
Weak supporting system for SME
Low R&D capability and facilities, poor access to advanced technology and skilled manpower and weak industry academia collaboration.
Weak preparation for standardization, testing and quality certification