ID No: OSL-FM-14

7/16/2020 Department of Organization Strategy

Assignment on and Leadership University of Dhaka
Submitted to: Muhammad Abdul Aziz
Industry policy and
Lecturer
SME policy Submitted by: Department of Organization Strategy
Sadia Islam and Leadership University of Dhaka

CONTENTS
Industry: ............................................................................................................. 2
1. Analyzing a local medium industry’s features and benefits applicable to the
industry based on the industry policy or SME policy: ............................................2
1.1 Recommendation for that industry to flourish: ...............................................2
2. Does the Industry policy and SME policy needs to be updated to ensure the
given contemporary issues mention in the questions? ..........................................5
3. Describing the supports or stimulus packages government announced to revive
business firms from the recent pandemic: ..............................................................7
1
Industry
An industry is a group of manufacturers or businesses that produce a particular
kind of goods or services.
In an industrial society, industry employs a major part of the population. This
occurs typically in the manufacturing sector. Bangladesh’s main industries are
cotton, textiles, jute, garments, tea processing, paper newsprint, cement,
chemical fertilizers, sugar and light engineering.
There are some form of industry like– large, medium, small, micro, cottage etc.
SME plays an important role in the economic development of Bangladesh.

1. Analyzing a medium industry’s features and benefits applicable for

the industry based on industry policy or SME policy:
The selected local business is Hatil Furniture which is located in Shewrapara,
Rokeya Sharani, Mirpur. The brand name Hatil stands for elegant and affordable
furniture. In this business the number of employment is between 121 and 300.
And the fixed asset is from 150 to 500 mil BDT. So, according to industry policy
2016, this furniture manufacturing business is medium industry.

1.1Recommendation for that industry to flourish:

Small and medium-sized enterprises (SMEs) are the backbone of the national
economy in Bangladesh. Small and Medium enterprises are particularly suitable for
the densely populated countries like Bangladesh where SME sector can provide
huge employment opportunity with much lower investment. They are expected to
create jobs, reduce poverty, and drive a resilient national economy. The
International Monetary Fund (IMF) Country Report (2012)1indicated that SMEs in
Bangladesh accounted for more than 99% of private sector industrial establishments
and created job opportunities for 70%–80% of the nonagricultural labor force.
The selected local business is also medium industry. This furniture manufacturing
business is really going well. Unemployment people are getting job, increasing
economic growth, providing better life, better education etc. Over the last

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decade, furniture industry has shown laudable performance by having an average of
25% export growth over the years. The industry generated employment for 2.5
million workers who directly contribute in financial inclusion.
Now, I will give some recommendation which are really necessary for medium
industry (Hatel Furniture)-

∙ Raw materials :
Majority raw materials are imported, not easy to get. So it’s very important
to find easy way to get raw materials for local business.
∙ Skilled workers :
There are enough workers in Bangladesh but not all workers are getting
proper training. For that reason this industry’s growth rate is decreasing. So
it’s necessary to provide them proper training
∙ Study on furniture design :
Knowledge on modern furniture making is low. That’s why I recommend
that study is urgent on modern furniture design.
∙ Electricity:
Government needs to give attention on electricity. Electricity is frequently
disrupting in this area. Because of this problem the manufacturing process is
getting slow day by day.
∙ Development of infrastructure:
Roads, bridge, transportation etc. are the main physical infrastructure. The
economy needs better infrastructure to connect supply chains and efficiency
move goods and services. In this industry it’s important to development of
infrastructure.
∙ Financial support:
The lack of finance stops this SME industry growing and becoming more
profitable. The SME sector tends to suffer because SMEs are viewed as a
less attractive investment opportunity than many others. In our country
there are many banks give special SME loans for this industry. But the
interest rate is so high. So they cannot make enough profit to raise their
business. Govt. should take necessary steps to give their proper financial
support.
∙ Awareness on technology:
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Using of modern technology is an important thing in today’s business.
Without it business can’t make good profit or can’t improve their worker’s
efficiency. Workers should know how to use these technology. After that they
can able to give their best and the business will definitely improve. ∙ Need more
research:
A recent study conducted by the International Cooperation Organization for
Small and Medium Enterprises in Asia, Japan, has found. The contribution of
SMEs to the GDP is only 20.25 percent in Bangladesh, whereas it stands at 80
percent in India and 60 percent in China. Some of the key reasons why the
sector has not developed properly are: scarcity of fiscal incentives,
management problems, access to finance and bureaucracy. it is now time for
the government to address these issues and give the sector a boost. if
developed properly, the sector will surely have the capacity to create job
opportunities for a large section of our unemployed youth. To that end, we
need to take proper policy initiatives, including increased research, in this
sector.
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2. Does the Industry policy and SME policy needs to be updated to
ensure the given contemporary issues mention in the questions?
SME is playing an important role to develop the economy of our country. In
Bangladesh this sector is actually changing the face of the economy. SMEs also can
play the Role as the Backbone of Sustainable development. Also this sector is
playing a significant role for the country’s economic growth, creating more new and
innovative jobs and reducing poverty. The country's SME sector has created 15 lakh
jobs between 2009 and June 2014.

To strengthen the country's industrialization process, the government has

announced the Small and Medium Enterprises (SMEs) as a priority sector and as the
driving force for industrialization.
But also there are some problems, because of these problems these sector
cannot raise their growth or cannot hold their sustainable growth or
achievement. Govt. have to be more careful to handling these problems.
There are some issues that should be updated in industrial policy or SME policy.

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A. Inclusive development and achieving Sustainable Development.
B. Ripping the benefit of demographic dividend
C. Reducing inequality
D. Ensuring maximum benefit of 4th Industrial Revolution.
I feel that industry policy or SME policy to insure those issues. SME can hold their
sustainable development by using proper plans and taking limited risk.
To ensure the benefit of dividend, there are some ways such as, increasing labor
supply, human capital, increase in savings and reducing dependency ratio.
SME can reduce inequality by creating more jobs and giving new and creative jobs to
unemployment young works. So that the income growth will also increase. And
that’s how income rate will increase and people will be more effective for this
country.

Most important part is 4th Industrial Revolution. And that is comprise of artificial
intelligence and information technology. It is an opportunity to help everyone
including leaders, policy makers and people from all income groups. It is about
more than just technology-driven change.
So, I think all of these part are key point of SME policy and these should be
updated.

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3. Describing the supports or stimulus packages government
announced to revive business firms from the recent
pandemic:
The pandemic Covid 19 is the global health crisis. Humans are not safe at all. Many
people are dying because of this virus. It was first detected in China now it has
been spread out all over the world. And people have no idea how to prevent this
virus. But the pandemic is much more than a health crisis, it's also a socio economic
crisis. Every day, people are losing jobs and income, with no way of knowing when
normality will return. The World Bank projects a US$110 billion decline in
remittances this year, which could mean 800 million people will not be able to
meet their basic needs.
SMEs are also affected by the corona virus, Including transport manufacturing,
construction, wholesale and retail trade, air transport, accommodation and food
services, real estate, professional services, and other personal services.

Zero output due to the unavailability of raw materials and lack of scope to sell their
outputs.28% of the respondents have seen a drastic decrease in their
revenue by over 50% c ash reserves are running dry or with their debtors. Services
industry took a heavy hit as they are unable to provide their services and generate
revenue. SMEs create livelihoods and if they fail we will go into deeper economic

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shock with more and more people coming below the poverty line. The
government should be reducing the tax rate.
But the good news is Government has announced some stimulus packages for
different industries to overcome the impact of COVID-19.
The stimulus packages are:
I. TK 30,000 crore announced for big industries and the service sector will be
distributed by commercial banks as a working capital loan at 9% p.a. the interest
rate with the government providing 4.5 per cent in subsidy.
II. Tk 20,000 Crore for small and medium enterprises, including cottage industries, to
receive a working capital loan at 9% p.a. the interest rate with the government
giving 5 per cent subsidy.
III. Tk 12,750 crore package was earmarked under the Bangladesh Bank’s
Export Development Fund to facilitate raw materials imports under the back-to
back Letter of Credit at 2 % p.a. from 2.73 % p.a. interest rate.
IV. Tk 5,000 crore was made to facilitate the ‘Pre-shipment Credit
Refinance Scheme’ at 7 % p.a.

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So, we can see that Govt. already took very important steps to revive SMEs. These
steps are very helpful for SMEs. Actually this pandemic is a challenging issue to all
over the world. We have to survive .So we need help. And I think Govt. will take right
decision for us, business and industry.
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