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SMALL
COTTAGE
INDUSTRIES
CORPORATION
(BSCIC)
BSCIC was created through an Act of Parliament in 1957 which was later amended in 1992. It
provides a package of services to private sector entrepreneurs in the small and cottage industries
sector. Small industries are defined as those engaged in manufacturing or processing or service
activities whose total fixed investment is limited to Tk. 30 million (US$ 0.75 million), while cottage
industries are those engaged in manufacturing or servicing and generally run by family members
with a total investment limited to Tk. 0.5 million (US$ 12500) only.
BSCIC also 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.
Bangladesh Export Processing Zones Authority (BEPZA) : The Bangladesh Export Processing
Zones Authority (BEPZA) was established to set up and operate export processing zones (free
zones) in Bangladesh under the Bangladesh Export Processing 7,ones Authority Act, 1980. To
begin with, it was decided that the country would have 3 export processing zones in phases, one
each in the port cities of Chittagong and Khulna and one air transportation based zone near the
Zia International Airport at Dhaka. BEPZA develops and services special areas where potential
investors would find a congenial investment climate free from procedural complications.
The policy making body of the Bangladesh Export Processing Zones Authority (BEPZA)) is its
Board of Governors chaired by Head of the Government. The Board consists of Ministers and
Secretaries of several relevant MinistrieslDivisions. Any decision taken by the Board of Governors
is deemed to be the decision of the government. For carrying out the day to day functions
including implementation of the Boards decisions, there is an Executive Board of BEPZA
consisting of an Executive Chairman and 3 members.
The Chittagong Export Processing Zone (CEPZ) established in 1983, has till June 1994 sanctioned
85 industries with a proposed investment of US$146 million of which 66 are wholly foreign owned
or joint ventures and the remaining 19 are owned by domestic entrepreneurs. 52 industries are
already in operation with an investment of US$ 105 million.
The Dhaka Export Processing Zone (DEPZ), created in 1993, has till the middle of 1994 sanctioned
17 industries with a proposed investment of US$ 53 million of which 13 are wholly foreign owned
or are joint ventures and 4 are owned by domestic entrepreneurs. 5 units with an investment of
US$ 0.5 million, are already in operation.
Total exports from BEPZA industries stood at US$ 76.6 million in 1991-92 and US$127.6 million in
1992-93.
Definition
Functions
BSCIC provides medium and long term loans to small industries, either directly, or through
consortium of commercial banks. BSCIC also provides assistance in all other matters relating to
development and expansion of small and cottage industries (SCI). The Bangladesh Small and
Cottage Industry Corporation (BSCIC) is the official body which monitors the development of
self-employment, cottage industries and small enterprises. It produces statistics on the types of
enterprises, their activities and the number of people employed.[3]
Its major functions are:[1]
of
industrial
estates
with
necessary
Current status
BSCIC has developed a total of 74 industrial estates throughout the country to foster the growth
of SCIs in a balanced manner and also construction works for good number of estates including
special type like Tannery, API (Active Pharmaceutical Ingredients) and Garments Park are under
execution
resident Bangladeshis for investment in industries. Non-resident Bangladeshi investors will enjoy
facilities similar to those of foreign investors. Moreover, they can buy newly issued
shares/debentures of Bangladeshi companies. Furthermore, they can maintain Non-resident
Foreign Currency Deposit (NFCD) account for upto 5 years.
Rationalization of Import Duty : Duties and taxes on import of goods which are produced locally
will be higher than those applicable to import of raw materials for producing such goods
Other Incentives :
- Exemption of tax on interest of foreign loans ;
- Exemption of tax on royalty, technical know-how and technical assistance fees, etc ;
- Liberal investment allowance for tax assessment ;
- Import of machinery under supplier's credit or pay-as-you-earn (PAYE) scheme on approved
terms
- Availability of long term credit facilities on liberal debt-equity ratio from industrial financing
institutions (development finance institutions, nationalized commercial banks and private
commercial banks) ;
- Income tax exemption of foreign technicians employed in approved industries for a period of 3
years ;
- Remittance of 50 percent of the salary of foreign nationals employed in approved industries ;
- Remittance of savings from earnings, retirement benefits and personal assets of individuals on
retirement/termination of services ;
and
- Remittance of approved royalties, technical know-how and technical assistance fees.
Vision
To be the leading Organisation in Developing Small, Medium & Cottage Industries that
contribute to the economic growth and to create vibrant and resilient SMCIs that enhance
Bangladesh is competitiveness in the world market. To transform SMCIs into an economic
powerhouse of the country by 2025.
Mission
To materialize the vision following mission may be followed :
i)
ii)
iii)
iv)
v)
vi)
To instill and eventually ingrain deeply the concept of learning organisation into
SMCIs and encourage them to be export-oriented.
Sharing the rewards of own endeavors with our communities, customers, employees,
suppliers, management and our stakeholders.
Goal
a. To assist private entrepreneurs for establishing new Small, Medium & Cottage Industries
(SMCIs) unit.
i) Total
iii) Medium
b. To create labour force employment facilities through new Small, Medium & Cottage
Industries (SMCIs).
i) Total
: 3.06 million
: 1.54 million
iii) Medium
: 0.52 million
: 1 million
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 programme/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
Objectives
1. TO
ENSURE a. Promoting the establishment of industrial units, with priority for
ACCELERATED GROWTH agro-support, agro-processing, import substitution and export
OF THE SMALL, MEDIUM oriented enterpriese utilizing indigenous raw materials.
AND
COTTAGE
INDUSTRIES
IN
BANGLADESH
(CREATION
OF
NEW
CAPACITY)
2. TO
INCREASE a. Assisting existing enterpriese to operate at optimum capacity.
PRODUCTIVITY OF THE
EXISTING
SMALL,
MEDIUM AND COTTAGE
INDUSTRIAL UNITS IN
BANGLADESH
(RESOURCE
MAXIMIZATION
OF
EXISTING CAPACITY)
b. Providing counselling and extension service including in-plantadvisory services, group services and training programmes on
technical quality control, marketing and financial management
exports.
4. TO
PROVIDE a. Setting up the infrastructure such as Industrial Estates and Common
INFRASTRUC-TURAL
Facility Centres, Design Centre etc.and ensure their optimum
FACILITIES
utilisation required by the industrial units.
5. TO
CREATE
AND a. Assisting in the creation of market (local and foreign) through
DEVELOP MARKETING appropriate sales promotion measures.
FACILITIES INCLUDING
MARKET INFOR-MATION
FOR
PRODUCTS
OF
7. TO
ENSURE a. Developing knowledge and skills of artisan/ crafts, technicians and
DEVELOPMENT
OF managers through training.
SKILLS
b. Designing,
developing
and
conducting
entreprenuership
development programme for small and cottage industries.
8. TO
HELP
ECONOMIC
DEVELOPMENT
development.
In the light of globalization, BSCIC refix its objectives in the following manner :
i) To create a healthy business environment that promotes and supports the establishment and
growth of SMCIs.
ii) To nurture high growth, resilient, innovative SMCIs that adopt best business practices.
iii) To enhance the technological, managerial, marketing, financial and entrepreneurial
capabilities of SMCIs to become globally competitive.
iv) To encourage enterprises and entrepreneurs to harness technology and knowledge in
developing high value-added products and services and moving up the value chain.
v) To facilitate and assist SMCIs to gain access to market by forming linkages and business
opportunities network, both locally and internationally.
vi) To foster the formation of a competitive and vibrant supply base to attract FDIs into the
country.
Strategy
Strategy 1: Upgrade technological and management capabilities of SMCIs.
Develop an enterprise diagnosis system as a tool for the promotion of SMCIs.
Enhance consultancy system for business improvement and problem solving.
Support the adoption of modem facilities and management systems such
as ISO 9000 and TQM. Support the efforts of companies to improve their product quality.
Improve the efficiency of R&D institutes and facilitate their networking with private
companies.
Strategy
2:
Develop
SMCIs.
entrepreneurs
and
human
resources
Foster
new
entrepreneurs
and
incubate
existing
entrepreneurs.
Enhance
the
efficiency
and
flexibility
of
training
services.
Improve the efficiency and coverage of industrial skill standards and certification systems.
Improve educational curriculum and teaching methods to meet industry needs.
Strategy 3: Enhance SMCIs access to markets
Improve
SMCIs
access
to
government
procurement
systems.
Promote subcontracting and linkages with large enterprises. both domestically and
internationally.
Strengthen
the
export
promotion
activities
of
SMCIs
Promote
cross-border
trade
and
linkages
with
trading
companies.
Strategy 4: Strengthen financial support system for SMCIs
Expand
and
develop
credit
guarantee
system
Establish
venture
capital
funds
for
the
development
Establish
SMCIs
Promotion
Strengthen financial advisory services for' SMCIs
for'
SMCIs
to
SMCIs
Fund.
7:
Develop
networking
among
SMCIs
and
enterprises.
know-how.
enterprises.
enterprises.
clusters
Multilateral and regional trade and investment liberalization policies have made markets more
accessible and competition more intense among local producers. It is becoming increasingly
imperative to be internationally competitive in order to function effectively even in domestic
markets. In a dynamic environment market by fast technological changes, achieving and retaining
competitive edge is a necessity and a challenge. Many SMCIs could be efficient exporters if they
were properly motivated and assisted in acquiring the necessary skills supported by a strong
infrastructure and given the right advice and assistance.
Most SMCIs donot see the importance of ICT applications in their daily operations. They do not
realize that emerging technologies and advances in ICT have contributed to productivity growth
and economic competitiveness. The increasing use of ICT in business is making it possible for
large companies to secure multiple suppliers. These suppliers have to meet the requisite product
quality, cost and speedy delivery with in a compressed time frame with competitiveness being
increasingly determined by leading edge technologies, it is crucial that SMCIs rapidly develop
their capacity to adopt and adapt technologies that are appropriate to their industries.
Skill Development.
Most SMCIs are labour intensive. Skills upgrading and knowledge acquisition, which are all
critical to long term competitiveness. SMCIs have a negative attitude towards investment in
training. They fear losing well trained staff to other companies and their investment. There is a
need to change this perception and mindset and to inculcate a training culture among SMCIs. The
in sufficient supply of skilled and knowledgeable workforce impedes output expansion. Therefore,
the ultimate objective is to produce skilled and knowledgeable workers for SMCIs to be
Finance.
The most cited problem confronting SMCIs is the inadequacy of finance. A key reason is SMCIs
are seen as high-risk by the average banker, SMCIs traditionally finance their operations through
own savings, loan from families and friends, as well as supplier credits. New start-ups face
difficulties in securing credit, as they have little collateral and no track record. In addition, their is
the problem of long processing time for loan application, while their shoud be a balance between
meeting the needs of SMCIs and prudent banking practices. The solution still lies in improving
access to institutional credit for SMCIs. This is a critical factor because a loan delayed is vartually
a loan denied.
Information.
The ability to seek and apply information in business operations will help SMCIs to be efficient in
the new business environment. As knowledge is pivotal in modern manufacturing, SMCIs need to
acquire critical knowledge and skill to mermain competitive. Technology and knowledge
investments have provided significant competitive edge to companies especially in design, product
research, process, innovation and management information system, SMCIS thus, need a referal
centre to which they can turn for information and advice on the various areas concerning their
operations.
Ensure flows of public expenditure (research, extension, training and market promotion)
Rationalize tax structure (by raising ceiling of exemption limits as regards taxation and by
lowering the VAT rates )
Stimulate sub-contracting activities (support for ancillary activities and producers of spares
and machinery need to be ensured in light of GOBs sub-contracting policy, including through
procurement and purchase policy of the government).
Design a credit guarantee scheme for agro-based small-scale entrepreneurs who do not have
the necessary collateral.
Channel funds to the small entrepreneurs without collateral through innovative banking.
Increase of the limit of collateral free loan and keep interest rate low 10%.