Bangladesh Small and Cottage Industries Corporation () (BSCIC) provides a package of services to private sector entrepreneurs in Bangladesh in the small and cottage industries sector. It was created through an Act of Parliament in 1957 which was later amended in 1992.BSCIC has country-wide institution network to provide door step services for entrepreneurs.Head Office of BSCIC located at 137-138,Motijheel, Dhaka, Bangladesh.Details of BSCIC can be known from its website:http://www.bscic.gov.bd

BANGLADESH 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 Small Industry (Manufacturing): Small Industry means an industry in which the value/replacement cost of durable resources other than land and factory buildings is in between (.05 to 15 million) taka and employment generation is not more than 50 persons. Cottage Industry (Manufacturing): Cottage Industry means family an industry in which members are engaged part-time or full-time in production and service-oriented activities. Medium Industry (Manufacturing): Medium Industry means an industry in which the value/replacement cost of durable resources other than land and factory buildings is between 15 million and 200 million taka and employment generation is not more than 150 persons .[2]FunctionsBSCIC 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] Promotion and registration of small and cottage industries Conducting advisory and industrial promotion services including training of entrepreneurs Skill development for artisans and craftsmen Creation of jobs for SCIs Construction and development of industrial estates with necessary infrastructural facilities for SCI Development of linkages between SCIs and large and medium sized industries. Online Service for registration of Industry, Application for Industrial plots, Application for Training facilities will be provide very soon.Current statusBSCIC 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

Incentives and Facilities for Private Investment :General Incentives for both Foreign and Local Investors :Tax Holiday : Tax holiday is allowed to industries subject to the relevant rules and procedures set by the National Board of Revenue (NBR). Presently, it is allowed for 5, 7, 9 and 12 years for industries set up in the developed, less developed, least developed and special economic zones respectively. The period of such tax holiday is calculated from the month of commencement of commercial production. The eligibility of tax holiday is to be determined by the NBR and the commencement of production is certified by the respective sponsoring agencies.Accelerated Depreciation : Accelerated depreciation in lieu of tax holiday is allowed at the rate of 80 percent of actual cost of machinery or plant from the year the unit starts commercial production and 20 percent for the following year, if the industry is located in the developed area. If the unit is set up in a less developed area, the rate of depreciation is 100 percent.Concessionary Duty Imported Capital Machinery : Import duty at the rate of 7.5 percent ad valorem is payable on capital machinery and spares imported for initial installation or for BMR/BMRE of existing industries. The value of spare parts should not, however, exceed 10 percent of the value of the machinery. Out of this 7.5 percent rate of duty payable. Export-oriented industries and industries located in the under-developed areas, may enjoy a further concession of the import duty in the following manner For 100 percent export-oriented : No import duty or any other tax is payable industries

Export-oriented industries in : Effective rate of duty 5 percent (Industries developed areas exporting minimum 70 percent of the total annual production may submit a bank guarantee to the customs authority for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem. This bank guarantee will be returned after installation of the machinery and fulfilling the conditions of export. In this case effective rate of import duty payable is 5 percent ad valorem).Other industries in developed : Effective rate of duty 7.5 percent areasExport-oriented industries : Effective rate of duty 2.5 percent (Export outside developed areas oriented industries, as mentioned above, located in under-developed areas may also submit a bank guarantee to the customs authority for 33.33 percent of the total import duty. In addition to this they may submit another bank guarantee for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem for being located in an under-developed area. These bank guarantees (33.33 percent plus 33.33 percent) will be returned after installation of the machinery and fulfilling the condition of export. In this case effective rate of import duty payable is 2.5 percent.Other industries outside : Effective rate of duty 5 percent (all other developed areas industries located in under developed areas other than export-oriented, may submit a bank guarantee to the customs authority for 33.33 percent of the total import duty payable at the rate of 7.5 percent ad valorem. This bank guarantee will also be returned after installation of the machinery. In this case, the effective rate of import duty is 5 percent ad valorem).

Value Added Tax (VAT) is not payable for imported capital machinery and spares. Tariff Rationalization : Products of local industries are protected through tariff rationalization, keeping in view the interest of entrepreneurs and consumers. Tariff protection is allowed upto 4 years to the new industries. There is Tariff Commission to prescribe protective rate where necessary.Incentives to Non-Resident Bangladeshis : Special incentives are provided to encourage non-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) Providing latest technical and managerial assistance to enterprises and communities for the improvement of productivity, quality and environmentii) .Promoting strategic alliance with clients as well as national and international professional bodies in pursuit of economic development.iii) Molding a work place that encourages creativity, innovation, professional growth and positive value.iv) To instill and eventually ingrain deeply the concept of learning organisation into SMCIs and encourage them to be export-oriented.v) Sharing the rewards of own endeavors with our communities, customers, employees, vi) suppliers, management and our stakeholders. Goala. To assist private entrepreneurs for establishing new Small, Medium & Cottage Industries (SMCIs) unit.i) Total: 0.409 million unit

ii) Small Industry: 0.086 million unit

iii) Medium: 0.008 million unit

iv) Cottage Industry: 0.315 million unit

b. To create labour force employment facilities through new Small, Medium & Cottage Industries (SMCIs).i) Total : 3.06 million

ii) Small Industry Sector : 1.54 million

iii) Medium: 0.52 million

iv) Cottage Industry Sector: 1 million

v) Percentage of new labour force employment (Total L/F 2005-2025, will raise 59-80 million): 3.80%

vi) Percentage of total labour force employment: 8.28% (6.63 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 IndustryUnitEmployment

Small0.1712.915

Medium0.0130.863

Cottage 0.9042.852

Total 1.0886.630

Role for development of SME:The BSCIC functionaries are deliberated up on the organizational objectives having rellevance to the BSCIC charter (Act xvii of 1957) and subsequent jobs assigned to the BSCIC. The objectives and key results areas have been identified and described below: ObjectivesKey result areas

1.TO ENSURE ACCELERATED GROWTH OF THE SMALL, MEDIUM AND COTTAGE INDUSTRIES IN BANGLADESH (CREATION OF NEW CAPACITY)a.Promoting the establishment of industrial units, with priority for agro-support, agro-processing, import substitution and export oriented enterpriese utilizing indigenous raw materials.

b.Promoting establishment of small, medium industry through ancillary units and sub-contracting arrangements.

c.Promoting area/regional development through establishment of small scale industries on the basis of locally available raw material, skills and growth potential as per district development plans.

d.Providing information to target people on industrial investment opportunities through mass media (including Radio, Television and News Papers) and publications.

2.TO INCREASE PRODUCTIVITY OF THE EXISTING SMALL, MEDIUM AND COTTAGE INDUSTRIAL UNITS IN BANGLADESH (RESOURCE MAXIMIZATION OF EXISTING CAPACITY)a.Assisting existing enterpriese to operate at optimum capacity.

b.Providing counselling and extension service including in-plant-advisory services, group services and training programmes on technical quality control, marketing and financial management exports.

c.Supplying statistical information and operational data for inter-firm comparison on productivity.

3.TO ENSURE OPTIMUM UTILIZATION OF FINANCIAL RESOURCEa.Providing advisory services to the enterpreneurs for proper utilization of financial resources of their industrial units.

b.Proper financial analysis and pre-investment feasibility for proper utilization of loan and equity financing resources.

c.Ensuring timely loan recovery for further investment.

4.TO PROVIDE INFRASTRUC-TURAL FACILITIESa.Setting up the infrastructure such as Industrial Estates and Common Facility Centres, Design Centre etc.and ensure their optimum utilisation required by the industrial units.

b.Maintaining efficiently the facilities such as electricity, gas, water, roads etc. for uninterrupted production of the units set up in the Industrial Estates.

5.TO CREATE AND DEVELOP MARKETING FACILITIES INCLUDING MARKET INFOR-MATION FOR PRODUCTS OF SMALL, MEDIUM AND COTTAGE INDUSTRIES a.Assisting in the creation of market (local and foreign) through appropriate sales promotion measures.

b.Providing assistance and advisory services to small enterprises for maintaining quality product by fixing appropriate standard.

6.TO INNOVATE PRODUCT PROCESS AND TECHNOLOGYa.Collecting and disseminating information on new and appropriate technology for the sector as a whole.

b.Promoting research work for the development of product, process and technology.

c.Making and supplying designs and prototypes for the cottage industry sub-sector.

d.Designing and supplying prototype of product, machinery, equipment and tool for small industries.

7.TO ENSURE DEVELOPMENT OF SKILLSa.Developing knowledge and skills of artisan/ crafts, technicians and managers through training.

b.Designing, developing and conducting entreprenuership development programme for small and cottage industries.

8.TO HELP SOCIO-ECONOMIC DEVELOPMENTa.Promotion of pilot projects in association with private entreprenuers in areas or fields of national interest where private investment is shy and hand them over at an appropriate private time.

b.Creating linkage with Youth Welfare, Women affairs, Social Welfare and other organisation engaged in the promotion of income generating activities, with the aim of achieving integrated rural development.

c.Assisting and advising in the promotion of industrial homes adjacent to industrial areas for the Welfare of family members of industrial workers.

d.Generating income among disadvantaged target people and in geographically under-developed areas by setting up cottage industries.

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 suchas 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 resourcesFoster 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 marketsImprove 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 for' SMCIsEstablish venture capital funds for the development to SMCIs Establish SMCIs Promotion Fund.Strengthen financial advisory services for' SMCIs Strategy 5: Foster an environment conducive for business development Establish and strengthen local information center for SMCIs Develop mechanism to review and revise laws, regulations andadministration procedures to redress problems facing SMCIs Strengthen support to equip SMCIs to prepare for the IT revolution.Improve the efficiency of various distribution channels.Strengthen the planning capabilities and services of regional and local authoritiesand organizations. Promote the establishment of SMCIs parks.

Strategy 6: Develop micro-enterprises and community enterprisesIncubate "strategic" micro-enterprises and community enterprises.Promote commercialization of indigenous know-how.Upgrade the managerial capabilities of micro-enterprises and community enterprises.Encourage the formation of business associations among these enterprises.

Strategy 7: Develop networking among SMCIs and clusters

Conduct studies of various industrial clusters to promote their efficiency collectively. Support pilot projects to develop industrial cluster(s) in each region. Encourage the formation of business associations to serve as platforms of fostering cooperation among members.

Provide infrastructural support and financial incentives to promote the development SMCIsKey Issues and challenges

The following are key issues and challenges faced by SMCIs.

Liberalization and Global competition

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.

New Emerging Technologies.

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 competitive in quality price and delivery.

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.

SMCIs need the following policy support

*Ensure flows of public expenditure (research, extension, training and market promotion)

*Stimulate private investment through proper guidance and pre-investment counseling.

*Rationalize tax structure (by raising ceiling of exemption limits as regards taxation and by lowering the VAT rates )

*Provide marketing assistance

*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.

*Create a database for the small and medium scale industries

*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%.

*Formation of cluster village

*Establish a training and design centre.

*Ensure more collaboration/partnership among the organization/agencies.