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Problems and Prospects of Small Business

In: Business and Management

Submitted By mahbubulalam
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Problems and prospects of our small industries
Published : Saturday, 05 January 2013
Women working in a small industrial unit

Md Atikur Rahman

Every country wants to develop. We believe that industrial development can bring in faster development for any country. A well-conceived industrialization strategy, be it import substitution industrialization or oriented industrialization, can be useful in accumulating wealth.

Many of the developing countries have achieved development through industrial development. Most developed countries are industrially developed countries. Europe and America's quick development came through industrial development. Japan, Korea, Taiwan, Hong Kong and Singapore became economically developed by having quick industrialization. In late 20th century some countries like Malaysia, Thailand, China, Indonesia and also Philippines developed by quick industrial development. So our government should concentrate more on industrial development in our country.

On the other hand, many small industries play a pivotal role in the economic development of a country.

Even countries like Japan and the USA that can boast of some of the largest industrial units in the world, had their rapid development and great prosperity thanks to their small industrial units. The most important single argument that can be advanced in their favour is their capacity to generate a large volume of the employment. In Bangladesh, capital is scarce, but cheap labour is abundantly available. Unemployment and seasonal unemployment are rampant on a mass scale. The employment capacity of small industries, being at least eight times that of large industries in capitalist or mixed economies, promotes monopolistic trends and leads to the concentration of economic power and wealth in a few hands. But small enterprises tend to create a situation in which a more equitable distribution of income is made possible.

The growth of large-scale industries leads to the concentration of economic activities in a few big cities. This also leads to their urbanization with a host of other concomitants overcrowding atmospheric pollution, nervousness, tension, soaring prices, unhealthy competition, etc. Concentration is also undesirable from the point of view of the security of the country.

It exposes the country to a grave danger in time of war. The process of decentralization accelerated by small-scale industries in addition to exploiting local resources helps to reduce regional imbalances and the imbalance between rural and urban growth. Large-scale and small-scale industries also complement each other. In the large-scale industries, the emphasis is on the production of capital goods. But small enterprises concentrate on producing consumer goods. Large industries generate incomes and if consumer goods were not available to absorb them, there would be runaway inflation causing many problems.

It was precisely for the reasons enumerated above that the strategy of Bangladesh economic development conceived first in second plans laid emphasis on small-scale and cottage industries. Another important advantage of developing small units is that they not only do not require much foreign exchange but are rather capable of making a sizable contribution to the foreign exchange earnings of the country. But, above everything else, they can bring about awakening among the people. They can make them self-confident and self-reliant. They can save the much prized inherited skill of our artisans from total extinction. And they can save a large majority of people from being condemned to monotonous and mechanical life associated with big cities.

Nowadays many small industries in our country are faced with several problems. Their biggest problem is the procurement of good raw materials in adequate quantities and in time. Very often, the large sector, with better buying capacity and better manipulating power, corners all the raw materials of good quality and the small producer has to be content with the leftovers. He is also handicapped by the banks. But the very small producer who is running a real cottage industry in a remote village is either ignorant of the facilities available or finds them inaccessible and is still exposed to the unethical practices of the village moneylender. His methods of work also continue to be old-fashioned and primitive. Once again, he is either ignorant of the existence of improved equipment or does not have adequate financial strength to afford it. At the time of selling also, he is often obliged to accept unremunerative prices because of weak bargaining power. Large-scale industries often outsell small producers, who find them fighting a hopelessly losing battle.

Our government has been fully conscious of the significance and role of small-scale industries. Therefore, it has been making sincere efforts to promote them.

Now even a large industry can float small units, legitimately hold a big share in them and get these units manufacture any of the reserved items. What other benefit will accrue to the small sector by this total about-turn of the government is very difficult to tell but the participation of large industry will at least ensure regular and timely supply of finance to small units. That will, no doubt, keep the sector alive.…...

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