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Exploring MSME sub-sectors to attract investment

Md Joynal Abdin | Published: August 07, 2019 20:44:57 | Updated: August 16, 2019 21:41:01


According to the National Industrial Policy 2016 (NIP 2016), industrial activities are mainly divided into two categories -- manufacturing industry and service industry. It has classified all industries into twelve categories based on features and sizes. These are as follows:


A. FEATURE BASED SEGMENTS
1. Controlled Industry: Government controls few sectors relevant to the national security, mineral resources, religious and cultural affairs. Private sector has to get no objection certificate from pertinent authority to establish these industries. For example, fishing in the deep sea, bank/financial institution, insurance company, generation, supply and distribution of power, exploration, extraction and supply of natural gas/oil, exploration, extraction and supply of coal and exploration, extraction and supply of other mineral resources etc. are considered controlled industries in Bangladesh.

2. Priority Sectors: Sectors having export potentials are considered priority sectors. According to the NIP 2016, plastics, overseas employment, ship building, environment friendly ship recycling, tourism, frozen fish and home textiles etc. sectors are considered Priority Sector.

3. High Priority Sector: Sectors having higher growth rate, higher employment generation, potentials to be exported are considered High Priority Sector. For example agro & food Processing, agriculture machinery, ICT, software, pharmaceuticals, leather, light engineering, jute goods are in High Priority Sector in the NIP 2016.

4. Reserved Industry: Industries that are kept reserved for public investment due to national security or other reasons have been termed reserved industries. Current list of reserved industry includes arms and ammunitions and other military equipment and machineries, nuclear power, security printing and minting, and forestation and mechanised extraction within the boundary of reserved forest.

5. Creative Industry: Creative industries are fine arts, crafts, innovative new items, merit based and creative in nature. For example advertising, architect, art and antics, design and fashion industries are considered creative industry.

6. High-tech Industry: High-tech Industry includes industrial enterprises dealing with knowledge and capital-driven high-tech environment friendly and IT/ITES or Research and Development.

7. Handicraft Industry: This industry is classified based on the use of artisan skills to produce handicraft products.

B. SIZE BASED SEGMENTS:

8. Cottage Industry: In manufacturing, micro industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets excluding land and building of less than Tk. 1.0 million, or with less than 15 workers, including household members.

9. Micro Industry: In manufacturing, micro industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets, excluding land and building, between Tk. 1.0 and Tk. 7.5 million, or with 16 to 30, or smaller number of workers. In service, micro industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets (excluding land and building) of less than Tk. 1.0 million, or with less than 15 or lesser number of workers.

10. Small Industry: Small industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets (excluding land and building) between Tk. 7.5 million and Tk. 150 million, or with 31 to 120 workers. For services, 'small industry' will correspond to enterprises with either the value (replacement cost) of fixed assets (excluding land and building) between Tk. 1.0 million and Tk. 20 million, or with 16 to 50 workers.

11. Medium Industry: In manufacturing, medium industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets (excluding land and building) between Tk. 150 million and Tk. 500 million, or with 121 to 300 workers. For services, 'medium industry' will correspond to enterprises with either the value (replacement cost) of fixed assets (excluding land and building) between Tk. 20 million and Tk. 300 million, or with 51-120 workers.

12. Large Industry: Large industry will be deemed to comprise enterprises with either the value (replacement cost) of fixed assets (excluding land and building) in excess of Tk. 500 million or with more than 300 workers (number of workers more than 1000 for the readymade garment factory). For services, 'large industry' will correspond to enterprises with either the value (replacement cost) of fixed assets (excluding land and building) in excess of Tk. 300 million or with more than 120 workers.

Among the above mentioned categories three segments namely Micro, Small & Medium Enterprises (MSME) have maximum potentials to attract more local and foreign investment. Because MSMEs are low capital and technology-intensive.This segment is considered as the engine of growth around the world.

Notable MSME sub-sectors (in manufacturing) are agro-based and agro-processing industry, readymade garments industry, leather and leather products , Light Engineering Industry, Jute and Jute products, Plastic Industry, frozen fish Industry, home textiles, renewable energy (solar Power, windmill), active pharmaceutical ingredient industry and radio pharmaceuticals industry, herbal medicinal plant, basic chemicals/dye and chemicals, radio-active (diffusion) application industry (e.g. developing quality of decaying polymer/preservation of food/ disinfecting medicinal equipment), polymer Industry, handicrafts, energy efficient appliances/manufacturing of electronic goods/development of electronic materials, tea industry, ceramics, tissue grafting and biotechnology, jewelry, toy, cosmetics and toiletries, agar -ator Industry, furniture, and feed mill etc.

In the service sector, the sub-sectors are: IT-based activities (system analysis, design, developing system solutions, information service, call centre service, offshore development centre, business process outsourcing etc.), Agro-based activities such as fishing, fish preservation and marketing, construction industry and housing, overseas employment, entertainment, hospitals and clinics, horticulture, flower cultivation and flower marketing, human resource development, tourism, testing laboratory, photography, telecommunication, transport and communication, warehouse and container service, engineering consultancy, filling stations (petrol pump, CNG conversion centre etc.), private inland container depot and container freight station, chain super market/shopping mall, 3rd party logistics, aviation service, inspection and testing service, regional feeder vessel and coastal ship service, modernised cleaning service for high-rise apartments, commercial building, automobile service, technical vocational institute, advertising industry and modeling e.g. print modeling, TV commercials, ramp modeling, outsourcing and security service (private security forces/manpower supply) etc.

Besides the above mentioned manufacturing and service sectors, many agriculture based / agro-processing MSME sub-sectors could be profitable in Bangladesh. These processing industries include processed fruit products (jam, jelly, juice, pickles, syrup, sauce etc.), fruits processing (tomato, guava, sugarcane, jackfruit, lychee, pineapple, coconut etc.) vegetables and lentil, processing of bread and biscuits, vermicelli, chanachur, noodles etc., manufacturing of flour, processing of mushroom and spirulina, starch, glucose and other dextrose product, milk processing (pasteurisation, milk powder, ice-cream, condensed milk, sweet, cheese, butter, ghee, chocolate, curd etc.), processing of potato products, processing of powdered spice, refining and hydrogenation of edible oil, salt processing, processing of prawn and other fishes and freezing, manufacturing of herbal cosmetics, manufacturing of Unani and Ayurveda medicines, fish feed and fish meal processing for poultry and livestock, seed processing and preservation, manufacturing of jute products (rope, thread, twain, canvass, bag, carpet, sandals etc.), production of silk textile, manufacturing of agro-equipment, manufacturing of rice, puffed rice etc. Production of flavored rice, tea processing, production of coconut oil, processing of rubber tape, shellac, cold storage (processing and preservation of edible potato and seed potato, fruits, vegetables etc.), production of wood, bamboo and cane furniture (exclusive of cottage industry), flower preservation and export, meat processing, production of bio slurry, mixed manure and urea, production of bio-pesticides, neem pesticides etc., apiculture, particle board, sweetening products, soya food production & processing, mustard oil producing industry (if local variety is used), rubber goods making project, rice bran oil, seed industry, milk and poultry production and supply, horticulture, floriculture, flower cultivation, flower and vegetable marketing (lemon, mushroom, battle leaf and honey is included in this industry) etc.

Most of the above mentioned MSME sub-sectors are prospective with high value addition possibilities. However, to attract investment, we must have comprehensive project proposals with approximate investment requirement, estimated payback period, availability of raw materials, required machinery list, availability of other factors of production etc. It is the right time to proceed in that direction. We must remember that confidence building among local investors is more important than attracting foreign investors, because foreign investors will not be interested in the absence of competent local partners. Therefore, a win-win situation has to be created for both local and foreign investors to perform faster and better in investment promotion.

Md. Joynal Abdin is Acting Secretary, Dhaka Chamber of Commerce & Industry (DCCI). mdjoynal@gmail.com

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