No more dependence on big brothers – common facility centres to help SME production

The micro and small entrepreneurs in various parts of the country will gradually get access to technology-based manufacturing as the Small and Medium Enterprise (SME) Foundation took initiative to set up common facility centres (CFCs) there.

As part of the initiative, the first CFC was launched on 18 August in Rajshahi's Kaluhati footwear cluster, comprising 13 state-of-the-art machines.

The main objectives of setting up CFCs are to improve the quality of entrepreneurs' products, produce versatile products, increase production rates and overall business development, according to the SME Foundation.

Several small and medium entrepreneurs said they presently use large corporations for product finishing or other sorts of work, which raises their production costs, but often they do not get proper services.

"The CFCs will decrease the entrepreneurs' production cost, increase product diversification and quality, and expand the country's export basket," Md Mafizur Rahman, managing director of SME Foundation, told The Business Standard.

"Since we do not have the financial resources, we will provide this service in all clusters gradually. We aim to provide such facilities in three new places (Tangail, Bogura, and Jashore) within the next fiscal year."

According to the National Industrial Policy 2022, an industrial cluster is a combination of 50 or more similar small, medium, micro or large industries located within a 5km radius. The cluster creates backward or forward linkage to manufacture similar types of merchandise, according to the policy.

Setting up CFC in industrial clusters will benefit entrepreneurs by providing access to shared production and processing facilities, packaging and quality-improvement facilities, training centres, design centres, shared logistics centres, and shared raw material banks.

SME Foundation General Manager Farzana Khan said, "The main purpose of CFCs is to advance entrepreneurs at the grassroots level. This will lead to inclusive growth.

"Technology is a big factor in moving forward. Small and medium entrepreneurs do not have enough money to buy technology and machines. That is why we are providing this support to them."

She further said, "The 13 machines in Kaluhati footwear cluster can be used to make various leather products like shoes, wallets, belts, and bags. Previously, entrepreneurs used to make these products manually. Now they are moving to technology."

The footwear cluster, which was established in the 1980s in Kaluhati village in Charghat, Rajshahi, manufactures leather and resin shoes and sandals. The cluster employs around 7,000 men and women.

Secretary of the Kaluhati Footwear Industry Owners Cooperative Association, Mijanur Rahman, said, "Entrepreneurs here used to make leather products by hand in their homes as there were no machines.

"Now, the cost of manufacturing leather products has been reduced by one-third due to the usage of machines. Many products are being manufactured in a short time by just pushing buttons. New models of products are also being made."

In a study, conducted in 2013, 177 clusters were identified across the country, with a workforce of about 2 million. The annual turnover of 70,000 businesses in these clusters is about Tk30,000 crore, according to SME Foundation.

The identified clusters include light engineering, handloom, embroidery, small garments, handicrafts, and leather products clusters, all of which were developed by private enterprises. Although these clusters have been formed on a small scale, the SME Foundation is working to expand these industries.

Committee formed to manage CFC

To ensure that the machinery is used correctly and to manage its operations smoothly, a management committee has been formed with the participation of Upazila Nirbahi Officer (UNO), SME Foundation, and the Cluster-based Industry Owners Cooperative Association.

"The formation of the committee will ensure accurate monitoring of the CFC. We have provided training to the workers so that they can use the machines," SME Foundation General Manager Farzana Khan told the Business Standard.

Prof Abu Hena Reza Hasan of the Department of International Relations at Dhaka University said, "A specific action plan is needed for the SME sector to address the challenges of graduating from least developed country (LDC) to developing country. 

"Bangladesh's SME sector lacks skilled manpower and technology. At the same time, it is necessary to strengthen the quality control institutions to ensure the quality of products. Steps need to be taken quickly to reduce the cost of production and also improve quality."

"The Bangladesh Standards and Testing Institution (BSTI) must be upgraded to provide technical Services to SMEs to develop quality procedures and standards," he added.