Factors frustrating industrialisation
Amirul Islam | Tuesday, 5 August 2008
INDUSTRIES, in both public and private sectors, are in the habit of blaming the government for all their troubles. Or, at least, they blame 'a poor business environment' for their failures. But a careful scrutiny would indicate that, in many cases, local entrepreneurs fail because they can not beat external competitors as they do not follow standard procedures for efficient or viable production.
Market studies or research to know the demand pattern of products are preconditions for the establishment of industries. Private sector investors need to do their own such research. The government can play a valuable role in this regard by collecting and providing such information. But instances are there in Bangladesh for some entrepreneurs to rush to invest in a certain sector to produce related goods in excess of demand. This occurs due to lack of market research on their part or the inability of the relevant government departments to provide the statistics on the demand situation. Industries set up without market survey, to produce in excess of demand turn out unviable in no time.
A lot of pre-launch activities should go into product designing and innovation to compete with rival producers -- specially foreign competitors. Adding new features can create customer appeal. Even packaging can make a local product more attractive than imported or smuggled items. But many industries in Bangladesh, still lag behind, in varying degrees, in following standard procedures to remain competitive in the market. It is, therefore, no surprise that many local industries go down in the competition vis-a-vis foreign products with innovative features, offering customers price and quality advantages.
Marketing needs to follow scientific promotional activities. Many companies in Bangladesh start off avoiding adequate marketing plan in the first place. Such enterprises relegate marketing department to secondary importance. Some enterprises neglect product quality or quality control. For success, businesses these days seeking either the domestic or the international market, need to have in place streamlined policies and the capacity for new product development, market research, quality control and sound marketing plans.
The Bangladeshi entrepreneurs would do best to start paying attention to these issues. They should do whatever needs to be done to remain in business on a sustainable basis. Weak manufacturing performance results from lack of attention and high cost of funds. The lending rates on bank funds are also high in Bangladesh.
Furthermore, many of the existing manufacturing units find it difficult to sustain viably due to erratic supply of power and gas as well as for infrastructural weaknesses and bottlenecks. In many cases, Bangladesh's tariff structure facilitates marketing, in one way or other of foreign items at the cost of domestic products. Law and order, low labour and capital productivity, bureaucratic obstructions and corruption also adversely affect domestic manufacturing. Growing influence of the black economy or smuggling also harms the domestic manufacturing.
Ad-hoc governmental policies or uncoordinated steps cannot improve the conditions for local manufacturing. Each factor responsible for underperformance of the manufacturing sector needs to be analysed and addressed for an overall improvement in the performance of the manufacturing sector.
Market studies or research to know the demand pattern of products are preconditions for the establishment of industries. Private sector investors need to do their own such research. The government can play a valuable role in this regard by collecting and providing such information. But instances are there in Bangladesh for some entrepreneurs to rush to invest in a certain sector to produce related goods in excess of demand. This occurs due to lack of market research on their part or the inability of the relevant government departments to provide the statistics on the demand situation. Industries set up without market survey, to produce in excess of demand turn out unviable in no time.
A lot of pre-launch activities should go into product designing and innovation to compete with rival producers -- specially foreign competitors. Adding new features can create customer appeal. Even packaging can make a local product more attractive than imported or smuggled items. But many industries in Bangladesh, still lag behind, in varying degrees, in following standard procedures to remain competitive in the market. It is, therefore, no surprise that many local industries go down in the competition vis-a-vis foreign products with innovative features, offering customers price and quality advantages.
Marketing needs to follow scientific promotional activities. Many companies in Bangladesh start off avoiding adequate marketing plan in the first place. Such enterprises relegate marketing department to secondary importance. Some enterprises neglect product quality or quality control. For success, businesses these days seeking either the domestic or the international market, need to have in place streamlined policies and the capacity for new product development, market research, quality control and sound marketing plans.
The Bangladeshi entrepreneurs would do best to start paying attention to these issues. They should do whatever needs to be done to remain in business on a sustainable basis. Weak manufacturing performance results from lack of attention and high cost of funds. The lending rates on bank funds are also high in Bangladesh.
Furthermore, many of the existing manufacturing units find it difficult to sustain viably due to erratic supply of power and gas as well as for infrastructural weaknesses and bottlenecks. In many cases, Bangladesh's tariff structure facilitates marketing, in one way or other of foreign items at the cost of domestic products. Law and order, low labour and capital productivity, bureaucratic obstructions and corruption also adversely affect domestic manufacturing. Growing influence of the black economy or smuggling also harms the domestic manufacturing.
Ad-hoc governmental policies or uncoordinated steps cannot improve the conditions for local manufacturing. Each factor responsible for underperformance of the manufacturing sector needs to be analysed and addressed for an overall improvement in the performance of the manufacturing sector.