Speakers at a seminar on Monday said Bangladesh lags behind the competing countries in terms of the SME sector’s contribution to Gross Domestic Product (GDP).
Bangladesh’s SME sector contributes only 30 per cent to GDP while its competing countries 40-60 per cent.
With an aim to keep the large industries running and advance the country's economy simultaneously, there is no alternative but to promote the SME sector, they added.
Therefore, to move ahead in the SME sector, banking finance needs to be more accessible, expertise in market relations and documentation needs to be enhanced and changing mindset to provide loans are necessary.
The speakers made the observations at a seminar titled "Opportunities and Challenges in the SME Sector" organised by the Economic Reporters’ Forum (ERF) at its office in the capital.
ERF president Mohammad Refayet Ullah Mirdha chaired the seminar conducted by ERF general secretary Abul Kashem.
In his speech, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) president Mahbubul Alam said, “In developed countries, large manufacturers acquire backward linkages from small entrepreneurs. Consequently, both small and large entrepreneurs thrive in the same industry.”
“For example, Toyota manufactures the engine for their cars but sources other parts from outside. However, that is not common in our country. Even some big corporations are producing puffed rice,” he added.
“To close this gap, it is necessary for small entrepreneurs to have access to finance from banks. Unfortunately, the loan process for SMEs is difficult, and even if they manage to secure a loan, the interest rates are as high as 12-14 per cent,” he said.
National Bank managing director & CEO Mehmood Husain pointed out that there are psychological barriers when it comes to giving loans in the SME sector.
“Many documents are required for getting a loan, and entrepreneurs are not enthusiastic about fulfilling these requirements. Lack of expertise is another reason. Due to the complexity of the process, many small entrepreneurs cannot meet the necessary criteria.”
Dhaka Chamber of Commerce & Industry (DCCI) president Md Sameer Sattar said that now four more major steps are needed for SMEs besides access to finance.
These include removing medium enterprises from SME classification, providing tax exemptions to SME accounts affected by Russia-Ukraine war, and various types of government policy support, including tax deferrals and LC margin layer creation, and formation of a separate SME ministry.
He said that political will is needed for SMEs so that the government can provide best service because these entrepreneurs alleviate poverty more.
SME Foundation Chairman Masudur Rahman said compliance must be ensured.
Many challenges lie ahead, and to tackle them, entrepreneurs must confront these challenges. There is no alternative but to build the capacity of entrepreneurs for these matters, he added.
