Fiscal incentives key to small, cottage industries’ growth

In the FY24 budget, we want the government to focus on policies and allocations aiming to help promote the growth of small and cottage industries, President of National Association of Small and Cottage Industries of Bangladesh (NASCIB) Mirza Nurul Ghani Shovon tells The Business Post’s Rafikul Islam in an exclusive interview.

Which things do you give priority in the next budget?

The Micro, Small and Medium Enterprises (MSMEs) sector in Bangladesh has emerged as a key contributor to the country’s economy, providing employment opportunities to 89 per cent of the population in urban and rural areas. With a wide network of direct and indirect members, NASCIB aims to foster the development of self-sustained and profitable micro, small and cottage industries, ultimately contributing to a prosperous Bangladesh.

The MSME sector comprises a staggering 7.8 million enterprises, employing approximately 21 million people. These enterprises play a pivotal role in driving innovation, ensuring social and regional stability, and contributing to the overall growth and development of the country.

Besides, we should prioritise capacity-building and skills development, infrastructure development, research and development support, market linkages and export opportunities for the sake of the MSME sector.

As Bangladesh strives to achieve Sustainable Development Goals (SDGs) by 2030, the MSME sector’s development becomes paramount. Prioritising the aforementioned budgetary measures is important in FY24.

What types of structural reforms are necessary to further develop this sector?

Structural reforms are crucial to unleash the full potential of small and cottage industries. We need policies that address infrastructure gaps, enhance skills development, encourage entre preneurship and foster market linkages. Additionally, promoting research and development activities and improving access to technology will help our industries become more competitive globally.

As you know that the government has SME Policy-2019 and Industry Policy-2022 focusing on the development of CMSMEs. To get maximum outcomes, time-bound action plans needs to be implemented effectively with collaborative approaches. If there is any gap, we need to identify these gaps and challenges and make it happen.

Can you shed light on the current challenges faced by small and cottage industries while doing business?

Certainly, CMSMEs often face challenges such as limited access to financing, access to information, less business environment, minimum forward and backward business linkages, less subcontracting, high inflation, increased prices of raw materials, and rising energy costs.

CMSME entrepreneurs and products are deprived of various legal, institutional and strategic benefits. On the one hand, just as the entrepreneur does not get enough benefits for product market and quality research, similarly creative and quality product research and market creation do not get strategic, technical or economic benefits. Therefore, in the way of development, international market creation or IPR can be facilitated to make domestic products industrial and efficient market, so it is noteworthy.

Furthermore, bureaucratic hurdles and complex regulatory processes hinder their growth. Addressing these challenges will require concerted efforts from the government, financial institutions, and industry associations.

What kinds of problems small and cottage industries may face after LDC graduation?

CMSMEs are the backbone of Bangladesh’s economy, and it is crucial to understand the potential obstacles they may face in the post-graduation era.

While LDC graduation presents new challenges to CMSMEs in Bangladesh, it is important to approach these obstacles as opportunities for growth and development. The government, in collaboration with industry associations like NASCIB, should develop comprehensive strategies that address the specific needs of CMSMEs.

This includes providing targeted support in terms of capacity building, access to finance, technology adoption, market access facilitation, and skills development. By addressing these challenges proactively, Bangladesh can ensure the continued success and resilience of its CMSMEs in the post-graduation era.

Considering high inflation, increased prices of raw materials, and rising business cost, do you believe that fiscal incentives are necessary for the development of the sector?

Absolutely, fiscal incentives play a vital role in promoting the growth of small and cottage industries. These incentives could include tax exemptions or reductions, duty waivers on imported machinery and raw materials, and subsidised energy prices. Such measures will help alleviate the burden on businesses and encourage their sustainable development.

What kind of policy support do you expect from the government to facilitate the growth of small and cottage industries?

We want the government to introduce supportive policies that ensure a congenial business environment. NASCIB urges the government to simplify and streamline regulatory processes, remove bureaucratic tangles and paperwork. The establishment of a single-window clearance system or an online portal for regulatory compliance would significantly improve the ease of doing business for these industries.

NASCIB firmly believes that with the right policy support from the government, these industries can flourish and contribute significantly to employment generation, poverty reduction, and overall socioeconomic progress.

The government should create a congenial environment that nurtures the growth of small and cottage industries, paving the way for a prosperous Bangladesh.

Do you get adequate support from BSCIC to develop your industries? What’s your observation?

Bangladesh Small and Cottage Industries Corporation (BSCIC) is playing a vital role in supporting small and cottage industries. However, there is room for improvement. We appreciate the initiatives, taken by BSCIC, such as providing infrastructure facilities and training programs.

However, we would like to get more targeted support, including easier access to finance, assistance in technology adoption, and marketing support for our products. Streamlining bureaucratic processes and enhancing coordination between BSCIC and industry associations will also be beneficial.

You received CIP card. What type of business you are doing and what’s your future plan?

I am the owner of a metal factory located in Kalihati of Tangail district. Our factory specialises in the production of various metal products, including components for machinery and equipment. With the CIP recognition, I feel honoured and motivated to contribute further to the growth of the small and cottage industry sector.

As for my future plans, I aim to expand the capacity of my factory and invest in advanced technologies to improve productivity and quality. I also plan to diversify our products to cater to both domestic and international markets. Moreover, I will continue to actively engage with industry associations, government bodies, and other stakeholders to advocate for the needs and concerns of small, medium and cottage industries.