Despite the vast potential of the SME sector, Bangladesh could not utilize this opportunity due to backdated policy and lack of funding for the SMEs, said Mahbubul Alam, president of the Federation of Bangladesh Chamber of Commerce and Industry (FBCCI).
While the SME sector contributes 40-60 percent of the GDP of neighboring and competing countries, Bangladesh is still less than 30 percent, he said.
Mahbubul said this while speaking as the chief guest at a seminar titled "Opportunities and Challenges in the SME Sector" organized by the Economic Reporters’ Forum (ERF), held at the Auditorium at Paltan in Dhaka on Monday.
FBCCI president said that in developed countries, big producers buy the backward linkages from small entrepreneurs. As a result, small and big entrepreneurs are created in the same industry.
Giving an example he said a big company like ‘Toyota Motor' makes the engine of the car and all the other parts are made by the SMEs.
“But in our country the big companies don’t give opportunities to the small ones, they make everything. Many large industrial groups also make ‘Chanachur and Muri’, which is also a barrier to growing SMEs in Bangladesh,” said FBCCI President.
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“Small entrepreneurs need bank financing to overcome this tax disparity. But SME entrepreneurs are not getting the required financing. Due to procedural complications, many funds are not available to genuine beneficiaries. The interest rate of those who are getting it also becomes 12-14 percent,” Mahbubul pointed out.
Mehmud Hossain, Managing Director of National Bank, said that there are psychological problems in lending to the SME sector.
“A loan requires many documents. But bankers and entrepreneurs are not interested in this for lack of skills. Due to this lack of interest, the SME sector is lagging behind,” he added.
He said that in Bangladesh, banks have set loan targets for the SME sector. But achieving that is challenging.
President of Dhaka Chamber of Commerce and Industry (DCCI) Barrister Samir Sattar said that apart from access to finance, some major steps are now needed for the SME sector.
These are: taking medium enterprises out of SMEs, providing tax waivers and LC margin layers to attract the SME sector, providing various types of government policy support, providing necessary training to entrepreneurs to make them suitable for entering the international market, and creating a separate SME ministry.
Masudur Rahman, chairman of the SME Foundation, said that Bangladesh’s SME sector is lagging behind the competitor countries. Because there is a shortage of financing and interest rates are high.
“In every case, the SME sector is facing obstacles. An indigenous loan process should be created for the SME sector. Innovative ideas are needed on how to facilitate lending,” he pointed out.
He said that market access should be facilitated to exploit the potential of the SME sector. Many times, SME entrepreneurs cannot enter the market due to middlemen. Middlemen do not allow entrepreneurs to grow. Genuine entrepreneurs depend on middlemen to market for them.
ERF President Refayet Ullah Mirdha presided over the seminar and General Secretary Abul Kashem moderated the seminar.