Government needs to patronise SMEs
Friday, 24 April 2009
Anwar Faruq Talukder
THERE is no doubt among development workers or development economists that the ultimate development of the Bangladesh economy mostly depends on the development of small and medium enterprises (SMEs). So patronisation of SME from the various sides is necessary. Understanding this need, the last caretaker government took some measures for the SMEs which reflect their annual budget 2008-09.
To be more effective in increasing the SMEs' access to finance, the government has already introduced a SME Foundation under the Industry ministry. It has been working for advocacy and development of country's SME sector. There is a board of directors from the experts in the SME sector. The board comprises the deputy governor of Bangladesh Bank, president of the Federation of Bangladesh Chambers & Industry (FBCCI), President of Women group, Chairman of Bangladesh Small & Cottage Industries Corporation (BSCIC) and many other SME experts.
Besides the SME foundation, South East Asian Development Fund (SEDF) and International Finance Corporation (IFC) are working with different banks and organisations to boost up country's SME sector. SEDF and IFC are providing various technical and financial help to the private commercial banks. They are also working to create awareness regarding environmental hazards due to various activities of SMEs. Furthermore, Asian Development Bank (ADB) is helping different financial institutions by providing refinance through Bangladesh Bank, which helps banks to minimise their cost of fund.
On its part, the government should also come up with pragmatic policies and take appropriate measures to support and patronise SME as a thrust sector with more incentive package like subsidy for water, gas, electricity, exports etc. Above all, the basic idea of industrialisation is to integrate SMEs with big industries. This task has to be implemented with the highest national priority. In the last budget (FY2008-2009), the government emphasised the development of SMEs through the SME foundation. In the budget speech, the former Finance Advisor declared tax exemption for some SMEs.
The SMEs play an important role in both the developed and the developing countries including Bangladesh. After decades of research and experiments with various enterprise development models, SMEs have emerged as the cornerstone of economic development in developing countries, providing the platform for job creation and economic growth.
But there are various constraints that hinder the development of SMEs in Bangladesh such as lack of medium- to long-term credit, limited access to market opportunities, technology, expertise and business information, lack of suitable incentives and financing sources, inefficient and limited services from relevant government agencies as well as poor capacity of entrepreneurs are other reasons for the slow growth of SMEs.
Obviously, the government has many things to do to develop the SMEs because, if they flourish, SMEs will create new entrepreneurs, more jobs and contribute to a great extent to the national economy, eventually helping it to get rid of this ongoing great depression.
(The writer is head of small business, SME Banking, Eastern Bank Ltd)
THERE is no doubt among development workers or development economists that the ultimate development of the Bangladesh economy mostly depends on the development of small and medium enterprises (SMEs). So patronisation of SME from the various sides is necessary. Understanding this need, the last caretaker government took some measures for the SMEs which reflect their annual budget 2008-09.
To be more effective in increasing the SMEs' access to finance, the government has already introduced a SME Foundation under the Industry ministry. It has been working for advocacy and development of country's SME sector. There is a board of directors from the experts in the SME sector. The board comprises the deputy governor of Bangladesh Bank, president of the Federation of Bangladesh Chambers & Industry (FBCCI), President of Women group, Chairman of Bangladesh Small & Cottage Industries Corporation (BSCIC) and many other SME experts.
Besides the SME foundation, South East Asian Development Fund (SEDF) and International Finance Corporation (IFC) are working with different banks and organisations to boost up country's SME sector. SEDF and IFC are providing various technical and financial help to the private commercial banks. They are also working to create awareness regarding environmental hazards due to various activities of SMEs. Furthermore, Asian Development Bank (ADB) is helping different financial institutions by providing refinance through Bangladesh Bank, which helps banks to minimise their cost of fund.
On its part, the government should also come up with pragmatic policies and take appropriate measures to support and patronise SME as a thrust sector with more incentive package like subsidy for water, gas, electricity, exports etc. Above all, the basic idea of industrialisation is to integrate SMEs with big industries. This task has to be implemented with the highest national priority. In the last budget (FY2008-2009), the government emphasised the development of SMEs through the SME foundation. In the budget speech, the former Finance Advisor declared tax exemption for some SMEs.
The SMEs play an important role in both the developed and the developing countries including Bangladesh. After decades of research and experiments with various enterprise development models, SMEs have emerged as the cornerstone of economic development in developing countries, providing the platform for job creation and economic growth.
But there are various constraints that hinder the development of SMEs in Bangladesh such as lack of medium- to long-term credit, limited access to market opportunities, technology, expertise and business information, lack of suitable incentives and financing sources, inefficient and limited services from relevant government agencies as well as poor capacity of entrepreneurs are other reasons for the slow growth of SMEs.
Obviously, the government has many things to do to develop the SMEs because, if they flourish, SMEs will create new entrepreneurs, more jobs and contribute to a great extent to the national economy, eventually helping it to get rid of this ongoing great depression.
(The writer is head of small business, SME Banking, Eastern Bank Ltd)