Informal practices, lack of data, and weak coordination among stakeholders are the major challenges hampering the growth of Bangladesh's small and medium-sized enterprises (SMEs), experts said at a session of the Economic Reform Summit on Tuesday.
They also emphasised the urgent need to change the mindset of lenders, check corruption in government offices, and provide time-befitting policy support for SMEs to foster growth.
The session titled 'SME-Led Industrialisation: Fixing Regulatory Challenges' is part of the two-day summit held at a city hotel.
Director of SME and Special Program Department at the Bangladesh Bank Nawshad Mustafa, Managing Director of Islami Bank Bangladesh Omar Farooq Khan and Deputy Managing Director of SME Foundation Nazim Hasan Sattar, and SME Specialist Kohinoor Yeasmin spoke at the session.
In his keynote presentation, Rubaiyath Sarwar, Managing Director of Innovision Consulting, said there has been no accurate data on SMEs' contributions to Bangladesh's GDP.
"Different sources give conflicting figures, making it difficult for the government to plan or track progress effectively," Sarwar said.
He noted that many SMEs are started by unemployed youth or women, but most remain small and informal.
"They struggle to access loans, technology, and larger markets," he said, adding that rising inflation has significantly affected the middle-income consumers who make up a large portion of the market for SME products, leading to reduced sales and profit in the recent times.
To address these challenges, Sarwar proposed five key steps, including creating a central SME database, simplifying the process for small businesses to become formal, decentralizing SME support across regions, promoting technology and green business growth, and strengthening business associations.
He also called for a stronger public-private partnership to support innovation and long-term growth.
Nawshad Mustafa echoed the need for a centralized database to accurately track both formal and informal entrepreneurs.
He added that entrepreneurial journey in Bangladesh is not easy, requiring perseverance and a willingness to fight against barriers.
He also emphasised the importance of coordinated efforts, including specialised wings in embassies to promote exports and remittances, as essential for sustaining the SME sector's growth.
Omar Farooq Khan acknowledged that while financing is a genuine concern, banks often perceive SMEs as a riskier investment, preferring corporate loans despite the latter having higher rates of non-performing loans.
He suggests developing good entrepreneurs, relaxing regulations on loan provisioning, and increasing monitoring and supervision.
Kohinoor Yeasmin emphasized the critical need for supportive infrastructure for SMEs beyond just sales, such as assistance with AI-driven product development, market innovation, design, and continuous research to meet global demands.
She also called for tax and legal reforms to ease the burden on small businesses and emphasized the need to address corruption and complexity in customs procedures.
Nazim Hasan Sattar, in his remarks, highlighted the critical role of SMEs in driving economic growth. He pointed to the success of Asian countries like China and Malaysia, whose economies shifted from agriculture to industrialization, fuelling their rise.
Sattar also noted policy gaps and a lack of ownership among policymakers for supporting entrepreneurs, he said.
Earlier in the summit, a session titled 'Tackling Youth Unemployment and Driving Skilled Migration' featured Fahim Mashroor, founder of Bdjobs.com, and Zia Hassan, Policy Advisor at the Ministry of Expatriate Welfare and Overseas Employment.
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