Learn from Germany, concentrate on SMEs for monetary growth
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The tiny and medium enterprises (SMEs) are highly recommended as the driver of the economy like Germany did because they add 22 % to the country's gross domestic product, a report suggests.
More than 98 % of the enterprises are SMEs in Bangladesh. Over 84 percent of rural non-farm employments had been generated through the cottage and micro enterprises, based on the study titled "Production of SMEs in Bangladesh: lessons from German experiences".
The SME Base and the Embassy of Germany conducted the analysis and released their findings through a virtual program yesterday.
MA Baqui Khalily, a professor of the business enterprise administration section of the University of Asia Pacific and the crew leader of the analysis, made a display on the study.
The contribution of varied categories of SMEs together is between 80 and 85 % of professional employment and around 25 % of total employment, in line with the study.
In Bangladesh, tiny enterprises contribute only a little over 3 percent and SMEs jointly around 22 % to GDP, Khalily said.
In Bangladesh, making enterprises with workers between 16 and 30 are referred to as micro while the ones with employees between 31 and 120 are categorized as small enterprises.
The medium enterprises constitute employees between 121 and 300 beneath the new National Industrial Insurance plan 2016.
Regardless of the policy changes, the development, and growth of SMEs in Bangladesh is at the mercy of some serious constraints.
He said limited or perhaps inadequate usage of finance is, even so, the main constraint. "It really is largely credited to terms and conditions of mortgage loan contracts."
It is followed by the second most significant issue of the dearth of skilled personnel, he said.
Apprenticeship isn't largely practiced as a result of the perceived cost associated with the high mobility of skilled workers.
They also have problems with asymmetric information on markets and products as a result of having less effective social networking.
He said the creation of SMEs found in Germany is globally ranked second with regards to contribution to occupation and value addition.
The majority of the enterprises found in Germany are actually SMEs. It really is driven extra by micro-enterprises that donate to around 82 % of most employees and around 17 percent to value addition.
Micro and tiny enterprises together donate to 96.5 % of all enterprise employees and around 35 % in value addition, the study said.
SMEs are the main way to obtain employment, accounting for approximately 70 percent of most employment, and are major contributors (50-60 percent) to value addition.
In Germany, 99.4 % of enterprises are micro, small, and medium enterprises. It makes up about 63 percent of most employment and contributes to over 54 % to value addition.
In emerging economies, SMEs contribute up to 45 percent of the total job and 33 % of GDP.
According to the study, the production of SMEs in Germany provides been guided by a set of principles -- think tiny first, have entrepreneurship as a great attractive career choice, provide a second possibility to honest and bankrupt enterprises.
The principles likewise incorporate establishing responsive administration to quickly respond to the needs of SMEs, give usage of finance with different capital raising funds for young technical firms, young innovative enterprises, and growth businesses, and go for skills production, efficiency, and innovation.
According to the analysis, the micro and SME sector in Bangladesh should be nourished through distinct coverage supports and action systems.
It recommended SMEs shouldn't be left alone without having to be properly developed, plus they should get classified not only by employment size but also by growth probable with different technology.
Different policies ought to be taken for the development of various kinds of SMEs, it said.
Different venture capital fund ought to be introduced for adolescent firms like hi-tech firms, innovative businesses and growth firms, in addition, it suggests.
The analysis also stressed the need for the presence of supportive finance institutions for financing several types of SMEs and investing in research and expansion for technological advancement, innovation and efficiency.
Strong complex education and apprenticeship system should also be there, according to the study.
The SME sector is promoting the production of Bangladesh and creating employment opportunities, Gowher Rizvi, international relation affairs adviser to the prime minister, said while addressing the start of the report.
Bangladesh must learn about how precisely Germany became successful and worked to make sure economic creation through SMEs, he observed.
However, he said SMEs get the possibility to supply recyclables to large industries.
Peter Fahrenholtz, ambassador of Germany to Bangladesh, said the SME sector contributes around 60 % to the German market and overall 40 % of the gross annual turnover of the professional sector comes from SMEs.
He said 86 % of SMEs are vocational-based plus they manufacture the world's best quality products.
The entrepreneurs will be benefited if a collaborative effort can be taken to make the most make use of Germany's know-how on SMEs, the ambassador believes.
Bangladesh should upgrade its organization environment and circumstances for expenditure to attract German entrepreneurs, he said.
The SME sector has been adding to the positive development of the economy, plus they even helped the economy to recuperate after the Covid-19 outbreak, said Md Moshsaraf Hossain Bhuiyan, ambassador of Bangladesh to Germany.
In Bangladesh, there is no defaulter in the SME sector while the opposite scene is seen in case of big industrialists, he said.
"For employment and creation of the united states, this sector is important," he said.
He suggested providing them with complex training.
Professor Masudur Rahman, chairman of SME Basis, said they are facilitating technology adaptation through providing technical support and skills training to the SME sector.
He believes German knowledge can help in the production of micro and little enterprises in Bangladesh.
Khondaker Golam Moazzem, exploration director of the Center for Insurance plan Dialogue, alleged that the policymaker and even the federal government do not think that the SMEs are the development engine of the overall economy, which may be the major barrier to build up the SME sector found in Bangladesh.
He also said almost all of the marketplace is captured by the large-scale manufacturers in Bangladesh and they supply all products.
He stressed the need for a strategy to improve the SME sector with regards to value chain perspective.
You will find a scope to introduce the knowledge of German SMEs in Bangladesh, he said. Amongst others, Md Shafiqul Islam, taking care of director of SME Foundation, as well spoke at the function.
Source: https://www.thedailystar.net
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