SME contribution still negligible: study

Image: Bizbangladesh.net
The contribution of small and medium enterprises (SMEs) to the economy is still negligible as the sector has not developed fully for some challenges like scarcity of fiscal incentives, management problem, access to finance and bureaucracy, according to a new study released yesterday.

The SMEs are yet to be fully utilised in Bangladesh although they have the ability to create numerous jobs and increase contribution to the gross domestic product (GDP).

The contribution of SMEs to the GDP is only 20.25 percent in Bangladesh, whereas it stands at 80 percent in India, 60 percent in China and 69.50 percent in Japan.

The sector accounts for 35.49 percent of the total employment in Bangladesh, according to the study, which was conducted by the International Cooperation Organisation for Small and Medium Enterprises in Asia (ICOSA), Japan.

Leaders of Japan Bangladesh Chamber of Commerce and Industry (JBCCI) shared the findings of the report with journalists at a meeting held at the JBCCI office in Dhaka.

The share of SMEs in all enterprises is 80 percent in Bangladesh, according to the study. It stands at 97.60 percent in India, 99 percent in China and 99.70 percent in Japan, the study revealed.

The study found that Bangladesh has 17,384 micro enterprises, 15,666 small ones, 6,103 medium and 3,639 large scale enterprises, where a total of 5.02 million people are engaged.

The SMEs constitute 50.91 percent of the total number of micro-economic units in Bangladesh, the ICOSA study also found.

Currently, Japan is the best user of SMEs in the world, the study said.

The Fareast nation has only 19 big business groups, with more than 99.7 percent of the industrial and services units being SMEs.

In Japan, 3.8 million companies, including 0.41 million manufacturing units, are SMEs.

According to the statistics of the Planning Commission of Bangladesh, at present SMEs account for about 45 percent of manufacturing value addition, 80 percent of industrial employment, 90 percent of total industrial units and about 25 percent of the labour forces.

SMEs’ contribution to export earnings varies from 75 percent to 80 percent.

During the study, a 15-member delegation from ICOSA had visited Bangladesh in November last year, which gave a very good opportunity for the SME Support Committee of Bangladesh to get involved.

The study found that policy inconsistency is also a major challenge for the development of the SMEs.

It recommended proper training and technological support for SMEs to improve the quality of their products.

SMEs face problem when it comes for product standardisation. So, the committee recommends the government consider setting up a dedicated laboratory to certify the quality of SME products.

The committee of the ICOSA recommends a separate division in the ministry of industries for dealing with SME affairs. In countries like India and Indonesia there is a separate ministry for dealing with SMEs. It also called for a separate bank to facilitate lending to SMEs. If not, one of the state-owned banks can be converted into an SME bank. India, Malaysia and some other countries have set up dedicated banks to cater for the needs of the SMEs.

Bangladesh needs to develop SMEs as a lot of Japanese investments are coming here and opportunities are being created, said Yuji Ando, president of JBCCI and country representative of Japan External Trade Organisation.

For instance, Honda has opened a manufacturing unit here. This company needs a lot of small parts that the local small and medium companies can produce.

Similarly, Bangladesh has the opportunity to grow SMEs in areas like food processing, services and consumer goods to serve the Japan markets and Japanese companies in Bangladesh. 
Source: https://www.thedailystar.net

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