SMEs stumble over funds, policy

Staff Reporter :
Small and medium-sized enterprises (SMEs) are limping with lack of bank finance, government policy support and skilled man powers, speakers said.

They further said the sector contributes less than 30 per cent to the country’s GDP, whereas the contribution of it 40 to 60 per cent in neighboring and competitive countries.

So, the development of the sector can help to sustain the large industries and the country’s economy, they said while speaking at a seminar on “Opportunities and Challenges in the SME Sector” organized by the Economic Reporters’ Forum (ERF) at its conference room in the city on Monday.

According to the SME Foundation, about 7.8 million SMEs in the country and around 24.5 million people are directly employed in the SME industry, primarily dominated by male employees (83.5 per cent).

“It is necessary to facilitate bank financing, provide training for increasing skills and prepare documents and markets, establish a separate cell or ministry for SME and to provide necessary policy support to advance the SME sector,” FBCCI President Mahbubul Alam said.

If it is possible to implement these, then the huge potential of the SME sector can be utilized and it will strengthen the base of the country’s economy by alleviating poverty through job creation, he added.

In addition to these, the bankers need to change their mentality, so that they take care of the financing for the development of the sector with real compassion, he thinks.

The FBCCI president further said, “In developed countries, large industries buy backward linkages products from small entrepreneurs.

For example, Toyota makes the engine of the car and all the other parts are made from outside.

As a result small and big entrepreneurs are created in the same industry.”

“But in our country, the large industries don’t give the chance. They produce everything themselves. Even many large groups produce chanchur and puffed,” he added.

“Overcoming the disparity, small entrepreneurs need bank financing. But SME entrepreneurs are not getting the required financing. Financing is still a major problem here.

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Due to procedural complications, many funds are not available to genuine beneficiaries. The interest rate of those who are getting it also becomes 12 to 14 per cent,” he said.

Besides, the SMEs are facing various problemmes to enter the international markets due to the lack of skills, he said. On the other hand, there is 1 per cent source tax for the SME sector which should not be there, he said.

“We are trying hard to remove it as the country’s economy will not grow if SME entrepreneurs are not given opportunities and making the country a smart Bangladesh, the SME must be promoted,” Mahbub added.

Mehmud Hossain, Managing Director of National Bank, said that there are psychological problemmes in lending to the SME sector as the loan requires many documents.

“But bankers, entrepreneurs are not interested in this. Lack of skills is one of the reasons. Due to this lack of interest, the SME sector is lagging behind,” he added.

He further said that banks have set loan targets for the SME sector, but it will be challenged.

DCCI President Sameer Sattar said along with the step of ensuring access to finance, four major measures are now needed for the SME sector.

These are separation of medium enterprises from SMEs, providing tax waiver facility and creation of LC margin layers for the war-damaged 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, he added.

“Political will is needed for the SME sector, so that the government can provide maximum services to the SME sector as the large industries cannot survive without SMEs,” he said.

Masudur Rahman, Managing Director of SME Foundation, said that the SME sector is lagging behind the competitor countries due to the lack of bank financing and high interest rates.

“In every case, the SME sector is facing obstacles. An indigenous loan process should be created for the sector. Innovative ideas are needed on how to facilitate lending,” he added.

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