Experts for reforms to boost SME competitiveness

Experts at a national conference observed that structural and institutional barriers, particularly limited access to bonded warehouse facilities, remain the principal obstacle preventing small and medium enterprises (SMEs) from expanding their participation in Bangladesh’s export sector.

The conference titled “Small & Medium Enterprises Competitiveness & Export Growth in Bangladesh,” was organized by the Business Initiative Leading Development (BUILD) in partnership with the Department of Foreign Affairs and Trade (DFAT) of Australia at the CIRDAP International Conference Centre in the capital, said a press release.

Speaking as chief guest, Md. Shahriar Kader Siddiky, Secretary of the Economic Relations Division (ERD), assured participants that the government’s commitment to SME development remains strong and that recommendations emerging from the conference would receive serious consideration.

He said the government is pursuing an Asian Development Bank-supported project to improve economic facilities and reduce approval delays, while also working toward a fully digitalized economy to facilitate business reforms.

He announced plans to establish a 150-acre Creative Hub in Purbachal and emphasized the importance of renewable energy, public awareness initiatives, policy implementation, and alternative financing mechanisms for businesses.

Presenting findings of a study titled “Institutionalized Exclusion: Bonded Warehouse Policy and SME Export Competitiveness in Bangladesh,” BUILD Research Director and IBA Assistant Professor Dr. Wasel Bin Shadat said that despite accounting for over 90 percent of industrial establishments, a quarter of GDP, and nearly 7.8 million jobs, SMEs contribute only marginally to exports.

The study found that none of the 107 surveyed firms had ever used bonded warehouse facilities, while awareness of the partial-exporter notification (SRO-384) stood at only 1.87 percent.

Administrative complexity, limited access to finance, and high duties on imported raw materials were identified as major constraints.

Dr. Shadat highlighted a home textile paradox, where firms face both high export potential and significant regulatory burdens, noting that yarn duties can reach up to 40 percent, often exceeding annual net profits.

He said nearly half (48.4 percent) of non-exporting firms expressed willingness to enter export markets if granted duty-free access to raw materials and simplified compliance procedures.

Distinguished Fellow of the Centre for Policy Dialogue (CPD) Dr. Mustafizur Rahman said Bangladesh had already demonstrated the success of SMEs in the ready-made garment sector through targeted policy support and incentives.

He questioned why similar support mechanisms had not been extended to sectors such as home textiles, light engineering, and agro-processed foods, and called for reforms in skills development, infrastructure, technology adoption, and awareness-building to enhance SME competitiveness in global markets.

Opening the conference, BUILD Chairperson AbulKasem Khan said SMEs account for around 90 percent of industrial establishments, contribute about one-quarter of GDP, and provide employment to nearly eight million people.

However, he noted that SMEs’ contribution to exports remains limited due to the absence of bonded warehouse facilities and inadequate utility and infrastructure support.

He stressed that export diversification had become essential as Bangladesh prepares for graduation from the Least Developed Country (LDC) category.

Additional Secretary and Director General-2 of the Prime Minister’s Office Dr. Ahmed Ullah said the government remains committed to improving the ease of doing business and is open to reform proposals aimed at supporting SMEs.

First Secretary of the National Board of Revenue (NBR) Mohammad NaziurRahmanMiah highlighted recent changes introduced in the FY2026-27 budget under SRO-384.

He said the input-output coefficient requirement had been removed, the previous 30 percent value-addition condition had been replaced with a simplified higher-value export requirement, and nine additional sectors had been included for duty-free raw material imports against a 100 percent bank guarantee.

Bangladesh Bank Director Nawshad Mustafa announced plans to introduce a dedicated TK 5,000-crore SME fund at a 9 percent interest rate and emphasized the need to reform securities regulations to enable SMEs to raise capital through stock market listings.

SME Foundation Deputy Managing Director Nazeem Hassan Sattar underscored the importance of strengthening backward linkages and supplier-producer relationships, noting that nearly half of the surveyed firms possess latent export potential.

Chief Executive Officer of the Bangladesh Agro-Processors’ Association (BAPA) BillalHossain said the agro-processing sector faces challenges including inadequate cold storage, weak branding, and seasonal shortages of raw materials, despite sourcing most inputs domestically.

Meanwhile, BSCIC General Manager SarwarHossain revealed that among 4,882 industrial units operating under BSCIC, 870 are export-oriented, but hundreds of SMEs remain unable to access bonded warehouse facilities.
He proposed establishing centralized bonded warehouses within BSCIC Common Facility Centres.

The conference was moderated by BUILD Chief Executive Officer FerdausAra Begum, who said BUILD would continue pursuing the recommendations emerging from the event to help unlock the export potential of SMEs and diversify Bangladesh’s export basket in the post-LDC era.

The event was attended by business leaders, entrepreneurs, academics, policymakers, development partners and representatives of various trade associations.