Limited access to finance has been one of the major challenges for small and medium enterprises over the past decade in Bangladesh, as banks generally favour larger and well-established companies in the country, according to the draft White Paper on the State of Bangladesh Economy submitted to chief adviser Muhammad Yunus on Sunday.
The white paper submitted by a 12-member committee headed by economist Debapriya Bhattacharya observed that SMEs faced difficulties in conducting operations in the intricate regulatory environment.
It said that the complex regulations included cumbersome and bureaucratic licensing procedures, inconsistent application of rules and lack of supporting government agencies.
It mentioned that lack of supporting government agencies made it quite difficult for the smaller businesses to scale up.
Md Ali Zaman, president of the Small and Medium Enterprises Owners Association of Bangladesh, said that only certain groups, who were already well off, received the benefit of business financing in the country.
鈥楴ot only banks, same thing happened with government financing,鈥� he said.
鈥楢mid the COVID outbreak, the past government allocated incentives for SMEs affected due the situation then. However, only 27 per cent of the incentives were disbursed, and most of them went to small-scale companies owned by big businesses,鈥� he said.
The Bangladesh Bank on April 2020 announced an incentive package of Tk聽20,000 crore for the SMEs affected due to the COVID outbreak.
According to the 2013 Economic Census conducted by the Bangladesh Bureau of Statistics, there were 8,66,424 SME establishments in the country, and a total of 73,06,797 persons were engaged in the businesses.
A recent SME Foundation study said that about 57 per cent of SME entrepreneurs mentioned tax structure as the main obstacle to doing business in compliance with the law while about 54 per cent of the entrepreneurs considered trade licence renewal process as an obstacle.
According to the white paper, SMEs were relatively vulnerable to infrastructural weaknesses, such as non-availability and erratic power supply, poor transport networks, and inaccessibility of modern logistics and communication systems.
It added that these factors raised operational costs and restrained capacity for expansion.
鈥榃here large firms may be able to afford the investment in alternatives or receive favourable treatment, SMEs are often bearing the brunt of this, further extending the gulf between them and larger enterprises,鈥� it further said.
The white paper suggested policymakers to take up the particular needs of the SMEs, especially with regard to access to finance, infrastructure and simplification of regulatory procedures, to enable them to become more contributory to economic growth in order to make the business environment more inclusive.
