Bangladesh’s economy is expected to face a multitude of challenges following its graduation from Least Developed Country (LDC) status. In light of this, experts and industry insiders stress the importance of nurturing small and medium-sized enterprises (SMEs) to diversify exports, generate employment, and significantly contribute to GDP growth.
They highlighted the role of government bodies and organisations such as the SME Foundation and the Export Promotion Bureau (EPB) in expanding market access through trade fairs, digital platforms, and bilateral agreements.
Additionally, they underscored the need for improved tax discipline, increased productivity, and enhanced business operations and sales performance.
Bangladeshi non-conventional products hold global potential
Speaking to the media, Abul Kalam Azad, managing director of Panacea Carbon Limited, said he has been exporting jute-stick charcoal powder to China, the Philippines, and Cambodia since 2016, earning around Tk12 crore annually from this 100% value-added product.
Azad is not alone – 12 SMEs are currently exporting this product to countries including Thailand and Taiwan, generating approximately Tk170 crore each year despite facing multiple hurdles.
Exporters note a growing global demand for jute-stick charcoal powder, which is used in inks, tyres, water purification, cosmetics, and the pharmaceutical industry.
“After graduating in economics from Dhaka University, I started a rice mill and moved into agro-processing. I later diversified into charcoal production by establishing a factory in Jashore in 2016,” Azad said.
From a modest beginning, Azad’s enterprise now employs 110 people and boasts an investment of Tk1.5 crore. “If the charcoal industry expands, jute farmers will benefit significantly. We don’t need to import any raw materials to produce the ash. The industry could grow by up to 40% within the next five years,” he added.
He also pointed out challenges such as logistics, certification, access to testing labs, R&D, and inadequate policy support.
Other unconventional products exported by Bangladeshi entrepreneurs include cane and banana fibre items, jute and bamboo crafts, parathas, frozen snacks, spring rolls, samosas, shingaras, cakes, rice paper, pottery, nakshi kantha, and miniatures.
In addition, SME exports encompass handicrafts, jute goods, frozen seafood, leather products, agro-items, ceramics, textiles, light machinery, vegetables, and fruits. These are shipped to countries including the USA, Germany, the UK, France, Italy, Spain, the UAE, Saudi Arabia, India, Turkey, Japan, Australia, Canada, Malaysia, and South Korea.
Export success stories amid challenges
Ashraf Hossain Mashud, managing director of Mashud Agro Processing Food Products Ltd, told the media, “Since 2013, I’ve been exporting parathas and frozen snacks to 10–12 countries, including the UK, Canada, Australia, and Italy. My first export to the UK was worth Tk50 lakh; now, it exceeds Tk30 crore annually.”
He explained that Bangladeshi fish importers in these countries often purchase his products. “I’ve since diversified into biscuits, spices, oil, and fish processing, employing over 5,000 people. There’s vast export potential for our products globally – we just need to ensure quality and uphold our commitments,” he said.
According to a USDA report, Bangladesh is expected to export wheat-based products worth $225 million in 2024–25 to countries such as Saudi Arabia, Oman, Malaysia, the USA, and the UK.
Mashud identified key challenges for SME exporters: price competitiveness, rising raw material costs, high business expenses, elevated bank interest rates, frequent policy shifts, energy shortages, container freight costs, and global competition.
SME export potential still underutilised
Experts note that Bangladesh has considerable scope to increase SME exports by leveraging its demographic dividend. Global small business markets were valued at $129.49 billion in 2023, and are projected to grow to $269.84 billion by 2032.
In FY24, Bangladesh’s exports stood at $44.46 billion. In the first nine months of FY25, exports reached $37.19 billion – a 10.63% year-on-year rise – of which 91.34% came from eight major product groups, many supported by SMEs, according to EPB data.
Although there’s no consolidated data on SME-specific exports, around 25% of total exports are believed to originate from this sector, with around 1,500 SME exporters active. The SME sector currently contributes about 32% to the national economy.
As per the Bangladesh Bureau of Statistics (BBS) Economic Census 2013, there are more than 7.8 million cottage, micro, small, and medium enterprises (CMSMEs), representing over 99% of the country’s industrial units and employing more than 25 million people.
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said, “The RMG sector plays a pivotal role in GDP growth, and many SMEs are integrated into its value chain. Diversifying exports through SMEs is essential.”
Data crucial for policy decisions
Professor Rahman emphasised that disaggregated industry data must be analysed to identify SME entrepreneurs and product lines for targeted policy support. “A comprehensive SME database will help policymakers take informed steps for sectoral development,” he noted.
He warned that, post-LDC graduation, businesses will face tougher competition due to the loss of trade preferences.
“There is no alternative to diversifying products. Our reliance on SMEs will only grow. The government must increase budgetary allocation to enhance SME skills and productivity.”
He also called for dedicated SME funding in the Annual Development Programme (ADP), enabling low-interest loans and employment generation.
Capacity building, trade facilitation key
Industry insiders said SMEs must navigate complex regulatory landscapes, reduced trade privileges, and limited access to finance and skills.
Mirza Nurul Ghani Shovon, president of the National Association of Small and Cottage Industries of Bangladesh (NASCIB), said, “Building SME capacity is vital for boosting our share in global markets. Agencies like the SME Foundation can play a significant role.”
He suggested that business attachés in Bangladeshi embassies abroad help connect SMEs with global buyers and recommended more trade fairs – both local and international.
DCCI President Taskeen Ahmed noted that SMEs account for over 28% of GDP, 45% of manufacturing value addition, and over 90% of private sector employment.
Between July and March of FY25, exports grew by 10.63% year-on-year, led by SME-backed sectors. Notable growth was seen in plastic and melamine (up 20.65%), frozen fish and crustaceans (up 13.78%), and engineering products like bicycles (up 60.10%).
He also highlighted the rise of newer export categories including furniture, paper goods, electrical items, handicrafts, wigs, and processed spices.
However, Ahmed pointed out persistent barriers: limited knowledge of export processes, complex customs procedures, high certification costs, and expensive logistics, especially for small-volume exporters.
Strengthening SMEs key to economic sustainability
Challenges facing SMEs include loss of duty-free access, intellectual property compliance, financial and infrastructural constraints, technological limitations, and skill gaps.
“There’s no alternative to strengthening SMEs if we want a sustainable economy and to overcome the upcoming challenges,” said Professor Rahman. National SME Policy 2025 set to boost sector.
SME Foundation Chairperson Md Musfiqur Rahman said the National SME Policy 2025 aims to increase the sector’s contribution to GDP from 28% to 35% by 2030.
The Foundation currently provides direct support to around 150,000 CMSMEs across all 64 districts and has facilitated low-interest loans to over 11,000 entrepreneurs. Since its inception in 2007, it has assisted two million SMEs – 60% of whom are women – through various initiatives aligned with the National Industrial Policy 2022 and SDG 2030.
EPB to launch SME export platform
EPB CEO and Vice Chairman Md Anwar Hossain told the media that SME competitiveness must improve to capture global markets. “We’re working at the policy level with NBR, BIDA, and the SME Foundation. An SME Export Platform will be launched by 2024 to centralise data and support market expansion.”
He noted that certification remains a significant hurdle. “We’re also working to allow duty-free import of raw materials, offer proper policy support, and extend bond facilities and bank access to SMEs.”
Export-oriented mindset needed
Anwar Hossain Chowdhury, managing director of the SME Foundation, stressed the need to look beyond domestic markets. “We are helping SME exporters through capacity building and by collaborating with EPB to enhance product quality and overcome export barriers.”
He added that the foundation plans to train 30 SME exporters soon.
“There is strong global demand for jute goods, leather products, light engineering, and plastic items. To meet SDG targets by 2030, we must strengthen SMEs by focusing on quality, skills, productivity, and market integration,” he concluded.
Source: Daily Sun.
Bd-pratidin English/TR
