The potential of small and medium enterprises is yet to be fully utilised in Bangladesh although they have the ability to create numerous jobs and increase contribution to the gross domestic product, a study finds.
The contribution of SMEs to the GDP is only 20.25 percent in Bangladesh whereas it stands at 80 percent in India, 15 percent in Pakistan, 60 percent in China and 69.50 percent in Japan.
The share of SMEs in all enterprises is 80 percent in Bangladesh. It is 97.60 percent in India, 60 percent in Pakistan, 99 percent in China and 99.70 percent in Japan, according to the study.
Mohammad Saleh Jahur, a professor of accounting and finance at Chittagong University, conducted the study.
He shared the findings at a seminar on “The role of SMEs in the national economy -- the case of Japan and how Bangladesh should go ahead” at Banani Club in Dhaka yesterday.
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 Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), Bangladesh AOTS Alumni Society and Chattogram AOTS Alumni Society jointly organised the seminar, which was attended by the factory owners, trade body leaders, a group of businessmen and university teachers from Japan.
The sector is found to have employed 35.49 percent of the total persons employed in Bangladesh, contributed 33.80 percent of the compensation of employees and invested 48 percent of the total investment in fixed assets, Jahur said.
However, the SMEs cannot thrive in Bangladesh for some major challenges like paucity of fiscal incentives, management problems, access to finance, policy inconsistency and bureaucracy, he said.
If the example of Japan is taken as the best user of the SMEs, it is found that Japan has only 19 big conglomerates and more than 99.7 percent industrial and services units are SMEs, said Muhammad Abdul Mazid, adviser to the AK Khan Foundation.
In a paper on “SME development around the region”, Mazid highlighted the contribution of SMEs in other developing and developed countries.
“The definition of SMEs is not very much clear in Bangladesh.”
It is must now to set a flexible definition of SMEs and provide them with appropriate policy support for the development of the SME sector in the country, he said.
Kurose Naohiro, president of the International Cooperation Organi-sation for SMEs in Asia, also presented a paper on “Changes in the roles of SMEs in Japan and Japan's interest in Bangladeshi SMEs”.
In Japan, 3.8 million companies, including 4.10 lakh manufacturing units, are SMEs, said Naohiro.
Some 70.1 percent or 33.61 million workers of the country were employed for non-primary industry in 2014, he said.
Companies in Bangladesh, including large entities, seem to depend on low-paid management, he said.
“Japan faced this problem in the 1960s, and many SMEs were culled out to disappear.”
The higher presence of Japanese people in Bangladesh proves that how much interested they are to develop the SMEs in the South Asian nation, said Wahiduddin Mahmud, an adviser to a former caretaker government.
Mahmud also mentioned that while he was the adviser back in 1996, the Japanese people helped construct the Chattogram international airport quickly.
Salahuddin Kasem Khan, former president of JBCCI, also spoke.