In a recent conference organized by the SME Foundation of Bangladesh has inferred that the country needed an SME-friendly environment without regulatory barriers to take the sector to the next level of global recognition. The meet to address Regulatory Barriers Facing SME Development in Bangladesh became a platform to discuss bottlenecks in the system that choked the SME growth in the country.
The bdnews24, Bangladesh’s leading online newspaper reported that a survey of SMEs in divisional headquarters revealed government regulatory laws hampered the growth of SMEs in the country. One such case in point was a licensing procedure – to obtain a trade license from the Dhaka City Corporation, it is mandatory to have fire license but to get the same from the fire service one should have a trade licence.
It has been found the system is grossly flawed with rules and regulations beyond logic. The procurement of licenses, certificates and loans required for setting up a business is time-consuming with complex prerequisites, says the survey.
Aftab ul Islam, the chairman of the SME Foundation said entrepreneurs and banks would come forward if authorities could create a better environment for investment. He added financing available to SME entrepreneurs, particularly women, was not satisfactory.
He informed the SME Foundation had launched ‘credit wholesaling’ activities as a pilot programme to address this issue. It is jointly run by Micro Industries Development Assistance and Service (MIDAS) and Shakti Foundation, an organization formed in 1992 for the economic empowerment of disadvantaged women of Bangladesh.
Prof Momtaz Uddin Ahmed, managing director of the SME Foundation stated while presenting the keynote paper that the outdated legal and regulatory framework of the country were the major constraints for the development of the industry. He identified the financial procedures burdensome and rates of interests very high, varying from 11 to 13 percent. Ahmed cited the examples in some other countries, where entrepreneurs in Turkey and India could secure loan rates as low as 4 percent and 5 percent respectively.
He also said that the entrepreneurs had to part with 25-50 percent as service charges in case of imported raw materials and machineries. He reminded that the recent effective changes made by the Regulatory Reforms Commission and Better Business Forum should be continued to ensure the growth of the sector.
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