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The small and medium enterprises (SMEs) in Bangladesh will face significant trade barriers if the country fails to take effective policies focusing its upcoming United Nations status graduation from a least developed to developing nation, according to experts.
The government should focus on upskilling the labour force, research and increasing technology capabilities to face the post-LDC challenges, they said.
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Currently, the SME sector is getting government support through subsidies and other forms of protection.
“After the imminent removal of privileges, SMEs will suffer severe and hostile repercussions on international trade and domestic operations,” said Abu Hena Reza Hasan, professor at the international business department of the University of Dhaka.
“Bangladeshi SMEs will likely lose their comparative advantage in the global economy following the graduation from the LDC status,” he said.
“The export competitiveness of SMEs will diminish, and they will face intense competition in the global and domestic markets,” he added.
Hasan made these comments while delivering a keynote speech at a seminar on “LDC Graduation of Bangladesh: Challenges and Opportunities for SMEs” organised by SME Foundation at its headquarters in Dhaka.
After the removal of privileges, SMEs will suffer severe and hostile repercussions in international trade and domestic operations.
— Abu Hena Reza Hasan A professor of DU
He also said a lack of skilled workers would increase investment costs because of the need to create human resources for businesses.
“Without local technology capabilities, foreign companies with advanced technologies can limit the SMEs’ role of import substitution and sub-contracting in global supply chains,” said Hasan.
The SMEs will have to increase their efficiencies to compete in the global market, said Sameer Sattar, president of the Dhaka Chamber of Commerce and Industry.
Mentioning that one of the main challenges will be access to finance, he urged financing entities not to discriminate against small enterprises when giving out loans.
The government should ensure the simplification of its existing rules regarding export initiatives of the SMEs, said Mostofa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industry.
He also urged the commerce ministry to take up initiatives for the diversification of jute products.
The government is not scared of the post-LDC challenges, said Prof Shamsul Alam, state minister for planning, as chief guest.
“Every challenge brings a new scope. We hope the post-LDC challenge will bring a fresh opportunity,” he said.
However, the state minister urged the commerce ministry to increase their expertise and capacity in negotiating with global partners properly over trade related issues.
Prof Alam insisted on the generation of specialised manpower in different government sectors.
Prof Md Masudur Rahman and Md Mafizur Rahman, chairperson and managing director of the SME Foundation respectively, also spoke at the event.
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