Policy needed to protect small businesses from the dominance of large corporations

As I look ahead to 2025, the future of small and medium enterprises (SMEs) in Bangladesh demands urgent attention. With the growing involvement of large corporations in sectors traditionally dominated by micro-entrepreneurs, the survival of small businesses has become increasingly challenging.

This shift not only reduces their sales and creates financial difficulties but has also forced some to shut down. In this context, I believe it is critical for the government to formulate policies that ensure fair competition while supporting the growth of small businesses.

At the forefront of my priorities for 2025 is the creation of a comprehensive database of SME entrepreneurs in Bangladesh. Despite the often-repeated figure of 7.8 million SMEs operating in the country, there is no reliable or up-to-date data on their true scale or the specific challenges they face. Without this crucial information, it becomes difficult to plan effectively or offer targeted support. For this reason, the SME Foundation is partnering with the World Bank to create a comprehensive database. Understanding the number of SMEs, their specific needs, and their unique challenges will be pivotal in shaping future policies and initiatives.

One of the key initiatives I will focus on in 2025 is updating the SME cluster mapping. Back in 2013, the government identified 177 SME clusters across Bangladesh, but no follow-up mapping has been done since. Clusters, which are defined groups of enterprises in a specific region that share production methods and technology, are vital to the growth of small businesses. They allow entrepreneurs to collaborate, share infrastructure, and access mutual resources. Updating this cluster mapping will provide valuable insights into which industries are thriving in different regions, helping to identify areas of opportunity and the specific needs of businesses operating within these clusters.

Another important step for 2025 is the renewal of the SME Policy. The five-year plan put in place in 2019 has expired, and it is time for a new policy to reflect the changing dynamics of the sector. The draft for the new policy has already been prepared and submitted to the Ministry of Industries, and I expect it to be finalised in 2025. This updated policy will address the challenges faced by SMEs today and ensure that our country's small businesses remain competitive in the global market.

Improving product quality and increasing access to international markets are critical for SME success

Looking at the current challenges facing the SME sector, there are a few that stand out. First, there is an urgent need to improve the quality of products produced by SME entrepreneurs. To compete both domestically and internationally, small businesses must enhance their productivity and product quality. However, many entrepreneurs face capital shortages, which prevent them from upgrading their operations or expanding their businesses. To address this, we have launched a Credit Wholesaling Programme, which aims to disburse Tk450 crore in loans between 2024 and 2025. This initiative will help alleviate some of the financial difficulties faced by entrepreneurs and provide them with the necessary resources to grow.

While financial support is essential, it is equally important to establish Common Facility Centres (CFCs) in SME clusters across the country. CFCs are shared spaces where small businesses can access production, packaging, quality enhancement, and training facilities. These centres provide essential infrastructure that many small businesses cannot afford on their own. Although we have identified 177 SME clusters across Bangladesh, funding has been a barrier to establishing CFCs in all of them. To create more CFCs, we need financial backing from both the government and development partners. With such support, we can significantly improve the quality of products, reduce production time, and help entrepreneurs overcome many of their operational challenges.

Looking at the bigger picture, the future of the SME sector is not just about overcoming current challenges but also about embracing new opportunities. The Fourth Industrial Revolution has arrived, and it is essential that our entrepreneurs embrace new technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), 3D printing, and robotics. These technologies are crucial for increasing productivity, improving product quality, and helping small businesses stay competitive in a rapidly evolving global market. Training programmes to introduce entrepreneurs to these technologies are essential, and the SME Foundation is committed to providing these resources.

Another critical area for development is increasing access to international markets. Promoting SME products abroad is a key step toward sustainable growth, and this requires coordinated efforts between the National Board of Revenue (NBR), the Ministry of Commerce, the Export Promotion Bureau, and other related institutions. With the right support, small businesses can become a driving force in the national economy.

However, there is one issue that stands out above all: the increasing dominance of large corporations in sectors traditionally occupied by small businesses. For example, when big companies start producing products like chanachur (snacks) or muri (puffed rice), it becomes nearly impossible for small businesses to survive. This is a problem that needs urgent attention from the government. We must introduce a policy that ensures both small and large businesses can coexist and thrive.

Large corporations can focus on larger-scale operations, while small businesses can concentrate on smaller tasks. The two can work together by creating a network in which large companies outsource production to small businesses, allowing them to scale up. In return, large companies should help small businesses improve product quality, packaging, and marketing. This kind of collaboration can drive economic growth, improve skills, and help small businesses compete with larger players.

If large corporations continue to take over everything from snacks to sweets, it will stifle the potential of small businesses and hinder our country's economic development. Instead, large companies should focus on their core competencies and collaborate with small entrepreneurs. With the right support, we can build a thriving ecosystem where both small and large businesses contribute to the national economy.

As I look ahead to 2025, my message is clear: the future of Bangladesh's economy depends on the success of its small businesses. By ensuring fair competition, fostering collaboration between large and small enterprises, and providing the necessary resources and training, we can unlock the full potential of the SME sector and create a prosperous future for all.