Bangladesh Bank Governor Dr Atiur Rahman (3rd from right) seen launching the UNESCAP country studies on Bangladesh, Nepal and Sri Lanka at a “Sub-Regional Seminar on Enabling Environment for Integration of SMEs in Global Value Chain” Tuesday. ICCB President Mahbubur Rahman (3rd from left), BRAC Bank Limited Managing Director & CEO, Syed Mahbubur Rahman (2nd from left), ICCB Vice President, Rokia Afzal Rahman (extreme left), Dr Masato Abe, UNESCAP (2nd from right) and ICCB Vice President, Latifur Rahman (extreme right) also seen in the picture.

Bangladesh Bank (BB) governor Atiur Rahman Tuesday called upon the Non Resident Bangladeshi (NRB) entrepreneurs to work together with the local SME entrepreneurs in developing online export of IT enabled services and promote e-commerce.

He also termed disbursement of SME loans by the banks as the social responsibility and gave all the credit to the nourishment of SME and agriculture sector by the banks that saved the country from economic depression during the global crisis.

“Apart from prospects of export of goods, there may be significant scope of developing online export of IT enabled services by SMEs. NRB entrepreneurs can join hands with our local SME entrepreneurs in promoting this particular e-commerce as they know both the worlds so well,” said Atiur at the opening session of a sub-regional seminar.

He was addressing the seminar titled “Enabling Environment for Integration of SMEs in Global Value Chain” as the chief guest.

The seminar was jointly organized by International Chamber of Commerce (ICC), Bangladesh, UNESCAP and BRAC Bank Ltd at a city hotel.

Chaired by ICC-B president Mahbubur Rahman, the seminar was addressed by, among others, Syed Mahbubur Rahman, managing director and CEO of BRAC Bank, Dr Masato Abe, Trade and Investment Division, UNESCAP, Bangkok and Rokia Afzal Rahman, president of Bangladesh Federation of Women Entrepreneurs.

Atiur Rahman launched the UNESCAP study report on Bangladesh, Nepal and Sri Lanka after his speech.

The BB chief said tech savvy younger Bangladeshi population already active in IT and may usefully be supported in organizing as more formal SMEs exporting broader range of online services in larger volumes.

“Banks can play facilitating role as well, in developing this joint online marketing platform. Prospects of similar export of accounting and legal services by SMEs may also be significant, as seen from Indian experience,” he said.

Atiur also said there is no other substitute rather technology developments for SMEs. Enabling environment and infrastructure development also essential for integration in global value chain, he added.

He said SME financing is a major thrust area of BBs ongoing financial inclusion campaign participated enthusiastically by all banks, on their own as well as in innovative partnerships with Micro Finance Institutions (MFIs) and mobile phone/smart card based IT platforms for cost effective service delivery.

“Besides our government, external development partners like ADB and JAICA have come forward in aiding the SME financing initiatives with refinance support lines for lending banks,” said the governor.

In his speech, Mahbubur Rahman said development of SMEs is vital to attain the governments targeted 7.2 per cent growth in FY 2012-13 and to become a middle income country by 2021.

He also urged the SME Foundation to ensure prudent utilization of the resources provided to them to promote the SMEs.

He suggested that the SME Foundation should undertake programme for promoting market access of Bangladeshs non-traditional products to enter into the global value chain.

“SMEs are important sources of export revenue in almost every developing economy. They contribute a larger share of manufactured exports in more industrialized East Asian economies with Chinese Taipei at 56 per cent, China at more than 40 per cent and India at 31.5 per cent,” Mahbubur Rahman said.

Today, it is important to remind ourselves of the enormous progress of our human race in the last few decades. In the twenty years since 1990, global wealth has almost doubled. Yet, nearly half of the worlds population i.e., 3 billion people, live on less than $ 2.50 a day.

Poverty remains the single most important challenge to humankind. So long as poverty remains endemic, sustainable development, environmental security, and global stability will remain elusive. The one sector that plays a major role in providing employment and in alleviating poverty in countries such as ours is SMEs. They can be a panacea to many of our problems.

Though SMEs play a key role in poverty reduction and inclusive economic growth but in the sub-region SMEs often face considerable resource constraints and have limited capabilities to compete effectively in global and regional markets such as capital, profitability, managerial skills, trained labour, brands and networking.

While SMEs account for more than 90 per cent of all private enterprises and employ roughly 60 per cent of the domestic workforce in South Asia, relative share of SMEs production in total domestic output is much smaller, approximately 35 per cent and direct contribution of SMEs to merchandise export earnings is around 25 percent.

Another important challenge facing SMEs in South Asia is creating new business opportunities to foreign markets and establishing effective linkages with global and regional markets including China and India. However, SMEs could access international markets through global and regional value chains (GVCs). They could build efficient networks by establishing linkages with large enterprises or even with other SMEs. Such integration in global value chain is expected to help boost SMEs value added activities in international trade, in particular, countries like Bangladesh, Nepal and Sri Lanka.

As we know that not only in Asia but across the globe, small and medium enterprises (SMEs) are considered to be the engine for economic growth and job creation. In Bangladesh, these enterprises are the largest employers. The key factors that constrain the growth of SMEs in Bangladesh are access to capital, high interest rate, weak marketing and lack of diversified products for export etc.

We all know that our readymade garment industries (RMGs) which are considered to be SMEs have made tremendous progress and account for almost 80 per cent of our total export and second largest exporter of RMGs in the world. Unfortunately, we are yet to see any other SME making considerable headway in entering into export market. However, in the recent past, we have seen a few products including plastic are making their mark in the domestic and thus became an import substitute enterprises.

The SME sector is gradually being recognized as a major thrust sector for industrial growth of our economy. Yet, given their potential, much more can and should be done in areas such as credit facilities, infrastructure, market access, quality and standards as well as training etc.

“As we know that it is vital to strengthen SMEs for overall economic development of our country, I am very happy that Bangladesh Bank has introduced several schemes and programme to flourish and expand SME Enterprises. Refinance scheme funded by Bangladesh Bank, IDA and ADB has been facilitating for the development of SMEs,” Mr Mahbubur Rahman said.

Besides, to ensure institutional financing facilities under easy conditions, Bangladesh Bank has taken various steps; like opening of Dedicated Desk for SME, Women Entrepreneurs Dedicated Desk and SME Service Centre in the commercial banks as well as setting up of a new department namely SME and Special Programme Department in Bangladesh Bank which is solely responsible for policy formulation, facilitating fund, monitoring and development of entrepreneurship in the SME sector.

Dr Masato Abe explained the importance of the SMEs integration in global value chain as well as its impact on Asian economies at the seminar.