The new reform package introduced by the interim government for small and medium enterprises (SMEs) is well-intentioned but fails to address the real challenges faced by small businesses. One of the key changes eliminates the requirement for entrepreneurs to hold 10 percent of export earnings in banks. While this may benefit established exporters by improving cash flow, it overlooks the struggles of smaller businesses like street-side artisans, tech startups, and women managing home-based food processing units.
Recent actions by the Bangladesh Bank further highlight this misalignment. Importers can now make advance payments of up to $20,000 without guarantees, up from the previous limit of $10,000, and Exporters Retention Quota limits have been raised from $25,000 to $50,000. These adjustments primarily benefit larger firms engaged in significant international trade, neglecting the millions of micro-enterprises grappling with fundamental operational challenges. For the 11.8 million genuine small entrepreneurs, regulatory obstacles remain significant hurdles, including complex registration processes, limited access to digital payments, insufficient marketing capabilities, and a lack of connection to innovation networks.
The proposed reforms reflect outdated thinking in addressing contemporary challenges. While neighboring competitors are investing in digitalization and sustainable manufacturing, Bangladesh’s policy focus remains on financial adjustments. This approach fails to acknowledge the three major shifts reshaping the global business landscape: the rise of digital markets, the transition to sustainability, and the integration of artificial intelligence (AI). International markets increasingly demand digital proficiency and eco-friendly practices, elements that are overlooked in the current reform agenda.
In the realm of digital transformation, an SME’s ability to leverage platforms like Amazon, cloud-based supply chain management, and mobile payment systems holds more significance than the level of advance payments allowed. The government’s digital portal initiative risks replicating the bureaucratic inefficiencies of past e-governance attempts.
The transition towards sustainability has become imperative in global trade. With the introduction of carbon border taxes in European markets and growing consumer demand for sustainable sourcing, Bangladesh’s lack of progress in developing green certifications and climate resilience measures poses a threat to future export opportunities.
Artificial intelligence is no longer a distant concept but a current reality, being utilized for inventory management, customer service, and market forecasting. Neglecting AI adoption could leave SMEs lagging behind with outdated tools in an era dominated by Industry 4.0 technologies.
A more visionary approach, such as the proposed Bangladesh 2.0 or an enhanced smart framework, is needed. This strategy would shift from piecemeal financial adjustments to comprehensive capacity building initiatives. Instead of solely raising payment thresholds for existing traders, it could introduce an SME growth fund to facilitate digital marketing, payment integration, and legal support for business registration.
Such a framework could implement a streamlined single submission system to eliminate registration delays by sharing data across government departments. It could also introduce “AI for All” vouchers to broaden SMEs’ access to AI tools and establish Green SME Certification offering tax incentives and procurement preferences to align businesses with environmental standards.
The choice facing Bangladesh is clear: continue with minor tweaks that benefit larger enterprises or embark on a true revolution that empowers small businesses. Maintaining a system that sidelines grassroots entrepreneurs or building an ecosystem that enables them to compete globally is the decision at hand.
The government’s current proposals reflect incremental thinking in a time that demands transformative vision. Focusing on financial adjustments while disregarding digitalization, sustainability, and technological advancements is akin to rearranging deck chairs on the Titanic. Bangladesh’s entrepreneurial spirit warrants more than mere survival—it demands momentum. To secure the economic future and support the majority of the industrial workforce, a fundamental reevaluation of SME policy is imperative. The revolution cannot be delayed.