Challenges and Prospects of SME Sector

Although SME is considered to be the engine of economic growth, Bangladesh lags far behind compared to neighboring countries, including India and china, when it comes to contribution to the Gross National product (GDP). SME constitutes 90 per cent of total enterprises in Bangladesh, as opposed to approximately 97 per cent in India, around 99 per cent in japan, and 60 per cent in Pakistan. Moreover, local SME contribute 25 percent to the GDP, which presents low figure in comparison to other emerging countries. It is worthwhile to mention that SME policy 2019 aims to increase the sector’s contribution to the GDP to 32 percent by 2023. Apart from this, it is predicted that ICT sector in Bangladesh would generate 30 lakhs employments by 2025. Despite having myriad opportunities to flourish this sector substantially, there remain a few challenges. The scarcity of skilled labor, fiscal incentives, access to finance are the key factors behind poor contribution to the economy. Amid the ongoing economic shocks stemming from Covid-19 pandemic, the scenario has become more aggravated due to the liquidity crisis, shifting to ecommerce practices. Moreover digitalization and automation of the industry has emerged as new challenges to SME sectors. The regulatory bodies concerned must sit with expert and address the issues of this sector so that this sector are able to more contribute to our economy and generate employments for the youths and women. The government should shrink the tax on SME sectors to give a boost to this sectors.