Editorial
Incentives for SME development
A compelling necessity
The Bangladesh Bank governor has said recently that the government is considering providing incentives for small and medium enterprises (SME) and food processing industries. The sector deserves massive support and assistance from the government since these have the potential to generate investment, attempt innovation and diversification and employ a large work force, both skilled and semi-skilled. The other advantage is, SMEs do not require heavy machinery or huge start-up capital and therefore they can go into production and earn dividends after a short gestation period.
We already have a large number of people earning a livelihood from small and medium scale manufacturing units that are spread across the country. There is need for more. For, there is no denying that these can contribute positively to our economy.
But this, however, remains to be said that many of the SMEs are finding it difficult to survive, as they need institutional support for their growth and sustainability. Among others, they need soft-term bank loan, quality development training, market network accessibility, establishing link with overseas buyers, reduced value added tax (VAT) and protection from extortionists. Furthermore, they need uninterrupted gas, electricity and water supply to keep the wheels running. We feel these are policy requirements that deserve deeper look by the development technocrats. The required incentives should come fast, if we want to become a middle-income country in the near future.
The Bangladesh Bank governor has also said that the country's macroeconomic policies ought to be conducive to poverty alleviation. The macroeconomic policies in fact should be supportive of SME development through a policy of decentralisation. Unless the branch offices of institutions financing businesses and industrialisation are empowered to take decisions without referring the matter to the central office, the desired level of growth of SMEs would remain elusive. We believe strengthening of the local bodies will also give a booster to the SME development.
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