THIS is alarming that despite employing more than 25 million people and comprising more than 99 per cent of industrial enterprises, small and medium enterprises remain largely absent from formal export policy. The sector accounts for 28 per cent of the gross domestic product and is estimated to account for a quarter of total exports. Yet, there is no dedicated export category for SMEs in national trade data. This invisibility reflects a systemic disregard for their potential. Entrepreneurs face significant hurdles in entering export market, a lack of access to proper documentation, export licensing and certification, an absence of updated, useable information on external market, and bureaucratic complexity in developing overseas contracts. The problem is worse outside Dhaka, where logistical and institutional support is weaker. Many SMEs, even when able to contact buyers, fail to take large orders because of insufficient production capacity and unreliable gas supply. Poor product quality, linked to outdated machinery and the inability to import modern equipment because of excessive import duties, as high as 60 per cent, adds to the obstacles. This fosters reluctance among SME owners to engage in export altogether despite rising demand for diversified goods on the international market.
What emerges is a policy environment structurally unfit to support export-oriented SMEs. The financing gap alone, estimated by the International Finance Corporation at $2.8 billion, illustrates the scale of exclusion. With formal credit access being limited and bank loans hard to obtain, most entrepreneurs resort to expensive microfinance options unsuitable for scaling up production. The tax burden on capital machinery and raw materials also often exceeds that on finished goods, disincentivising essential upgrades. Burdensome import duties on capital machinery, in the ranges of 27鈥�60 per cent, continue to undermine productivity and global competitiveness. While efforts such as the SME Foundation鈥檚 RISE initiative and the Export Promotion Bureau鈥檚 ongoing data work are encouraging, they remain in nascent stages and cannot offset the absence of a coordinated national strategy. The state should not only build a comprehensive database of SME exporters but also undertake market-based research to align product lines with global demand. Support should extend beyond Dhaka, ensuring that rural and semi-urban enterprises have access to export-related services, finance and infrastructure. A national strategy should address skills development, certification facilitation, packaging and traceability training and reduced bureaucratic friction across agencies. Until the root causes are addressed, structural neglect would stifle the sector鈥檚 potential.
The authorities should, therefore, move beyond rhetorical commitments and deliver a coordinated, decentralised and inclusive export policy for SMEs. With strategic reforms in finance, infrastructure, information systems and tax policy, SMEs can be repositioned from informal producers to competitive global suppliers.