Govt moves to transform SME sector into key economic driver

The government has undertaken a series of initiatives to transform the country's Small and Medium Enterprise (SME) sector into a major driving force of the economy. 

Over the past few months, the Investment Coordination Committee has held four consecutive meetings to accelerate policy reforms and remove bottlenecks affecting SME growth.

The meetings were attended by Lutfey Siddiqi, Chief Adviser's Special Envoy for International Affairs and Chair of the Committee, Dr Ahsan H. Mansur, Governor of Bangladesh Bank, Md Abdur Rahman Khan, Chairman of the National Board of Revenue (NBR), and representatives from both public and private sectors. 

Participants stressed the need for direct participation of entrepreneurs in policymaking to ensure effective integration of SMEs into the mainstream economy.

Among the measures already implemented are the removal of the rule requiring 10 percent of foreign order proceeds to be compulsorily deposited in banks and a proposal from the SME Foundation to allocate each business entity an annual foreign currency quota of USD 3,000, which has been sent to Bangladesh Bank for approval.

At the meeting held on 9 October 2025 at Bangladesh Bank, several key decisions were adopted. These include the development of new SME-friendly financial products through a joint workshop by the SME Foundation and Bangladesh Bank's SME & Special Programs Department (SMESPD), and a performance review of the existing SME Master Circular to assess its effectiveness. The meeting also decided to conduct a feasibility study on offering loans up to Tk 500,000 without trade licenses and to explore the possibility of adjusting interest rates at the client level to make the refinancing scheme more attractive.

Earlier, on 28 August 2025, the Committee met at the Chief Adviser's Office to identify major SME challenges such as delays in payments, customs complexities, licensing barriers, and limited access to finance. A follow-up meeting on 21 September 2025 at the SME Foundation heard directly from entrepreneurs and prepared a set of recommendations for relevant ministries. Another online meeting on 8 October 2025 connected SME entrepreneurs from across the country to gather further feedback.

Ongoing implementation measures include strengthened NBR monitoring to simplify sample clearance, and initiatives by Bangladesh Bank to allow entrepreneurs to receive payments through digital wallets similar to ICT sector privileges. The central bank has also directed SSL Commerce and other relevant banks to ensure prompt deposit of online sales proceeds and taken steps to incorporate B2B and B2C models into export policies for online marketplace exports.

Additional initiatives include awareness campaigns on SME policies, proposals for a special foreign currency card for entrepreneurs, and plans by the Bangladesh Foreign Trade Institute (BFTI) to publish SME sector reports for international buyers. Coordination between the Chief Adviser's Office and the SME Foundation is also underway to introduce a Standard Operating Procedure (SOP) for export promotion through Bangladeshi embassies abroad.

Other recent reforms include raising the limit for advance payments without bank guarantees from USD 10,000 to USD 20,000, increasing the ERQ account ceiling from USD 25,000 to USD 50,000, and allowing export transactions on open account terms with coverage from local insurers. The NBR has also simplified the HS Code process -- tariff assessments will now be completed if the first four digits of the eight-digit HS code match.

Commenting on these reforms, Lutfey Siddiqi said, Special Envoy Lutfey Siddiqi said, "The core objective of the reforms is to enhance dynamism in the economy. Collectively, SMEs are a massive contributor to our economic activity, even though their voices are not always as loud as those of large businesses. We must help SME entrepreneurs become more dynamic and make their operations easier at every stage - from financing to payments and logistics. The government must act as a facilitator, not as a barrier."

An emergency meeting of the Investment Coordination Committee was also held on 9 October 2025 at the Bangladesh Bank Conference Room, chaired by Dr Ahsan H. Mansur, with Lutfey Siddiqi and Md Abdur Rahman Khan attending as special guests.