Govt Moves To Transform SME Sector Into Key Economic Driver

The government has launched a series of initiatives aimed at transforming Bangladesh’s Small and Medium Enterprise (SME) sector into a major engine of economic growth.

In recent months, the Investment Coordination Committee has held four consecutive meetings to fast-track policy reforms and remove barriers hindering SME expansion.

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); along with representatives from both public and private sectors.

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

Among the key measures already implemented are the removal of the rule mandating the deposit of 10 percent of foreign order proceeds in banks and a proposal by the SME Foundation to allocate each business entity an annual foreign currency quota of USD 3,000, which has been submitted to Bangladesh Bank for approval.

At the meeting held on 9 October 2025 at Bangladesh Bank, several significant decisions were adopted. These include developing SME-friendly financial products through a joint workshop by the SME Foundation and Bangladesh Bank’s SME & Special Programs Department (SMESPD), and reviewing the effectiveness of the existing SME Master Circular. The committee also decided to conduct a feasibility study on providing loans up to Tk 500,000 without trade licenses and explore client-level interest rate adjustments to make refinancing schemes more appealing.

Earlier, at its 28 August 2025 meeting at the Chief Adviser’s Office, the committee identified key challenges facing SMEs, including delayed payments, customs complications, licensing barriers, and limited access to finance. A follow-up session on 21 September 2025 at the SME Foundation gathered direct feedback from entrepreneurs and prepared a set of recommendations for relevant ministries. Another online meeting on 8 October 2025 connected SME stakeholders from across the country to gather further insights.

Ongoing measures include enhanced NBR monitoring to simplify sample clearance procedures and initiatives by Bangladesh Bank to allow entrepreneurs to receive payments through digital wallets, similar to facilities granted to the ICT sector. The central bank has also instructed SSL Commerce and other relevant banks to ensure prompt deposit of online sales proceeds and initiated steps to include both B2B and B2C models in export policies for online marketplace transactions.

Additional initiatives feature awareness campaigns on SME policies, a proposal for a dedicated foreign currency card for entrepreneurs, and plans by the Bangladesh Foreign Trade Institute (BFTI) to publish SME sector reports targeting 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 policy reforms include increasing the limit for advance payments without bank guarantees from USD 10,000 to USD 20,000, raising the ERQ account ceiling from USD 25,000 to USD 50,000, and permitting export transactions on open account terms covered by local insurers. The NBR has further simplified the HS Code process, allowing tariff assessments to be completed if the first four digits of the eight-digit HS code match.

Commenting on the reform drive, Special Envoy Lutfey Siddiqi said, “The core objective of these reforms is to inject greater dynamism into the economy. Collectively, SMEs make a huge contribution to our economic activity, even though their voices are not always as loud as those of large businesses. We must empower SME entrepreneurs to operate more efficiently at every stage—from financing to payments and logistics. The government’s role should be that of a facilitator, not 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.