FBCCI president Mahbubul Alam today said that Bangladesh is yet to tap fully the vast potentials of the SME sector due to backdated policy and lack of sufficient funding for the SMEs.

"AS the SME sector contributes 40-60% of the GDP of neighboring and competing countries, the percentage is still less than 30 in Bangladesh," he said.

Mahbubul said this while speaking as the chief guest at a seminar titled "Opportunities and Challenges in the SME Sector" organized by the Economic Reporters' Forum (ERF), held at its office in the capital today.

He said that in the developed countries, big producers buy the backward linkages from small entrepreneurs. As a result, small and big entrepreneurs are created in the same industry.

Citing an example he said that a big company like 'Toyota' manufactures the engine of the car and all the other parts are made by the SMEs.

"But, in our country the big companies don't give opportunities to the small ones, they make everything. Many large industrial groups also make 'Chanachur and Muri', which is also a barrier to growing SMEs in Bangladesh," said the FBCCI President.

"Small entrepreneurs need bank financing to overcome this tax disparity. But, SME entrepreneurs are not getting the required financing. Due to procedural complications, many funds are not available to genuine beneficiaries. The interest rate of those who are getting it also becomes 12-14 percent," Mahbubul added.

President of Dhaka Chamber of Commerce and Industry (DCCI) Barrister Md Sameer Sattar said that apart from access to finance, some major steps are now needed for the SME sector.

These are: taking medium enterprises out of SMEs, providing tax waivers and LC margin layers to attract the SME sector, providing various types of government policy support, providing necessary training to entrepreneurs to make them suitable for entering the international market, and creating a separate SME ministry.

Masudur Rahman, chairman of the SME Foundation, said that Bangladesh's SME sector is lagging behind the competitor countries. Because, there is a shortage of financing and interest rates are high.

"In every case, the SME sector is facing obstacles. An indigenous loan process should be created for the SME sector. Innovative ideas are needed on how to facilitate lending," he pointed out.

Masudur said that market access should be facilitated to exploit the potentials of the SME sector. Many times, SME entrepreneurs cannot enter the market due to middlemen. Middlemen do not allow entrepreneurs to grow. Genuine entrepreneurs depend on middlemen to market for them.

Mehmud Hossain, managing director of National Bank, said that there are psychological problems in lending to the SME sector.

"A loan requires many documents. But, bankers and entrepreneurs are not interested in this for lack of skills. Due to this lack of interest, the SME sector is lagging behind," he added.

Mehmud said that in Bangladesh, banks have set loan targets for the SME sector. But, achieving that is challenging.

ERF president Refayet Ullah Mirdha presided over the seminar while its general secretary Abul Kashem moderated the seminar.