SMEs want change in definition so large peers can't get their benefits
Many large enterprises are now reportedly categorised as medium enterprises and are enjoying policy support meant for SMEs
The SME Foundation and the Bangladesh Small and Cottage Industries Corporation (BSCIC) have proposed changes to the definitions of medium and large enterprises based on fixed assets to make sure SMEs can scale up by having better access to government policy support and assistance from development partners.
An enterprise in the manufacturing sector should be categorised as a medium industry if the value of its fixed assets except land and buildings is more than Tk10 crore but less than Tk30 crore, the two agencies say, adding those with fixed assets worth Tk30 crore and above should be categorised as large industries.
According to the existing industrial policy, a manufacturing enterprise is categorised as medium if the value of its fixed assets except land and buildings is less than Tk50 crore.
People concerned feel many large enterprises are now categorised as medium because of the complexities in the definition of the slab and are enjoying policy support and incentives meant for small and medium enterprises (SMEs) only.
Eventually, SMEs fail to get access to the policy support owing to a lack of "competitiveness and capacity" compared to their larger peers, they added.
The SME Foundation and the BSCIC, which are working for the development and expansion of small and medium enterprises, have sent their proposals to the Ministry of Industries to redefine the Cottage, Micro, Small and Medium Enterprises (CMSMEs) in the National Industrial Policy 2021, which will replace the 2016 Policy.
The Bangladesh Bank has also given a similar opinion on fixed assets in redefining and revising the definitions of CMSMEs. But, the central bank has agreed to categorise an enterprise as a large-scale industry if its annual turnover is more than Tk30 crore, in response to a request from the SME Foundation.
The SME Foundation, however, is of the opinion that a large enterprise must have an annual turnover of at least Tk50 crore. On the other hand, the BSCIC has suggested not to classify industries on the basis of annual turnover.
If the definition is based on fixed assets, large-scale industries will be excluded from the group of medium-scale ones and SMEs will benefit from this, SME Foundation Chairman Md Masudur Rahman told The Business Standard.
The latest example of large enterprises' eating up incentives meant for SMEs is the Tk20,000 crore incentive package announced by the government.
The low-interest loan package was announced to help CMSMEs to recoup the Covid-19 pandemic shocks but the targeted beneficiaries could not avail this facility because of various conditions set by banks and other complexities.
The SME Foundation and the Bangladesh Bank also have expressed the opinion to consider an enterprise as a medium industry if it employs 101-250 people. Those with 250 and above employees should be categorised as large industries, these two organisations say. The BSCIC, however, is against proposals to classify industries on the basis of manpower.
The National Industrial Policy broadly defines industries in four categories – micro, small, medium and large.
The Industrial Policy 2016 included manufacturing and service sectors in each category. The SME Foundation and the BSCIC have proposed to include the trading sector in the manufacturing sector in the new industrial policy.
According to the Economic Census 2013 by the Bangladesh Bureau of Statistics (BBS), there are 78.18 lakh business establishments in the country, of which 99.93% are CMSMEs and .07% are large establishments.
