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Chief Representative's Speech

December 21, 2014

Seminar on "Promotion of Light Engineering Industries through Import Substitute Spare Parts Manufacturing" and "Matchmaking" Event
(21/Dec/2014 @ Shanai Community Center, Dhaka)


Honorable Minister of Industries, Mr. Amir Hossain Amu,
Mr. K. M. Habib Ullah, Chairperson, SME Foundation,
Mr. Md. Abdur Razzak, President, Bangladesh Engineering Industry Owners' Association,
Distinguished guests,
Ladies and gentlemen.

Assalamu alaikum and good morning.

I am deeply honored to be present at this momentous event which is highly relevant to the socio-economic development of Bangladesh that Japan International Cooperation Agency, JICA, has been engagaed in for forty-two years.

Contributions of Small and Medium-sized Enterprises to socio-economic development are indeed significant throughout the world. In many countries, most of enterprises are SMEs and a large majority of employees are working there. Japan is not an exception where as much as 99% of enterprises are SMEs and 75% of employees belong to them. In Bangladesh, the proportion of employment generated by SMEs is mere 40% which means there is a tremendous untapped potential.

Let me show you one precedent of SMEs' potential which unfolded in Japan. Japan is the acknowledged world leader of manufacturing which ranges from automobile to electric appliances represented by global giants such as Toyota, Toshiba and Panasonic. These large enterprises are often believed to be the source of Japan's admired competitiveness.

You should understand, however, that Toyota, for example, cannot continue its operation without inputs and cooperation of as many as 10,000 SMEs. These unknown SMEs have contributed to manufacturing quality shafts, bolts and nuts of each and every car in a timely manner, thereby enabling Toyota to operate under its unique just-in-time manufacturing system. Thanks to this system, Toyota could gain trust from customers in the global market. This sort of organic linkage between SMEs and large companies is ubiquitous in Japan. This is arguably the real source of competitiveness Japan boasts of.

JICA has been supporting to promote SMEs in Bangladesh through various initiatives under its program for private sector development. To cite an instance, JICA is committed to a refinancing scheme, namely "Financial Sector Project for the Development of Small and Medium sized Enterprises," providing the Bangladesh Bank with a soft term loan of 5 billion yen, which is equivalent to around 330 crore taka at the current exchange rate. Till date, more than 300 SMEs obtained medium-to-long term investment credit of 210 crore taka from this scheme to enhance their productive capacities, thereby generating employment and bolstering the economy. Besides, forty-six participatory financial institutions for the scheme are developing their ability of medium-to-long term financing to SMEs.

Furthermore, recognizing that finance alone is not enough to advance SMEs in Bangladesh, JICA has been supporting trainings on bankable business development to prospective SMEs in collaboration with the Bangladesh Bank and the International Finance Corporation of the World Bank Group. 800 plus SMEs received the training during the last two years, and 20% of them are women entrepreneurs. In sum, JICA is assisting Bangladesh in creating what you might call an ecosystem of nurturing SMEs.

Ladies and gentlemen,

Bangladesh's achievement in the area of economic growth, exports of readymade garment and remittance is remarkable. Still Bangladesh needs to leap onto a growth trajectory of higher than six percent to become a middle-income country by 2021. To do so, Bangladesh has to encourage diverse and high value-adding industries.

The light engineering industry was identified as the highest priority sector in "Export Policy 2009" and as the thrust sector in "Industrial Policy 2010." There are about 40,000 small-scale light engineering enterprises across the country, producing some 10,000 types of different items for construction, agriculture and other industries.

JICA released a study early 2009 titled "Potential Sub-Sector Growth for Export Diversification in Bangladesh." According to the study, one of the opportunities for the light engineering industry is the huge size of market in terms of import substitution for industrial machinery. The strength of the industry the study pointed out is that the basic production skills have been accumulated to meet requirements of domestic market. On the other hand, the study raised as its weakness the shortage of technical institutions dedicated to, among others, metal testing, R&D, quality assurance, accreditation inspection and formal trainings.

Taking pointers from Japan's experience that I mentioned earlier, Bangladesh should foster an enabling environment for both large enterprises and SMEs of the light engineering industry to get competitive. SMEs have to be equipped with advanced technologies and high-level delivering systems which will in turn develop large enterprises further.

I believe the SME Foundation organized today's matchmaking event under this context. Through this commendable effort, I hope the light engineering industry will undertake an organic linkage between large enterprises and SMEs, thereby enhancing competitiveness of the manufacturing sector as a whole and contributing to sound socio-economic development of Bangladesh.

Shobaike Annek Donnobad. Thank you very much.


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