Redirecting money spent on migration will boost small businesses

Every year, about 22 lakh young Bangladeshis enter the job market. Finding no work, nearly 10 lakh borrow or sell family assets, each spending Tk 5-10 lakh to migrate abroad for menial jobs and many end up exploited or even perish at sea. If we do the math, that's over Tk 75,000 crore leaving the country every year. If even a fraction of this were invested locally—say by one or two lakh of those youths—employment and GDP both will be boosted. Skilled workers could still go abroad as respected professionals rather than cheap labour.

A major criticism of the interim government is its failure to come up with a clear plan to lift millions out of poverty or revive the economy. Yet this could be achieved even within the few months the government has, if certain policies were changed.

Based on my four-decade-long work with small and medium enterprises (SMEs), I can assert that Tk 5 lakh is enough to start a small enterprise. So why don't people invest? The answer is fear. Entrepreneurs are constantly harassed because of trade licenses, VAT, and tax rules that empower predatory officials. Rent-seekers linked to political networks inflate costs further. These expenses, of course, cannot be shown in official accounts, but then small entrepreneurs (SEs) are often accused of keeping excessive margins and end up being punished by mobile courts through crippling fines or even jail sentences. The result? The life savings and years of effort of these entrepreneurs collapse.

Perhaps that is why many young people risk dangerous journeys across the Mediterranean Sea rather than investing in a small business at home. This fear, not lack of funds, blocks the potential for huge local investment.

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What needs to be changed

The remedies are not complex, but they demand courage, understanding of local realities and humane behaviour from policymakers. Also, we need to ask ourselves, what is it that we want from the SMEs? Obedience to strict government regulations, whether practicable or not, or being able to deliver good quality products and service to consumers? I believe the latter is the answer, as I put forward some suggestions to this end.

Create a distinct SE category requiring special support to survive and grow. Remove "Medium" enterprises from the SME label. The millions of youth we are talking about start small.

A recent SME Foundation study found 90 percent of SMEs never took bank loans, yet policy circles keep fixating on credit. What the entrepreneurs need most is anenvironment that lets them experiment and grow. The amount spent on migration alone dwarfs any credit programme.

SEs should be exempt from trade license, VAT, and income tax. Government revenue from them is negligible, but entrepreneurs lose a lot to corruption. Someone once raised a question why a paddy thresher seller needs a license for selling the machine when a farmer does not need a trade licence to grow paddy.

Rather than policing, launch a responsible entrepreneurship campaign so that producers self-regulate, maintain quality, and protect the environment. Mutual trust among producers, traders, and consumers will prove stronger than fear-based enforcement. A system built on fear encourages a culture of bribery and drives good products out of the market. In addition to the formulation of favourable policies, strong oversight is vital.

Transform the Directorate of National Consumer Rights Protection into Small Enterprise Extension Department (SEED), whose officers would train small entrepreneurs in management, accounting, and technology—directly, or through partnerships with Bangladesh Council of Scientific and Industrial Research (BCSIR), Bangladesh Industrial and Technical Assistance Center (BITAC), Bangladesh Machine Tools Factory Limited (BMTF)and universities. Instead of policing, Seed should provide advice, consultation and motivation, strengthening the entrepreneurs and awakening their inner sense of responsibility. Merge SME Foundation and Bangladesh Small and Cottage Industries Corporation (BSCIC) into Seed, creating one dynamic agency. Seed should not give loans or build industrial zones; banks and private initiatives can do that. However, Seed should link up SEs with them and create employment for thousands of university graduates.

Agriculture flourished in Bangladesh because of a tax-free environment, which eliminated harassment. Furthermore, the Agriculture Extension Department provided necessary support and advice. SEs deserve the same.

Most small ventures start as home experiments. Forcing them to move to distant commercial zones will kill the initiative. China allows countless home-based businesses, drawing on family and community workforce. In Bangladesh, they exist unofficially and entrepreneurs' fear of the authorities often pushes them to operate in hazardous conditions. Legalising home-based enterprises under Seed's supervision would allow them to take adequate safety measures and unleash huge grassroots industrialisation.

Large Bangladeshi industries depend entirely on imported technologies and cannot adopt indigenous innovations. Hence, very few products developed by BCSIR over the last seven decades reached the markets. Universities and research bodies must build active partnerships with small rather than large industries. Seed can coordinate this collaboration.

Each year in Bangladesh, millions of youths seek work, while billions of dollars flow out through migration. Yet the alternative lies within reach. If policy shifts from courting foreign investors to empowering local entrepreneurs, the nation can mobilise its own capital for productive growth. Investing in small enterprises is not charity; it is smart economics, the fastest route to job creation and resilience.

Supporting small enterprises can transform Bangladesh from a remittance-dependent nation into one driven by innovation, dignity, and self-reliance. The capital exists. The youth are ready. Only courage and vision are needed from our policymakers.

Dr Khondkar Siddique-e Rabbani is honorary professor of biomedical physics and technology at Dhaka University. He can be reached at [email protected].

Views expressed in this article are the author's own. 

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