Tk7,800cr CMSME package wins praise, but implementation remains key
Bangladesh's smallest businesses are set to receive their biggest budgetary backing yet, but industry leaders say the real challenge begins after the money is allocated
The government has taken an initiative to provide around Tk7,800 crore in financial support for the Cottage, Micro, Small and Medium Enterprises (CMSME) sector in the proposed budget for FY2026-27, aiming to boost investment, employment generation and business expansion.
Entrepreneurs, economists and industry stakeholders have welcomed the initiative, saying the financing package could significantly support the country's SME ecosystem.
However, they cautioned that ensuring effective implementation, proper monitoring and the actual flow of funds to genuine entrepreneurs will be the biggest challenge.
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The government plans to establish a Tk5,000 crore stimulus fund for the CMSME sector, a key driver of Bangladesh's economy and employment generation.
In addition, a proposal has been made to allocate another Tk2,000 crore in the FY2026-27 budget for distributing low-interest loans through Infrastructure Development Company Limited (IDCOL), Bangladesh Infrastructure Finance Fund Limited (BIFFL) and the SME Foundation.
Furthermore, Tk300 crore has been proposed as direct government support for the creative economy sector, while another Tk500 crore is expected to be mobilised through Bangladesh Bank's Corporate Social Responsibility (CSR) fund.
Altogether, the proposed support package amounts to approximately Tk7,800 crore.
"We proposed the creation of at least a Tk2,000 crore fund for the SME sector. For the first time, such a fund has been included in the national budget. We are delighted and grateful for this initiative."
SME Foundation welcomes dedicated allocation
Anwar Hossain Chowdhury, Managing Director of SME Foundation, said the organisation had long been advocating for a larger financing facility for SMEs.
"We proposed the creation of at least a Tk2,000 crore fund for the SME sector. For the first time, such a fund has been included in the national budget. We are delighted and grateful for this initiative," he said.
According to him, the allocation will help improve access to finance for small and medium entrepreneurs and support business expansion. However, he stressed the importance of ensuring proper implementation.
The SME Foundation also said that 36 out of the 113 recommendations it submitted for the FY2026-27 budget have been fully or partially accepted by the government.
Govt prioritising SME development
National Board of Revenue (NBR) Member (Tax Policy) Mutasim Billah Faruqui said supporting cottage, micro, small and medium enterprises remains one of the government's top priorities.
"A significant number of recommendations from the SME sector have been accepted. The special financing and incentive measures included in the budget reflect the government's commitment to SME development," he said.
Faruqui added that several supportive fiscal and tariff measures have been introduced to improve the competitiveness of SMEs.
"The government is also working to encourage new entrepreneurs, innovative ventures and industrial expansion," he said, expressing hope that coordinated efforts by the government, entrepreneurs, business associations and the media would help the CMSME sector play an even greater role in economic growth and employment generation.
SME Foundation seeks stronger policy support
Presenting a keynote paper, SME Foundation General Manager Mohammad Jahangir Hossain said the proposed FY2026-27 budget includes around Tk7,800 crore in support for the CMSME sector through various provisions.
However, he noted that several incentives promised under the National Industrial Policy 2022, Draft National SME Policy 2026, National Tariff Policy 2023 and Export Policy 2024-27 have yet to be fully implemented by the National Board of Revenue.
He proposed introducing a separate preferential tax regime for MSMEs through a dedicated law or statutory regulatory order (SRO), bringing existing income tax, VAT and customs incentives under a unified framework.
Jahangir Hossain also called for increasing the proposed Tk2,000 crore refinancing fund for easy-term lending through government agencies and raising the SME Foundation's allocation to at least Tk5,000 crore.
Under the "One Village, One Product" initiative, he recommended allocating at least Tk100 crore from the proposed Tk300 crore Creative Economy Fund to the SME Foundation.
Citing SME Foundation research, he said Bangladesh currently has 177 industrial clusters employing nearly 2 million people and urged the government to allocate at least Tk2,000 crore annually for cluster-based SME development.
Improving the business environment is equally important
Speaking to The Business Standard, CPD Distinguished Fellow Dr Mustafizur Rahman said CMSMEs are the backbone of Bangladesh's economy, driving employment, supply chains and industrial growth.
While welcoming the government's dedicated budget allocation for the sector, he said financing alone will not unlock its full potential. Easier access to credit, a better business environment and fewer regulatory hurdles are equally important, he said.
Rahman noted that many small businesses struggle to obtain bank loans because they lack collateral, even though their cash flow and digital transaction records could serve as reliable indicators of creditworthiness.
He also stressed that the real challenge is ensuring the funds reach genuine entrepreneurs. Strengthening implementation, simplifying licensing and registration, and providing targeted support for women-led, export-oriented and service-sector businesses will be crucial, he added.
According to the Bangladesh Bureau of Statistics' Economic Census 2024, CMSMEs make up 99.92% of the country's economic units and employ nearly 78% of the workforce, highlighting their critical role in Bangladesh's economy.
