Throughout 2023, numerous small and medium enterprises (SMEs) in the country grappled with formidable challenges, primarily stemming from heightened production costs, soaring inflation, and complications in securing letters of credit for importing crucial raw materials.
This adversity disproportionately affected the SME manufacturing sector, which contributes nearly 25 per cent to the country’s gross domestic product.
Ohidul Haque Shanto, the proprietor of Chamra Bari specialising in leather goods, expressed distress over a decline in both production and sales compared to the previous year. Shanto highlighted a substantial decrease in orders, receiving only one compared to the five secured in the previous year.
The surge in raw material prices, according to Shanto, was exacerbated by increased import costs attributed to challenges in opening letters of credit (LCs).
In January 2023, the general inflation rate reached 8.57 per cent, with food inflation at 7.76 per cent. By November of the same year, these figures rose to 9.49 per cent and 10.76 per cent for general and food inflation, respectively, as per Bangladesh Bureau of Statistics data.
Jahirul Islam, the proprietor of Shamima Silk House specializing in handloom saris, noted operational changes. Previously utilising 25 to 30 hand machines for sari production, the business faced adjustments amid the economic challenges of 2023.
