We have made our micro, small, and medium enterprises (MSMEs) the egg-laying, wool-bearing, milk-giving pig -- the German fantasy animal that does everything at once.
We want them to give jobs to men, women, and people with disabilities. We want them to go green, though the market pays no premium for going green. We want them to sell at the lowest price while their rent, raw materials, and transport costs all rise. We want them to transact with the bank, pay taxes.
Then we complain that the MSMEs are informal. But we fail to address the concern that formality raises production costs while the shelf price stays the same.
We bring them to seminars. We pat their backs. We give them awards. And every seminar opens with the same sentence: MSMEs do not have access to credit. And that cycle goes on for decades. We leave the ground hostile yet ask these small firms to carry the country to a trillion dollars.
We must be living in a fool’s paradise.
The situation however could be improved and MSMEs can indeed be a conduit to the trillion dollars hope.
But the MSMEs will not be able to do it alone. They can do it if we see MSMEs and large businesses as a nexus and in the same value creation network.
A food safety certification costs the same whether you sell to one shop or five hundred. So does a cold chain, a compliance officer, a brand, a gas connection, a distribution network. These are fixed costs.
A large firm spreads them across enormous volumes while a firm turning over Tk50 lakh a year cannot spread them at all. So when a cost shock arrives, it does not land equally. It irritates the large firm. It kills the small one.
That is the story of the last 11 years. The charts tell it.
Since 2015, rent has risen 93%. That is the CPI housing group, since Bangladesh publishes no commercial rent index. Producer prices for raw materials are up 64%, diesel 63%, electricity for business premises 61%. Industrial gas has risen more than five times. Marketing has risen more than nine times.
Now reflect: How much has the price gone up on the bag you bought last month from a boutique on Facebook? Zero, or close to it.
Look at how fast it arrived. Diesel rose 42.5% in a single night on August 6, 2022. Gas for large industries rose 150% in one order on February 1, 2023, from about Tk 11 to Tk 28 per cubic metre.
The retail electricity tariff rose again on June 1, 2026, and the small-industry tariff rose 18.3% against a system average of 16.7%. The small firm was charged above the average.
One number deserves far more attention. Industrial gas costs Tk 30 per cubic metre for an existing user. For a new user it costs Tk 40. We charge the entrant a third more than the incumbent. We say we want new firms to emerge and inefficient ones to make way. Then we put a price on entry.
Marketing tells the same story. In 2015 it cost Tk 30 to reach a thousand people on Facebook. By 2022 it was Tk 98. Today it is Tk 280.
Roughly Tk 65 of that is Bangladeshi VAT and withholding tax. Much of the rest is the fall of the taka. Only a fraction is Meta raising its price.
Since Covid-19, hundreds of thousands of MSMEs built their businesses on f-commerce. Their cost of finding a customer has risen ninefold while the price they charge has barely moved.
So where has the money gone? The consumer pays far more than she did a decade ago. The producer does not receive it. What sits between them has widened: Transport, storage, spoilage, tolls, layer upon layer of trading, and the VAT and duty increases of January 2025.
When we discuss inflation, we take the side of the consumers; but barely we think of the producers who are also choking to death. The producer and the buyer are not opponents. They are two ends of the same rope.
This is why consumers should worry about the small firm. As MSMEs thin out, the cheapest supply goes first. The neighbourhood producer, the small trader, the one-room manufacturer who kept the price honest.
Fewer sellers mean less competition, and less competition means the consumer pays more.
I was sitting recently with the chief executive of one of our largest agro-logistics companies. He was explaining their struggle to source and sell rural produce in their urban outlets.
The cold storage network in Bangladesh is old and was built for potatoes; so the company cannot use it for perishables. Despite the investment in highways, congestion remains.
Recently they tried an innovative scheme to source fresh sweet from the South and sell it in outlets in Dhaka. Half the fresh-milk sweets became stale on arrival.
I can write a book on my experience in trying to solve these supply chain challenges. I remember in 2010, we wanted to promote crates to cut post-harvest losses on pineapple shipped from the Chittagong Hill Tracts.
The crown took up nearly half the cargo space and bruised half the load. And when the load spoiled, the trader pushed the loss down to the small farmer.
In a chain without contracts, loss flows downhill until it reaches whoever has the least power to refuse it.
It does not have to work that way though. Between roughly 2006 and 2016, large numbers of cattle were distributed to char dwellers in the northern districts. It soon became clear there was no high-yielding fodder.
The next round of interventions built the fodder system and then the artificial insemination system. Later, the sheer volume of cattle resulted in processing capacity. A system formed.
But notice how it formed. One missing piece at a time, over a decade. It became a system only when a large buyer appeared at the end of it.
That is what Bangladesh is missing. Our policy imagines large and small enterprises as rivals. It treats the corporate sector as something the MSME must be shielded from, and the MSME as something to be supported separately: Its own ministry, its own foundation, its own seminar.
The two never meet. The small firm faces the market alone. It buys at the worst price in the chain, sells at the worst price in the chain, and absorbs every shock that is passed down.
Bangladesh does not need thousands of grocery shops each bargaining alone against a fragmented wholesale market. It needs them inside networks.
This is the road our neighbours took, and they did not leave it to chance.
In Vietnam, the Ministry of Industry and Trade partnered with Samsung to build a domestic supplier base, sending engineers into Vietnamese factories to bring them up to standard.
More than 300 Vietnamese firms now sit in Samsung's supplier tiers. Malaysia has run a Vendor Development Program for decades, registering anchor companies, matching them with small vendors and financing those vendors through a dedicated bank window.
In Thailand, more than 10,000 7-Eleven outlets trade. Most are franchised to individual owner-operators who buy through one system rather than a hundred.
In Indonesia and the Philippines, millions of warungs and sari-sari stores are the exact counterparts of our mudir dokan. Supply platforms now give these one-room shops something close to the buying price of a chain.
In none of these countries did the small shop close. It stopped standing alone, and networked small firms carried those economies upward.
How can we fix this?
The MSMEs in Bangladesh will deliver the trillion-dollar economy. But they cannot deliver it in the arrangement we have built for them: A few million firms, each operating alone, each absorbing every shock the system passes down, each competing against the large enterprise that ought to be its customer.
However, if we put the small and the large enterprises in the common nexus of creating value, the trillion-dollar hope will arrive soon.
Md Rubaiyath Sarwar is Managing Director, Innovision Consulting.