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STUDIES IN TRADE AND INVESTMENT 70 Enabling Environment for the Successful Integration of Small and Medium-sized Enterprises in Global Value Chains: Country Studies on Bangladesh, Nepal and Sri Lanka United Nations publication Sales No. E.12.II.F.6 Copyright © United Nations 2011 All right reserved Manufactured in Thailand ISBN: 978-92-1-120640-1 ISSN: 1020-3516 e-ISBN: 978-92-1-055300-1 ST/ESCAP/2610 For further information on this publication, please contact: Mr. Ravi Ratnayake Director Trade and Investment Division Economic and Social Commission for Asia and the Pacific United Nations Building Rajadamnern Nok Avenue Bangkok 10200, Thailand E-mail: itid.unescap@un.org ii The opinions, figures and estimates set forth in this publication should not be considered as reflecting the views or carrying the endorsement of the United Nations. Mention of firm names and commercial products does not imply the endorsement of the United Nations. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any <strong>country</strong>, territory, city or area, or of its authorities, or concerning the delimitation of its frontiers or boundaries. Where the designation “<strong>country</strong> or area” appears, it covers countries, territories, cities or areas. References to dollars ($) are to United States dollars unless otherwise stated. Bibliographical and other references have, wherever possible, been verified. The United Nations bears no responsibility for the availability or functioning of URLs. All the material in this publication may be freely quoted or reprinted, but acknowledgement is required, and a copy of the publication containing the quotation or reprint should be sent to the ESCAP Publications Office. The use of this publication for any commercial purpose, including resale, is prohibited unless permission is first obtained from ESCAP. Requests for permission should state the purpose and the extent of reproduction.
COUNTRY STUDIES ON BANGLADESH, NEPAL AND SRI LANKA Preface Small and medium-sized enterprises (SMEs) have played an important role in South Asia and remain a critical source for employment creation as well as income generation. SMEs occupy an important position in the development strategy for inclusive economic growth and poverty reduction. In this respect, export-oriented SMEs, supplying competitive products and services with greater potential for backward and forward linkages, would substantially contribute towards higher national income and overall socio-economic progress of nations. Therefore, the development of exportled SMEs should be promoted through effective policy options in South Asian countries. However, SMEs in the subregion typically face considerable resource constraints and currently have limited capabilities to compete effectively in global and regional markets. It is thus imperative to further expand SMEs’ capacity and competitiveness for survival and sustained development, particularly in the current competitive business environment. Furthermore, one of the most crucial challenges facing SMEs in South Asia is how to create new business opportunities in the global and regional markets. Recent experiences from a wide range of Asia-Pacific countries, particularly from South-East Asia and China, strongly indicate that domestic SMEs can access international markets through global (and regional) value chains (GVCs), which provide a full range of value added business activities across borders. Such GVCs are expected to help boost SMEs’ value added activities in international trade, in which SMEs at present play a limited role. In order to participate in GVCs effectively, SMEs in South Asia must remove entry barriers by developing capacities in a wide range of increasingly stringent international standards with regard to quality, price and timely delivery of products. However, SMEs typically lack an environment that would allow them to improve their capacity and competitiveness. Such environment should include policy and regulatory framework, supporting infrastructure, access to financing, entrepreneurial culture, technology incubation and business development services. With financial support provided by the Government of Japan, the publication aims to propose practical policy interventions in improving business environment by targeting three South Asian countries, namely Bangladesh, Nepal and Sri Lanka and facilitating SMEs access to global and regional markets, especially through GVCs. Consequently, sector based value chain approach was adapted to focus on a few product groups with high export potential. Bangladesh chose consumer and industrial plastic products, Nepal selected agro-based products, such as ginger and coffee, while industrial rubber products, electrical and electronic goods were the focus of Sri Lanka. National action plans for these products were developed along with operational strategies and the required institutional framework among stakeholders. Constraints and opportunities for the promotion of export-oriented SMEs were identified and a set of policy recommendations with institutional support mechanisms were suggested. It is expected that both the Governments concerned and the private sector would find such action plans and recommendations useful and take the necessary steps in this regard. iii
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