Enhancing Export Capability of MSMEs: Challenges and Way Forward

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in Bangladesh’s economic growth, contributing significantly to GDP and employment. However, they face substantial challenges in expanding into international markets, which are expected to intensify with Bangladesh’s graduation from LDC status in 2026, affecting MSMEs’ global competitiveness. This study examines these challenges, focusing on the obstacles to enhancing MSMEs’ export capacity and how internationalization can be facilitated to boost their contribution to Bangladesh’s GDP. The research aims to identify key barriers, explore potential export markets, and provide actionable recommendations for improving MSME export capacity. Using a mixed-methods approach, data was collected from 110 MSMEs across industries, including Ready-Made Garments (RMG), Light Engineering, Plastics, Leather & Leather Goods, Agro-processing, and Pharmaceuticals, through surveys and Key Informant Interviews (KIIs). The survey revealed significant obstacles such as complex taxation, high tariffs, inadequate logistics, limited access to finance, and challenges in meeting international standards. KIIs further highlighted issues like corruption in banking and inefficiencies in customs processes. The study identifies potential export markets for MSMEs, including the USA, Europe, and East Asia, and recommends strengthening institutional support, streamlining customs procedures, providing low-cost financing, and fostering product innovation. These findings are intended to guide policymakers in boosting the export potential of Bangladeshi MSMEs.