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Country Studies on Bangladesh, Nepal and Sri Lanka

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Country Studies on Bangladesh, Nepal and Sri Lanka COUNTRY STUDIES ON BANGLADESH, NEPAL AND SRI LANKA 1 STUDIES IN TRADE AND INVESTMENT 70 ESCAP is the regional development arm of the United Nations and serves as the main economic and social development centre for the United Nations in Asia and the Pacific. Its mandate is to foster cooperation between its 53 members and 9 associate members. ESCAP provides the strategic link between global and country-level programmes and issues. It supports Governments of the region in consolidating regional positions and advocates regional approaches to meeting the region’s unique socio-economic challenges in a globalizing world. The ESCAP office is located in Bangkok, Thailand. Please visit our website at www.unescap.org for further information. The shaded areas of the map are ESCAP Members and Associate members. ii Cover illustrations and layout by Napidchaya Pichedtanavanich COUNTRY STUDIES ON BANGLADESH, NEPAL AND SRI LANKA i 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: [email protected] The opinions, figures and estimates Bibliographical and other references set forth in this publication should not be have, wherever possible, been verified. The considered as reflecting the views or United Nations bears no responsibility for carrying the endorsement of the United the availability or functioning of URLs. Nations. Mention of firm names and commercial products does not imply the All the material in this publication endorsement of the United Nations. may be freely quoted or reprinted, but acknowledgement is required, and a copy The designations employed and of the publication containing the the presentation of the material in this quotation or reprint should be sent to the publication do not imply the expression ESCAP Publications Office. of any opinion whatsoever on the part of ii the Secretariat of the United Nations The use of this publication for any concerning the legal status of any country, commercial purpose, including resale, is territory, city or area, or of its authorities, prohibited unless permission is first or concerning the delimitation of its obtained from ESCAP. Requests for frontiers or boundaries. Where the permission should state the purpose and designation “country or area” appears, it the extent of reproduction. covers countries, territories, cities or areas. References to dollars ($) are to United States dollars unless otherwise stated. COUNTRY STUDIES ON BANGLADESH, NEPAL AND SRI LANKA Preface mall and medium-sized enterprises (SMEs) have played an important role in South SAsia 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 export- led 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 iii 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. STUDIES IN TRADE AND INVESTMENT 70 Acknowledgements his research project was implemented by Masato Abe, working under the overall Tsupervision of Ravi Ratnayake, Director of the Trade and Investment Division and Marc Proksch, Section Chief, Private Sector and Development Section, Trade and Investment Division, United Nations ESCAP. Bhavani P. Dhungana and Bhuban B. Bajracharya played advisory roles throughout the implementation of the project. Masato Abe and Bhuban B. Bajracharya drafted Chapters 1, 2 and 3. Posh Raj Pandy contributed to a section on the value chain approach in Chapter 1. Annex 1 was prepared by Sheikh Morshed Jahan and Mohammad Saif Noman Khan, while Posh Raj Pandey contributed Annex 2. Annex 3 was written by Ananda K.W. Jayawardane, R.A. Attalage and Masato Abe. K. Ramanathan provided valuable advice on different sections of the Chapters and the Annexes. Throughout the project implementation and finalization stages, members of national steering committees in Bangladesh, Nepal and Sri Lanka provided substantive guidance. In the course of preparation of this publication, research assistance was provided by Paradai Adisayathepkul for all chapters, particularly for Annex 3. Suman Basnyat assisted in research for Chapter 1 while Sagar Sen, Asif Javed Rahman, M. Rashedur Rahman Raju, Mashref Ul Hoque and Abdullah Al Mahmud contributed for Chapter 3 and and Neelu Thapa and Paras Kharel for Chapter 4. Fabian Suwanprateep enhanced the readability of the publication by improving its outline, while, at the same time, providing research assistance. Linghe Ye, Pradeep Kumar Angadi, and Wenru Xie also provided research assistance. Technical editing was done by Masato Abe, Bhavani P. Dhungana and Bhuban B. Bajracharya. Paradai Adisayathepkul, Fabian Suwanprateep and Natthika Charoenphon formatted the final manuscripts. Napidchaya Pichedtanavanich provided cover and book layout design. Natthika Charoenphon and Napidchaya Pichedtanavanich provided secretarial assistance. iv COUNTRY STUDIES ON BANGLADESH, NEPAL AND SRI LANKA Contributors MASATO ABE is an Economic Affairs Officer in the Private Sector and Development Section, Trade and Investment Division, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP). He has extensive experience in enterprise development with a special emphasis on the SME sector and supply chain management. Prior to joining the United Nations, he worked in the global automotive, electronics and high-technology industries. He holds degrees in marketing, business administration and economics, and is a research fellow at Thammasat University. R.A. ATTALAGE is a Professor in the Department of Mechanical Engineering, University of Moratuwa, Sri Lanka and has worked in this capacity since 2003. He obtained his B.Sc. in Engineering (Honours) Degree from the University of Moratuwa, his MEng in Energy Technology from the Asian Institute of Technology (AIT), Thailand, and a Ph.D. from the École des Mines de Paris. He has worked as a consultant to the Asian Development Bank, the World Bank, and Nexant Inc. on energy related assignments. He is also a chartered engineer and has several publications in journals
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