Presented by:

Maria Howlader FCA

Council Member- ICAB

Chairman SMP Committee -ICAB

TABLE OF CONTENS

Content Page no

Emerging Economies 3-4

Bangladesh Economy -Overview 5

GDP growth and comparisons with other Emerging Economy 6

SMEs: Contribution and Significance 7

SMEs: Contribution in GDP in Industry Sector 8

SMEs: Contribution and Significance- other countries 9

Small and Medium Practices (SMPs) 10

Features of SMPs as per IFAC 11

Global presence of SMPs-Technology , Talent & Advisory 13-16

Top Global Challenges of SMPs 17

Significance of SMPs in Bangladesh 18

Current Major Practices of SMPs 19

Potential Practice opportunities for SMPs in Bangladesh 20

Major Challenges for SMPs 21

Transforming challenges in opportunities 22

ICAB’s Initiative 23

Way Forward 24-27

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Rapidly growing and volatile economies, specificallycertain Asian and Latin American countries.

Emerging economies promise huge potential forgrowth but also pose significant political, monetary,and social risks.

Features of Emerging Economies are (i) TransitionalEconomy, (ii) Young and Growing Population, (iii)Underdeveloped Infrastructure (iv) Increasing ForeignInvestment, (v) Faster economic growth as measuredby GDP, (vi) Prospects of high returns etc.

Entirely new or restructured industrial sectors growingat a rate faster than the overall economy. Suchindustries usually come into being when customersneed change, new technologies replace older ones, orwhen new socio-economic conditions emerge.

EMERGING ECONOMIES

Emerging Economies

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IMF defines 23 countries as Emerging Economies

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BANGLADESH ECONOMY - OVERVIEW

Bangladesh GDP Growth projection 8% in FY 2019 (Source ADB);As per World Bank 7.3%.

Bangladesh Bureau of Statistics (BBS) GDP growth to hit record 8.13% in FY-2019

Bangladesh is the fastest growing economy in Asia in 2019;

Bangladesh among world’s top 5 fastest growing countries-World Bank;

Industry sectors are driving record for GDP growth. Contribution ofIndustries in GDP is approx 32% out of which 23% comes from SMEsmanufacturing sectors ( BBS last Financial Year)SMEs are treated as the engines of this growth .

Country 2014 2015 2016 2017 2018 2019(forecast)

Bangladesh 6.0% 6.6% 7.1% 7.3% 7.9% 8.0%

India 7.4% 8.0% 8.2% 7.2% 7.0% 7.2%

Maldives 7.3% 2.9% 7.3% 6.9% 7.6% 6.5%

Nepal 6.0% 3.3% 0.6% 7.9% 6.3% 6.2%

Sri Lanka 5.0% 5.0% 4.5% 3.4% 3.2% 3.6%

Pakistan 4.1 4.1% 4.6% 5.4% 5.2% 3.9%

Bhutan 4.0% 6.2% 7.4% 6.3% 5.5% 5.7%

Afghanistan 2.7% 1.5% 2.3% 2.7% 2.2% 2.5%

GDP Growth and Comparisons with Some of Emerging Economies

ADB –Economic Outlook 2019

SME: Contribution and Significance

• About 99% of Bangladeshi formal business enterprises are SMEs ( ADB Institute ,2016)

• The total number of SMEs in Bangladesh is estimated to be 79m establishments. Of them, 93.6% are small and 6.4% are medium.

• SMEs have huge significance in Bangladesh economy

• SME Definition –National Industrial Policy 2016

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SME Contribution in GDP in Industry Sector

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71%

29%

SME Contribution in GDP in Industry Sector

SME Industry

Other Industry

15%

32%

53%

Contribution in GDP

Agriculature

Industry Sector

Service and other Sector

SMES: Contribution and Significance- other countries

• The significance of SMEs can be clearly observed if we take a look at the contribution of SMEs in some select Asian countries.

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Country % of SME

China 97.3

Malaysia 97.3

Kazakhstan 97.5

Vietnam 97.7

Singapore 99.4

Sri Lanka 99.5

Philippines 99.6

Thailand 99.7

Japan 99.7

Republic of Korea 99.9

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Small and Medium Practices (SMPs)

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No uniform definition of SMPs

Majority SMPs are sole practitioners or small

partnerships whose clients are mostly SMEs

Recent Research indicates that more than 95% of

enterprises across the world are SMEs.

SMPs constitute the vast majority of accountancy

practices worldwide;

SMPs are contributing as Trusted Advisor, specially

in emerging economies around the world.

IFAC has chosen to define SMPs as “accounting practices whoseclients are mostly SMEs, external sources are used tosupplement limited in-house technical resources, and contain alimited number of professional staff.

What constitutes an SME differs depending on the country.”

1• Small- and medium-sized practices

(SMPs) are a critically important part of the profession

2• SMPs constitute the vast majority of

accountancy practices worldwide

3• SMPs typically serve small- and medium-

sized entities (SMEs)

4• Professional accountants with SMPs are

often the preferred source of advice for SMEs;

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• SMPs can provide a range of high-quality professional services to their SME clients, including audit and assurance and expert business advisory services.

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FEATURES OF SMPs AS PER IFAC

Global presence of SMPs The 2018 IFAC Global SMP Survey found that accountants working in small- and medium-sized practices (SMPs) are embracing technology to better serve clients and attract and retain top talent.

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Significance of SMPs in Bangladesh

• SMPs are the main source of supports for SMEs

• Role of SMPs to SMEs as the trusted advisors

• In Bangladesh, SMEs have significant presence for social and economical development

• SMPs can provide a range of high-quality professional services to their SME clients, including audit and assurance and expert business advisory services

• SMPs can offer their services at lower fees than the large firms

• SMPs can be more responsive to the clients needs

• Besides, SMPs can contribute to its rapid growth in trade and business being the expert professional advisory service providers in different aspects

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Audit – both Internal & External

Taxation - regulatory and advisory services

Accounting and valuation services

Business advisory and regulatory affairs

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Current Major Practices of SMPs in Bangladesh

Corporate Finance, Foreign Investment Advisory

Human Resources policies and procedures, employment regulations etc.

Restructuring , Succession planning, Insolvency, Liquidation

IT, cloud computing , data analytics, ERP, Blockchain

Business Development

Potential Practice opportunities of SMPs in Bangladesh

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Pressure to lower fees

Attracting new clients and retaining existing clients

Reluctance to adapt technology

Reluctant for Differentiating from competition

Resource constraints

Competition with the large and foreign firms

General perception and mindset of the businesses entities towards large firms

Challenges for the SMPs in Bangladesh

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Investment in technology and adaption of new changes

Investment in building Expertise, Skilled Resources by attending training, workshop , INVESTMENT IN CAPACITY BUILDING

Widen the services Area, business adviser services, corporate finance, IT

Differentiating by focusing on niche market and building expertise

More focus on Quality services , professional ethics to enhance trust of the business owners

Transforming Challenges in Opportunities

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ICAB’s initiatives

• Working with the World Bank for capacity building fund of SMPs

• ICAB providing rigorous training , workshop for capacity building of SMPs

• Organises SMP conferences

• QAB of ICAB provides quality guidelines for SMPs

• ICAB’s prescribed Fees Schedule also help SMPs to enhance audit fees

• Meeting and discussion with relevant regulators, GoB on business development

• Contributes and participate in meeting SAFA SMP Committee

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Capacity building plan for the SMP in terms of knowledge sharing, practice management, technology adaptation etc.

Infrastructural development of Firms;

Adapting Technology faster;

Exchanging professional views with the accountants from regional and international bodies;

Enhancing collaboration with government, regulatory bodies, international bodies;

Making the industry aware of the quality and diversified services of SMPs;

WAY FORWARD……

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Way Forward……

Collaboration with international accounting and business bodies

Networking, merger and demerger

Attracting and retaining talent candidate and skill staff

Government , donor agencies and other institutional support

Adequate training on both professional & technological advancement;

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Motivating the Corporate houses to pay higher fees to the SMPs;

Identifying and separating business development and marketing for the non-audit services;

Switching from Practice-focused to Client-focused;

Standing out and differentiating from others;

Looking for new business opportunities;

WAY FORWARD……

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