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Old Dhaka’s small businesses demand speedy disbursement of stimulus funds
Star Business Report
Businesses in Old Dhaka yesterday demanded speedy disbursement of the government-announced stimulus package for cottage, micro, small and medium enterprises (CMSMEs).
These entities, thousands of which are located in Old Dhaka, have been struggling to survive on being badly impacted amid the Covid-19 fallouts.
The demand came at a virtual meeting organised by the Dhaka Chamber of Commerce and Industry (DCCI) on the current situation of Old Dhaka’s businesses.
Some 13 million CMSMEs account for 25 per cent of Bangladesh’s GDP and 35.5 per cent of total employment, said Shams Mahmud, the DCCI president, while moderating the event.
Their contribution to export earnings also range from 75 per cent to 80 per cent but the sector has been hit hard by the pandemic while banks are reluctant to disburse loans from the stimulus package.
The CMSMEs sometimes face challenges in access to finance, market linkage, product standardisation, modern technology and training and for a lack of skilled manpower, according to a statement from the DCCI.
Small entrepreneurs still want to pay VAT and tax but they want to avail instalment facility to cope with losses, said Mahmud. “Moreover, we need to find out alternative sources of financing besides banks,” he said.
The DCCI plans to sit with the banks to try to figure out the procedures SMEs need to take to be eligible for bank loans from the stimulus package, informed Mahmud.
He also urged the government to announce 2021 as the year of the CMSMEs sector. “We want to come out of this situation. We need SME linked FDI policies to make CMSME sector grow further,” he added.
Small enterprises come together to create a big conglomerate and large businesses are mostly dependent on SMEs, said Hossain Khaled, managing director of the Anwar Group of Industries.
“We have to create employment opportunities as it is the main concern now in a country like Bangladesh. Due to the Covid-19 pandemic our sales have come down by 35 per cent, which will have negative ripple effects,” he said.
Unbanked SMEs might not be able to benefit from the stimulus, which is a challenge, he said. “We need to bring the unbanked entrepreneurs in the banking channel,” he added.
Terming Old Dhaka the centre of business, he said reducing the cost of doing business was necessary for survival at this time. Making 25 per cent of the government’s e-procurements from CMSMEs should be made mandatory, he emphasised.
“Our manufacturing sector is by and large import based, Khaled said, underscoring the need for easing complex procedures of import.
During this crisis, SME Foundation now should be more active and Bangladesh Bank can introduce a refinancing scheme with a 1.5 per cent to 2 per cent interest rate for the SME sector, he said.
“We were not able to sell any product during this time of pandemic,” said Md Alauddin Malik, president of Local Garments Manufacturers Association.
“This sector has been hit hard. We are also not getting adequate support from banks to get loan from the stimulus package.” Dyeing and embroidery traders are linked with this sector so they also need financial aid, he said.
Due to unbearable traffic congestion, Old Dhaka is losing customers day by day, he added, requesting to let shops remain open till 8:00pm instead of 7:00pm.
There are 120 industrial units in Keraniganj BSCIC industrial area and closures prompted many employees to go home, most of whom are yet to come back, said Hossain A Sikder, president of Dhaka Shilpa Malik Samity.
Some 80 per cent of export-oriented industrial units in the BSCIC area are closed due to a lack of demand, he said.
Moreover returnee migrants will put pressure on the existing unemployed workforce. At this time, financial support from the banks will help ease the crisis, he added.
Md Abdur Razzaque, president of Bangladesh Engineering Industry Owners’ Association, requested the government to defer VAT and electricity bill payments for a year. This association represents 40,000 members.
He also called for waiving VAT on locally made capital machinery and businesses providing repairing services. Apart from fiscal support, a few non-fiscal assistances will also help SMEs, he added.
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