Small ventures to take fresh hit without immediate stimulus loans

The ongoing lockdown – which is getting extensions since its enforcement on 4 April to keep Covid-19 infections in check – might spell new trouble for cottage micro, small and medium enterprises (CMSMEs) if speedy disbursements of funds from the stimulus packages for them are not ensured, experts say.

They also emphasise developing alternate sources or mechanisms apart from the banking system for distributing stimulus funds towards the CMSMEs so that unbanked entrepreneurs can get benefits.

The credit guarantee scheme should further be expanded and made flexible so that small ventures can maximise their benefits, the speakers said at a webinar titled "Impact of Covid-19 on CMSMEs and Understanding their Recovery: Evidence from BSCIC Industrial Estates" on Sunday.

The Economic Reporters' Forum and the PRISM Programme of European Union organised the event.

Some 95% of micro, small and medium enterprises under BSCIC industrial estates registered a fall in both production and sales, while 70% reported a decrease in profits to some extent during the 66-day shutdown last year, according to the survey results disclosed at the event.  

The survey was conducted in person during January-March 2021.

Almost 90% of CMSMEs recovered to the pre-Covid level in December last year. But a majority of smaller firms could not regain their normal-time production even after the withdrawal of the shutdown, the report said. 

Former Bangladesh Bank governor Dr Atiur Rahman said the government will have to think about rolling out the second round of stimulus packages to the affected industries before the first round of the stimulus packages end.

The rules and regulations of the central bank as well as its credit guarantee scheme should be more simplified, he said, adding, "Not only the money, but also easing of the rules is stimulus.....giving hope to people is also very important."

Dr Atiur said the BSCIC industrial estates can be turned into state of the art ones where modern facilities, available in the special economic zones can be replicated there.

While presenting a keynote paper, Research Director of Bangladesh Institute of Development Studies (BIDS) Dr Monzur Hossain said firms had been able to maintain 50% of their production during lockdown in March-May 2020 and later they slowly gained 80% of production by the end of December 2020. 

Chairperson of BUILD Bangladesh Abul Kashem Khan stressed the need for addressing the barriers in availing support from the stimulus packages and also demanded time-bound speedy disbursement of funds.

He said formulation of a database for the CMSMEs is very important as it will help to make better policy design.

Industries Minister Nurul Majid Mahmud Humayun, as the chief guest said CMSMEs are the most affected during the pandemic situation while the government had rightly announced the Tk20,000 crore stimulus package for these enterprises.

In addition to this, Humayun informed that another Tk1,500 crore stimulus package had been announced so that the entrepreneurs in rural areas could avail it. 

Out of the amount, the industries minister said Tk300 crore has been allocated against the SME Foundation, which will disburse Tk100 crore in the outgoing fiscal year while Tk200 crore in the next fiscal year.

The industries minister said optimum utilisation of the stimulus packages should have to be ensured in an innovative way through extending support to the stakeholders concerned.

Chairman and Chief Executive Officer of Pran-RFL Group Ahsan Khan Chowdhury said the entrepreneurs benefitted from the stimulus packages during the pandemic and if the micro and small entrepreneurs could be protected through financing, then they would be able to make a turnaround.

DCCI President Rizwan Rahman proposed providing 50% of the government stimulus package to the micro, cottage and small industries, withdrawing tax on Facebook to spur the growth of e-commerce market, digitisation of SMEs, and providing fiscal literacy training to bankers.

Ambassador and the Head of Delegation of the European Union to Bangladesh Rensje Teerink, Industries Ministry Additional Secretary Golam Yahia, and BSCIC Chairman Md Mostaque Hassan joined the webinar as special guests.