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The Financial Express

Bangladeshi small firms' 2020 Covid 'holiday' output drops by 26pc

| Updated: June 07, 2021 16:10:47


Illustrative photo Illustrative photo

The small firms lost their output up to 26 per cent by the end of December last year because of the Covid-induced 'holiday' and its subsequent consequences.

During the period, the micro and medium firms lost 20 per cent of their output as the government had imposed restrictions on movement and shutdown for the months between March and May last year to avert spread of the coronavirus.

However, 74 per cent firms on an average were more or less affected by the pandemic, according to latest research findings released on Sunday.

During the three-month period from March to May last year, some 96 per cent of such types of firms were affected.

Research Director of BIDS and one of the senior short-term consultants of PRISM Project Dr. Monzur Hossain conducted the survey on 216 firms in 16 BSCIC industrial estates.

He presented the findings at a virtual meeting styled "Impact of Covid-19 on MSMEs and Understanding Their Recovery: Evidence from BSCIC Industrial Estates", organised jointly by PRISM and Economic Reporters' Forum (ERF).

Dr. Hossain said the micro and medium enterprises have performed better than the smaller ones at the recovery stage.

Industries Minister Nurul Majid Mahmud Humayun attended the event as the chief guest while Ambassador and Head of Delegation of the European Union to Bangladesh Rensje Teerink, Additional Industries Secretary Golam Yahia, and Chairman of the Bangladesh Small and Cottage Industries Corporation (BSCIC) Md. Mostaque Hassan were the special guests.

Former Governor of Bangladesh Bank Dr. Atiur Rahman, President of the Dhaka Chamber of Commerce and Industry (DCCI) Rizwan Rahman, Chairman and CEO of PRAN-RFL Group Ahsan Khan Chowdhury and Chairperson of Business Initiative Leading Development (BUILD) Abul Kasem Khan attended Abul Kasem Khan attended the webinar as panel discussants.

Team Leader of the technical assistance to the BSCIC - PRISM Programme Ali Sabet made the welcome address while ERF President Sharmeen Rinvy chaired the event and its General Secretary S M Rashidul Islam moderated the event.

Industries Minister Humayun said the CMSMEs [cottage, micro, small and medium enterprises] were the most affected ones during this pandemic and the government has rightly announced Tk 200 billion stimulus package for this important segment of the economy.

He also informed that another Tk 15 billion stimulus package has also been announced for the rural areas. Out of that amount, he said, Tk 3.0 billion has been allocated for the SME Foundation.

The industries minister said the micro, cottage and small firms have been playing an important role to boost the country's economy.

EU Head of Delegation Teerink highly appreciated the prompt response by the government of Bangladesh and said it was instrumental to scaling, upscaling and rescaling of the workforce of the enterprises to get better outcome.

She opined that a comprehensive unique social protection system should be put in place.

She also mentioned about the allocation of 130 million Euro budget support for Bangladesh.

Additional Industries Secretary Golam Yahia mentioned that the CMSMEs were playing a big role in industrialisation of the country and said Bangladesh would emerge as a developed nation by 2041 through successful implementation of the SME Policy.

BSCIC Chairman Md Mostaque Hassan listed various initiatives of the Corporation to facilitate the cottage, micro and small industries, and said that the factories in the BSCIC industrial estates remained operational despite the pandemic situation.

He said the BSCIC has made its training programmes time-befitting and informed that its online service will be inaugurated on June 13. Online marketing will be launched soon and a master plan has been taken to diversify exports, he said.

Former Bangladesh Bank Governor Dr Atiur Rahman said the government would have to think about rolling out the 2nd round of stimulus packages to the affected industries before ending the first round of the stimulus packages.

He said that the rules and regulations of the central bank as well as its credit guarantee schemes should be made simpler. "Not only money, but also easing of the rules is a stimulus … giving hope to people is also very important."

Dr Rahman advocated for providing special stimulus or fund from the budget to those affected enterprises in the districts like Khulna, Satkhira and Natore where lockdown is being enforced to rein in the Covid-19 infection rate.

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

He said that apart from the banking sector, alternative sources or mechanisms should be developed for distribution of this fund so that the unbanked entrepreneurs could avail of the supports.

Mr Khan, also a former DCCI President, said that the delayed or deferred payment system could be introduced as the CMSMEs were under pressure with the payments of VAT, tax and utility bills.

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

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

He said the BSCIC could create a linkage between the large and small industries while it should give more attention to the CMSMEs to ensure their revival.

Welcoming some specific proposals in the budget especially for the automobile sector, VAT waiver, some benefits for the CMSMEs, DCCI President Rizwan Rahman said that one simple car production needs some 8,500 spare parts and it would help develop backward linkage industry in the country. "It's just a start."

He suggested withdrawal of the provision of advance income tax considering the pandemic effect.

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

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