The government has been urged to give priority to the CMSMEs sector while considering the next round of stimulus packages for expediting the country's economic recovery process.
Speakers at a webinar on Thursday made the call, suggesting to increase fund flow to the cottage, micro, small and medium enterprises (CMSMEs).
The funding to small businesses based on well-defined database is expected to create jobs promptly and boost supply and demand in the domestic market, they said.
Business Initiative Leading Development (BUILD) organised the virtual conference titled "Covid Stimulus and Links to Employment, Consumption and Investment: The Bangladesh Experience, Global Lessons and Priorities for Next Round of Support".
Planning Minister MA Mannan addressed the programme as chief guest while Chairman of Chittagong Stock Exchange (CSE) Asif Ibrahim, The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Md Jashim Uddin, Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman, and Centre for Policy Dialogue (CPD) Distinguished Fellow Professor Mustafizur Rahman took part in the discussion.
Moderated by Metropolitan Chamber of Commerce and Industry (MCCI) President Barrister Nihad Kabir, Policy Exchange Bangladesh Chairman Dr M Masrur Reaz presented the keynote paper at the event.
In his presentation, Dr Reaz said that about 83 per cent of the small firms have not received any support from the Tk 200 billion stimulus scheme for the CMSMEs sector.
However, the government has so far disbursed 73.26 per cent or Tk 146.5 billion to the CMSMEs at an interest rate of 9.0 per cent, including 5.0 per cent subsidy.
In comparison, more than 98 per cent of the Tk 400 billion bailout packages for large industries were disbursed till date.
Dr Reaz pointed out the factors that have made availing of the fund from the stimulus package difficult for the small firms.
There are: documentation requirement, bank-client relationship, size of business, collateral and guarantor requirement, discretionary behaviours of officials and, knowledge and capacity gap.
He said that due to the adverse impact of the pandemic, 44 per cent of the micro enterprises and 38 per cent of other low-tech firms had to cut more than 50 per cent of their staff amid fund shortage.
Citing BIDS data, he also mentioned that the average reduction in revenue for SMEs in 2020 was nearly 66 per cent.
Speaking at the programme, Professor Mustafizur Rahman said the CMSMEs sector and self-financed businesses were somewhat left out of the current stimulus package while the large export-oriented industries got the major share of the allocated funds.
He stressed the need for injecting fund to the small businesses sector if the government really wants to curb unemployment problem and strengthen the domestic market further.
Besides, he said, the small businesses or start-ups should come up with new business models if they want to sustain in the coming years as the economy will not return to the pre-pandemic situation so early.
He noted that the government has planned to establish 100 economic zones across the country with a view to create 10 million jobs.
But without creating skilled workforce, he warned that it would be very difficult to bring foreign and local investment in those economic zones.
Planning Minister MA Mannan said that despite some setbacks in the manufacturing industry due to the pandemic, the country's economy somewhat remains stable due to a sort of stability in the agriculture sector.
Terming local industry as the key driving force of the economy, he said that throughout the pandemic period, the local industry did well while the government disbursed huge amount of funds under stimulus package to support the export sector.
About supporting the CMSMEs sector in the next stimulus scheme, he said: "I heard that the next stimulus package will be about lifting the businesses from the bottom like small businesses."
"This time the government will engage the Microcredit Regulatory Authority (MRA), SME Foundation and other institutions working with the small businesses for smooth disbursement of the fund," he added.
Taking part in the discussion, DCCI president Rizwan Rahman called for creating a proper database of CMSMEs sector so that the small businesses become eligible for loans from the financial sector.
He said the collateral-based financing does not fit for the small business model as many of them do not have any asset to take loans against it.
A new policy mechanism is required to increase finance to small businesses, he added.
He said that neighbouring India has rolled US$ 67 billion for recovery of the SMEs sector while Bangladesh allocated around Tk 200 billion (equivalent to around $ 2.35 billion) for CMSMEs.
In the next round of stimulus, the CMSMEs sector that mostly fall in the informal sector should get highest priority for the sake of fast economic recovery, he suggested.
SME Foundation Chairperson Dr Md Masudur Rahman, Chittagong Chamber of Commerce and Industry (CCCI) President Md Mahbubul Alam, Bangladesh Bank (BB) General Manager Muhammad Jamal Uddin, International Labour Organization (ILO) Bangladesh Country Director Tuomo Poutiainen, BUILD Chairperson Abul Kasem Khan, and BUILD CEO and Member Secretary Ferdaus Ara Begum also spoke at the event.
