DCCI sat with Old-Dhaka-based specialised business associations to determine the problems faced by MSMEs in getting bank loans from the stimulus package
Business leaders have called for the speedy disbursement of loans from the stimulus package–and for them to be allowed to pay VAT, tax and all utility bills in equal installments over the next six months–for the sustainability of their businesses.
They urged this at a virtual discussion on Wednesday, according to a press release from the Dhaka Chamber of Commerce and Industry (DCCI).
The DCCI arranged the discussion with the stakeholders of the micro, small and medium enterprises (MSME) sector of the Old-Dhaka-based specialised associations–to hear their concerns in getting bank loans from the stimulus and about the downward trend of businesses during the Covid-19 crisis.
Businesses are experiencing their worst scenario ever during the pandemic but the SME entrepreneurs are not accessing adequate loan facilities from the stimulus.
Moderating the meeting, DCCI President Shams Mahmud said 13 million MSMEs contribute 25 percent of the GDP and 35.5 percent of the total employment in the country. MSMEs' contributions to the export earnings range from 75-80 percent.
"However, the sector is hit hard by the Covid-19 pandemic. Additionally, banks are reluctant to disburse loans from the stimulus package to MSMEs. MSMEs sometimes face challenges in: access to finance, market linkages, product standardisation, modern technology, access to training, and a lack of skilled manpower," he added.
Shams Mahmud said small business entrepreneurs still want to pay VAT and tax but they want facilities to pay in installments to cover their losses. "Moreover, we need to find alternative sources of financing besides banks."
He also said the DCCI is planning to sit with the banks and will try to figure out what are the procedures SMEs need to comply with to get bank loans from the stimulus. He urged the government to announce 2021 as the year of CMSME sector.
"We want to come out of this situation. We need SME-linked FDI policies to make the CMSME sector grow further," said the DCCI president.
Speaking as a guest of honour at the programme, Hossain Khaled, managing director of Anwar Group of Industries, and former president of DCCI, said small enterprises all together create a big conglomerate and large businesses are mostly dependent on SMEs.
"We have to create employment opportunities as this is the main concern now in a country like Bangladesh. Due to the Covid-19 pandemic, our sales have decreased to 35 percent which will have many negative ripple effects," he added.
He said unbanked SMEs may not benefit from the stimulus which he termed a challenge. "We need to bring the unbanked entrepreneurs into the banking channel."
Saying Old Dhaka is the centre of business, Hossain Khaled said, "Reducing the cost of doing business is necessary for our survival at this time."
Twenty-five percent of the government's e-procurement should be mandatory from CMSMEs, he emphasised.
Saying the country's manufacturing sector is by and large import based, he underscored the need for easing complex import procedures.
"During the crisis, the SME Foundation, now, should be more active. The Bangladesh Bank can introduce a re-financing scheme of 1.5 to two percent interest rate for the SME sector," added the Anwar Group managing director.
Md Alauddin Malik, president of Local Garments Manufacturers Association, said, "We have been unable to sell any product during the pandemic. This sector is hit hard. We are also not getting adequate support from banks to receive loans from the stimulus package. However, dyeing and embroidery traders are linked to this sector so they need financial aid."
He said due to unbearable traffic congestion, Old Dhaka is losing customers daily and called upon the authorities to allow shops to remain open till 8pm instead of 7pm at present.
Hossain A Sikder, president of Dhaka Shilpa Malik Samity, said there are 120 industries in the Keraniganj BSCIC industrial area. Many employees had gone home following the closure of industries and most of them are yet to come back. He said 80 percent of the export-oriented industries in the BSCIC area are closed due to lack of demand.
"Moreover returnee immigrants will put a pressure on our existing unemployed workforce. At this time, financial support from banks will help ease the crisis," he added.
Md Abdur Razzaque, president of Bangladesh Engineering Industry Owners' Association, requested the government for deferring VAT and electricity bill payment by a year. He also called for waiving VAT on locally-made capital machineries and repairing businesses.
Mohammad Jalal Uddin, president of Bangladesh Bread Biscuit and Confectionery Makers Association, said most of the MSMEs in Old Dhaka do not have bank accounts.
Saying 95 percent of SMEs are good borrowers and successfully repaid their loans, he called upon banks to give loans to those MSMEs who have not any bank account upon recommendation by the respective business bodies.
There are 5,000 bakeries in Bangladesh out of which only 270 are in operation now.
"Without fiscal assistance, small industries in Old Dhaka will face a big problem," he added.
Alhaj Md Golam Mawla, president of Bangladesh Edible Oil Wholesalers Association, said most MSMEs are unable to fulfill all requirements of banks. He also said entrepreneurs of this sector are yet to receive fiscal support from banks.
"Moreover they are facing problems in getting single digit loans started in the first quarter this year. Entrepreneurs engaged in consumer items need large investment so they need financial support at this time," he added.
DCCI Vice-President Mohammad Bashiruddin, directors Waqar Ahmad Choudhury, Alhaj Deen Mohammad, Md Shahid Hossain and Monowar Hossain also spoke on the occasion.
They said access to finance is very critical now. They also urged for a one-year deferral on paying tax, VAT and utility bills. They called upon the government to focus on duty structure, the transportation sector, ports, employment, plus alternative financing mechanisms and non-fiscal support for SMEs.
Senior Vice President of DCCI NKA Mobin, FCA, FCS gave the concluding remarks.