Hit hard again, this time by the second wave of the Covid-19 pandemic, Bangladesh's small and medium enterprises (SMEs) are now pinning hopes on the upcoming budget to stay afloat. Not to mention that the survival of these firms is important as they are one of the major employers in the country's economy.
Ranging from short-term liquidity and tax cuts to simple compliance for availing loans and extension of debt repayment periods by at least two years, these enterprises seek an array of relief from the government to tide over the economic crisis. These leeways to SMEs, entrepreneurs say, will not only help the sector survive but also ensure the preservation of jobs.
Kazi Sazedur Rahman, the president of Paper Cup Manufacturers' Association of Bangladesh (PCMAB), told UNB that though a slew of stimulus packages was announced by the government last year, over 80 percent of the small entrepreneurs in Bangladesh failed to reap the benefits of the same due to corruption in the system.
“Though Bangladesh Bank said that over 72 percent of the stimulus packages worth Tk20,000 crore were disbursed as loans until March 31, the reality is different. Some 95 percent of the disbursed loans were availed by corporate houses through sister concerns floated overnight," said Sazedur, also the MD of KPC Industry.
According to him, the SME sector has again been hit hard by the second wave of Covid. "The government has so far been very supportive of the sector, but the problem lies at the loan distribution level. Many SMEs are already out of the banking system. If more help is not extended to the sector in the coming fiscal, then many more SMEs will disappear."
The small entrepreneurs also seek a substantial cut in the value-added tax on various items in the upcoming budget -- from the existing 15 percent to 5 percent. "Lower taxation will, in turn, benefit the economy as many SMEs don't acquire trade licenses to avoid paying 15% VAT. So, a cut in VAT will benefit both the government as well as the SMEs," Sazedur said.
"Moreover, the central bank should immediately impose a moratorium on old loan repayments as it has already extended the deadline till June 30 for banks to disburse stimulus funds among businesses in the cottage, micro, small and medium enterprise (CMSME) sector. Otherwise, many defaulting entrepreneurs won't get the benefit."