'Typically, SMEs run on a small amount of cash, but due to dwindling sales, their funds dry up'
As the coronavirus pandemic hit the economy, the country’s Small and Medium Enterprises (SMEs) sought fiscal and financial support from the government, on Monday.
Talking to Dhaka Tribune, entrepreneurs urged the government to take effective measures such as providing working capital, tax waivers, incentives, low cost long-term loan facilities for small and medium-sized firms to keep their production running in the crisis.
“Tens of thousands of small businesses are struggling with the falling domestic demand due to the outbreak of COVID-19 weighing badly on small investors,” National Association of Small and Cottage Industries of Bangladesh (NASCIB) President, Mirza Nurul Ghani Shovon, told Dhaka Tribune.
These small businesses are now struggling to keep their businesses running as their sales are down drastically due to the countrywide lockdown, said Ghani.
Typically, SMEs run on a small amount of cash, but due to dwindling sales, their funds dry up, he explained.
In the given context, the government should devise a bailout package including interest-free loans, tax waivers and the withdrawal of VAT for the SME sector, added the business leader.
Besides the financial support, the sector urged the government to defer utility payments, including gas and electricity, for at least six months.
“If it is done, it will help reduce a funding crunch to some extent.”
NASCIB President Mirza Nurul Ghani Shovon urged the government to think about incentives for workers as a huge number of workers risk losing jobs due to slower demand.
According to NASCIB data, there are 6,000 SMEs under the Bangladesh Small and Cottage Industries Corporation (BSCIC) clusters, and another one lakh SMEs operate across the country.
In case of shutting down the factories, there would be colossal losses of Tk20,000 crore a month, he estimated.
Top officials at the SME Foundation and Ministry of Industries are going to meet Prime Minister Sheikh Hasina today (Tuesday) to discuss the current state of the SME sector after the outbreak of the coronavirus.
“After the outbreak of the coronavirus, the SME sector is going through a tough time as their sales fell alarmingly, while they are suffering from a shortage of imported raw material supplies ,” said Md. Safiqul Islam, Managing Director of SME Foundation.
Shafiqul said the sector faced an unpleasant situation at a time when small entrepreneurs were bracing for bumper sales ahead of the Bangla New year and Eid-ul-Fitr.
“In these two festivals, they have a high sales volume and live the rest of the year on the profits they make on these two major occasions,” he added.