• Thursday, Oct 01, 2020
  • Last Update : 09:52 pm

'Reduce VAT for SMEs to combat Covid-19 fallout'

  • Published at 10:53 pm May 30th, 2020
Mirza Nurul Ghani Shovon
Mirza Nurul Ghani Shovon, president of the National Association of Small Cottage Industries of Bangladesh (NASCIB)

Cottage, micro, small, and medium enterprises (CMSMEs) are hit hard by the Covid-19 pandemic. For CMSMEs to survive the Covid-19 fallout, the government should reduce VAT from 15% to 5% for the sector in the upcoming national budget, said Mirza Nurul Ghani Shovon, president of the National Association of Small Cottage Industries of Bangladesh (NASCIB) in an interview with Dhaka Tribune's Ibrahim Hossain Ovi.

What kind of budgetary support do CMSMEs need amid the coronavirus fallout?

The countrywide shutdown due to the coronavirus pandemic has put CMSMEs in a sorry state, jeopardizing the employment of tens of thousands of people. Value added tax (VAT) is now a great burden, especially for small entrepreneurs who have financially suffered the wrath of coronavirus.

In this situation, we are urging the government to bring down VAT for the sector from 15% to 5% in the budget for fiscal year 2020-21 to help entrepreneurs. This should continue for at least two years.

SME contribution to GDP is about 25%, and 40% of the country’s employment is in this sector. According to Bangladesh Bureau of Statistics (BBS), 7.8 million SMEs employ 24.5 million people.

What kind of policy support should be there for SMEs in the budget for FY21?

In the next fiscal, the government should increase import duty on goods which are already produced locally, in order to help local industries. This will increase demand for domestic goods and help the sector survive.

The government announced the light engineering sector as the product of the year for 2020. To support the sector, the  government budget should free the sector from VAT and other duties to let it grow.

Likewise, so the sector can develop further, import duties on light engineering goods and spare parts should be increased since local manufacturers are making quality products.

Access to finance is a big challenge for SMEs. What can be done in the budget to resolve it?

Prime Minister Sheikh Hasina announced a financial package of Tk20,000 crore to introduce low-interest working capital for CMSMEs, which will be disbursed through the banking system. This is a good initiative and we are grateful to her.

However, for existing SMEs, we urge the government to create a fund with money allocated  in the budget at low interest rates for at least three years. From that fund, both new and existing SME entrepreneurs could manage to get working capital.

In addition, the government should keep allocation for human resource development and entrepreneur capacity building through training.

59
58
blogger sharing button blogger
buffer sharing button buffer
diaspora sharing button diaspora
digg sharing button digg
douban sharing button douban
email sharing button email
evernote sharing button evernote
flipboard sharing button flipboard
pocket sharing button getpocket
github sharing button github
gmail sharing button gmail
googlebookmarks sharing button googlebookmarks
hackernews sharing button hackernews
instapaper sharing button instapaper
line sharing button line
linkedin sharing button linkedin
livejournal sharing button livejournal
mailru sharing button mailru
medium sharing button medium
meneame sharing button meneame
messenger sharing button messenger
odnoklassniki sharing button odnoklassniki
pinterest sharing button pinterest
print sharing button print
qzone sharing button qzone
reddit sharing button reddit
refind sharing button refind
renren sharing button renren
skype sharing button skype
snapchat sharing button snapchat
surfingbird sharing button surfingbird
telegram sharing button telegram
tumblr sharing button tumblr
twitter sharing button twitter
vk sharing button vk
wechat sharing button wechat
weibo sharing button weibo
whatsapp sharing button whatsapp
wordpress sharing button wordpress
xing sharing button xing
yahoomail sharing button yahoomail