Entrepreneurs involved in the small and medium enterprise (SME) industry are encouraged by the tax breaks and support in the proposed budget for fiscal year 2021-22 as an opportunity to unleash the potential of local industries, including light engineering, agro processing and dairy products.
They also considered it to be conducive for women entrepreneurs, after Finance Minister AHM Mustafa Kamal proposed tax exemption for SMEs run by women who generate less than Tk7 lakh annually.
Talking to Dhaka Tribune, Masudur Rahman, chairman of SME Foundation, said that this year’s budget is extremely business-friendly, as the government had maintained its consistency in gradually reducing corporate tax, which was once the highest among neighboring countries.
"The finance minister paid special attention to the light engineering sector in the proposed budget, realizing that it is one of the most promising sectors in our country. The government had previously declared 2020 as the year of light engineering,” he also said.
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Having a market of Tk75,000 crore, it is a thrust sector for the SME industry, as domestic production accounts for Tk25,000-26,000 crore, while the rest is dependent on imports, said the SME Foundation chairman.
The government is also establishing special economic zones (SEZs) to attract domestic and foreign investment. The light engineering industry will play a major role as the forward and backward linkage industries of these SEZs, he further mentioned.
Masudur Rahman also said that agriculture, agro-processing industries, and dairy farms are some of the major components of the SME industry.
These sectors received special attention in the budget. The proposed tax exemption for the industries engaged in processing locally grown agricultural products and machineries for the next ten years will help to add value from this sector, he also said.
He said that the number of women entrepreneurs in the SME sector has increased significantly in the last few years, which is positive for the country's economy.
The proposal to tax exemption for women SME entrepreneurs with less than Tk7 lakh annual turnover will undoubtedly encourage more women entrepreneurs, he added.
Masudur Rahman said that a budget comes with all the elements of a country's overall economy.
“There is no reason to think that all our demands will be met. Many of the demands we sent were not reflected in the proposed budget, but the continuity of the proposal's inclusion makes us optimistic,” he further said.
He said that now they are waiting for the budget to be passed through the bill, because only then they will be able to know the details about VAT and tax.
Mantasha Ahmed, president of Association of Fashion Designer of Bangladesh (AFDB), said that they want all the SME entrepreneurs in the informal sector to get loans to turn around their languishing businesses.
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There are many entrepreneurs who did not receive the stimulus package and initiatives need to be taken to address the challenge of disbursing loans. Imposing taxes on MFS is frustrating for entrepreneurs. However, the proposal of tax exemption for women entrepreneurs is very positive, she also said.
Rezbin Hafiz, a leather entrepreneur and owner of People’s Footwear, thanked the government for encouraging the domestic products and discouraging the import of those products in the proposed budget for FY22.
“Many proposals of our sector have been reflected in this year's budget. Many industries in the SME sector have been given special importance,” she added.
Nasima Akter Nisha, founder of Women and E-commerce Forum (WE), said that they are thankful to the finance minister for proposing tax exemption for women entrepreneurs.
“But imposing taxes on mobile financing services (MFS) will hamper the journey towards full-fledged e-commerce. Most of the SME entrepreneurs, F-Commerce or e-Commerce entrepreneurs always encourage customers to pay through MFS,” she said.
In this case, imposing additional tax on MFS will discourage customers from making online payments, which have been increased since a few years, and will hamper the journey towards building a digital Bangladesh, she added.
Biplob Saha, owner of Bishwo Rang, said that everyone termed the proposed budget as business-friendly: “But it is seen that loan is given to one who has more assets and ultimately SMEs like us are not getting the necessary loans. The proposed budget said nothing about loans for SME entrepreneurs.”
Finance Minister AHM Mustafa Kamal presented the proposed national budget of Tk603,681 crore for the 2021-22 fiscal year in the parliament on June 3.
