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Dhaka Tribune

Small, cottage industries left out of factory reopening scheme

Insiders said that the CMSME sector topped the list of sectors most affected by the pandemic

Update : 03 Aug 2021, 09:04 PM

Cottage, micro, small and medium enterprises (CMSMEs) are left out of the government’s initiative to reopen amid the strict lockdown, aimed to curb surging Covid-19 infection.

The government allowed exported-oriented factories to reopen on August 1, after the owners insisted on resuming their operations ahead of the ongoing lockdown, which will now continue until August 10.

Insiders said that the CMSME sector topped the list of sectors most affected by the pandemic. 

However, experts said that there was no choice but to keep the CMSMEs out of the reopening directive, as the government did not introduce any separate policy for domestic industries amid the lockdown. 

A number of SME firms are incurring huge losses, while a bigger portion had to shut shop as well, they also said. 

A large portion of businesses have experienced sharp drops in sales. These business losses have choked cash flows, with entrepreneurs unable to pay installments on existing loans, said insiders. 

They also warned that the resumptions of the apparel industry will help the export sector, but the domestic economy will take a nose dive again due to a lengthy shutdown of SMEs. 

Talking to Dhaka Tribune, Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD,) said that the SME sector is almost entirely dependent on the domestic market and is influenced by the market situation, as well as the purchasing power of the people. 

“So, they have little scope to gain much by opening their factories. However, a separate policy could have been adopted for those who wanted to keep their businesses open,” Moazzem added. 

The owners of the export-oriented industries are close to the power circle and could create pressure to get some policy decisions in their favor which the SME could not, he also said. 

Also Read - Access to banks, consistent flow of funds key to boost SMEs

Mirza Nurul Ghani Shovon, president of National Association of Small and Cottage Industries of Bangladesh (Nascib), said that it is true that the export-oriented industries are the lifeline of Bangladesh's economy.

“But the government should take policy for the CMSMEs to remain operational by strictly maintaining Covid-19 safety measures. It was not difficult for 10-15 labour-driven industries,” he added.

“Nevertheless, they are still requesting the government to allow reopening CMSMEs, as their situation is worsening with each day,” he added.

Monira Begum, an entrepreneur from Rangpur and owner of Shataranji Palli Rangpur, said that her business has suffered a lot because of Covid-19. 

“I have only 30 workers in my factory and it was not possible to keep my factory open during the lockdown. I do not know how I will recover the losses incurred during the multiple lockdowns,” she added.

Muhammad Munir-uz-Zaman, director of Nascib, said that they appealed to the government through FBCCI repeatedly but failed to get any positive response. 

“An SME company has about 10-200 workers, which is much less than the apparel factories. It was easy to keep the factories open in compliance with the highest hygiene rules,” he added.  

He also said that they have no choice but to wait until August 10. 

“The largest sector of the country is now on the verge of destruction due to the lack of timely action,” he added.

Conditions for reopened factories

Meanwhile, the Ministry of Health and the Ministry of Industries issued guidelines for the factories before reopening including maintaining physical distancing during entry and exit, ensuring wearing of masks and gloves, fixing working hours according to shift, measuring workers' temperature, ensuring adequate sanitation system, etc.

Asked if it was possible to comply with these in the SME factory, he said that it was easier for them to comply as the factory is smaller in size with fewer workers. 

According to SME entrepreneurs, at least half of the small industry have gone broke due to the shutdowns, and the situation is deteriorating gradually as their resilience is reducing.

Mafizur Rahman, managing director of SME Foundation, said that there is no specific zone for SME factories and these factories are scattered all over the country. 

“No separate policy could be taken to keep these factories open in general. Most of them are domestic market-centric, so if the country's market is closed, they have to shut their factories as well,” he added. 

He also said that the government has declared stimulus packages to cover the loss and SME Foundation will disburse them.

According to SME Foundation, contributing 25% to the country’s GDP, the SME sector employs 20.3 million Bangladeshis — around 36% of the country’s adult population. There are currently 7.8 million SMEs across the country.

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