With the country's cottage, micro, small and medium enterprises (CMSMEs) struggling to overcome the impact of Covid-19 pandemic, economists and trade body leaders suggest taking some measures, including timely disbursement of funds from incentive packages and tax concessions for the revival of the sector.
They also suggest announcing separate stimulus packages for women entrepreneurs and cottage, micro and small (CMS) enterprises so they can cope with the impact of the Covid-19 pandemic that has hit the country's overall economy hard.
Appreciating the Bangladesh Bank (BB) for allowing term loan facilities for the CMS enterprises, they said the sector must be given special attention for loans and incentive packages, as it employs the largest segment of the workforce.
"CMSMEs need to be given special attention for incentive packages because the sector has faced a very hard time during the Covid-19 pandemic. As the proper and quick disbursement of stimulus packages is a challenge, the government must take steps to reach the money timely to CMSMEs through banks and microfinance institutions," said economist and former governor of Bangladesh Bank Dr Atiur Rahman.
He said banks are not so competent, and they also have a lack of experience on disbursement and recovery of loans. “So, if cautionary measures are not taken, funds from incentive packages would not reach the actual enterprises hit hard by Covid-19.”
Mentioning the Bangladesh Bank's Tk 10,000 crore refinancing scheme for the CMSME sector, the former central bank boss said attention needs to be given to policy change for segregating cottage, micro and small enterprise from CMSME because the CME enterprises with small capital need more support from the refinancing scheme.
To ensure quick and proper disbursement of loans for CMSMEs, Dr Atiur Rahman said the government needs to use digital financial platforms to reach loans to CMSMEs, and in this regard, the government should not ask borrowers to submit much paper or documents for getting loans.
Talking to Bangladesh Post, chief spokesperson of Bangladesh Bank Sirajul Islam said as the regulatory authorities, the central bank is always conscious about quick and proper disbursement of funds from stimulus packages among the Covid-19 affected industrial units.
He said the central bank has kept banks and financial institutions under its close watch so that affected industries, especially the CMSMEs, can get proper support from the government's stimulus packages.
Dhaka Chamber of Commerce and Industry (DCCI) President Rizwan Rahman said the government has announced incentive packages for the CMSME sector, but banks are not properly cooperating with the sector on giving the loans.
Laying emphasis on easing loan distribution procedures, he said Bangladesh Bank will give loans to banks and other financial institutions and then they will distribute loans among CMSMEs. It is a complicated system and time consuming process, he said, adding that if microfinance institutions are involved in the process, CMSMEs will get loans timely.
Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) former President Abdul Matlub Ahmad said that cottage, micro and small enterprises are the worst affected sector and as these enterprises have small capital, they need support from the government to cope with the impact of the Covid-19 pandemic.
He said CMEs are still struggling to cope with the losses amid the prevailing pandemic. Along with the credit support, the government can consider giving them tax-duty concessions for a limited period so that they can run their businesses properly.
The government earlier announced Tk 200 billion for the CMSME sectors as collateral-free loan facilities as working capital under the credit guarantee scheme of the central bank.
The credit guarantee facility was open only to working capital in the CMS enterprise sector, it said, adding that Covid-19 has adversely affected the entire CMSME sector.