The cottage, micro, small and medium enterprises (CMSMEs) of the country had suffered the most during the Covid-19 pandemic as most of them shut down and millions of employees lost their jobs.
The industry was on the way to recovery riding on the Tk 20,000 crore stimulus package announced by the government but only 50 per cent of it has been disbursed and the implementation has been unsatisfactory due to a lack of coordination.
On the other hand, the Russia-Ukraine war has become another big challenge for this industry as production costs are increasing significantly and export earning is on the downturn.
The sector people were optimistic about getting another stimulus injection that would make the industry’s recovery sustainable and boost production and exports across the country.
But they have become pessimistic after Finance Minister AHM Mustafa Kamal placed the proposed Tk 6,78,064 crore budget for 2022-23 fiscal year in parliament on Thursday.
The budget only proposed to continue the existing facilities and did not introduce any major new amenities apart from a uniformed 12 per cent tax rate for all general industries exporting goods and services.
Talking to The Business Post, Mirza Nurul Ghani Shovon, president of National Association of Small and Cottage Industries of Bangladesh (NASCIB), said, “The overall budget is good. The rate of tax at source on supply of raw materials to manufacturers has been cut from 7 per cent to 4 per cent to reduce the production cost but the areas they will apply to have not been addressed properly.”
“To ensure sustainable recovery for CMSMEs, we needed the government to offer a fresh stimulus package for the industry. At least Tk 2,000 crore should have been allocated for SMEs and BSCIC,” he added.
Golam Ahsan, former president of Bangladesh Handicrafts Manufacturers and Exporters Association, said they are exporting $35 million worth of goods annually and generating employment for millions of people.
“We currently get 10 per cent incentive for exporting handicrafts. Three years ago, it was 20 per cent. The government gives 20 per cent incentive for exporting jute products. But when we export jute products, we don’t get the same rate. That is contradictory.
“The handicrafts industry should be given 20 per cent incentive rate for all products to boost the export,” he added.
Transportation cost has increased threefold, the prices of raw materials are up and the labour cost is also high. Under these circumstances, handicraft exports are also down now and no major steps have been taken to address this, he lamented.
However, Dhaka Chamber of Commerce and Industry President Rizwan Rahman said the budget has tried to address the recovery of CMSMEs.
“Bangladesh Bank recently reported that 50 per cent of the stimulus package has been disbursed in the second phase but the challenge still lies in smooth and hassle-free disbursement of the other 50 per cent for both formal and informal sectors and the budget has no directives regarding that.
“The 7.5% GDP growth target may remain unrealized if the major financing challenge of CMSMEs remains unaddressed,” he said.
He said increasing the net balance of CMSME loans by at least 1 per cent per annum to a minimum of 25 per cent may help but the major challenge of micro and small businesses is weaker access to finance than medium businesses.
“Customs duty hike and tax exemption on some products may also help but these need to be given to the common and core SME industries,” Rizwan added.
