Allocate special fund for small enterprises: experts

Special allocation is needed for the cottage, micro, small, and medium enterprises (CMSMEs) in the upcoming budget to recover the losses induced by the Covid-19 pandemic, speakers said at a webinar.

"The women entrepreneurs related with fashion house faced severe losses during Eid and Pahela Baishakh in 2020 and 2021. So, they need special allocation to recover the losses," said Mantasha Ahmed, founder president of the Association of Fashion Designers of Bangladesh (AFDB).

She spoke at a pre-budget discussion on "Addressing the challenges of CMSMEs in the informal sector-creating opportunities through digital transformation" jointly organised by the SME Foundation and the AFDB today.

She also demanded exemption of 5 per cent value-added tax for online business for expansion of the business as well as one year of free access to the internet for CMSMEs.

At the programme, Planning Minister MA Mannan said debt flow for CMSMEs and skills development in the SME sector needs to increase along with the financial capacity of the SME Foundation to provide opportunities for entrepreneurs.

Mannan said it is needed to take initiative to increase the skills of entrepreneurs at the upazila level for the development of small and medium enterprises.

"It is necessary to arrange loans and grants for them under the supervision of SME Foundation and other government agencies," he noted.

He also called on the SME Foundation to provide more financial assistance and opportunities for project implementation in terms of credit flow and skills development for small entrepreneurs.

AMA Muhith, former finance minister, said the informal sector of Bangladesh is very wide and this sector contributes to economic growth.

He also said the experiment is going on to find out the effective ways to support the sector and it is justified until an effective solution is found.

Muhith also opined to continue the support in different forms to keep them alive.

In the keynote presentation, Fahmida Khatun, executive director of the CPD, said in order to recover from the losses caused by the coronavirus, small and medium entrepreneurs and women entrepreneurs need to be provided with incentives in the coming budget.

Referring to a study of CPD on CMSME, she said most of the SMEs did not get benefit under stimulus packages announced by the government to recover the Covid-19 losses.

Therefore, steps need to be taken to expedite the disbursement of loans in the incentive package, she said.

Fahmida also suggested distributing loans through the SME Foundation, PKSF and other state-run microfinance institutions.

Kamal Ahmed Majumder, state minister for industries, said the government is continuing to help the small and medium enterprises during the pandemic to reduce the damage caused to the informal sector.

The government is launching a credit guarantee scheme so that small and medium entrepreneurs do not face any problem in getting loans due to a lack of collateral, he said.

He also said the National Skills Development Authority is working under the Prime Minister's Office to enhance skills in the informal sector.

Majumder said small entrepreneurs have to suffer a lot from getting loans from banks and financial institutions as they do not have a trade licence.

He, however, said big businesses get loans easily but they do not make repayments properly.

He also demanded that in the forthcoming budget, special allocation should be made for the small enterprises.

Sonia Bashir Kabir, founder and chairman of SBK Tech Ventures and SBK Foundation, said the access to finance is very important for the SMEs to reduce the credit gap.

"The commercial banks cannot provide them with loans as they do not have lending history on what basis loan can be provided," she said.

Kabir also said an increased number of women entrepreneurs are gradually starting to use digital platform.

She said technological help is needed to move the SMEs to a level and their skills also need to be developed.

Md Mofizur Rahman, managing director of SME Foundation, said SME entrepreneurs need policy support and budget allocation for their sustainable development.

He demanded incentive and support for SMEs to recover the losses caused by the pandemic.

Bibi Russell, noted fashion designer, demanded allocation for research for the development of small entrepreneurs.

Farzana Khan, general manager of the SME Foundation, conducted the discussion.