DCCI calls for emergency fund to help firms pay workers

The Dhaka Chamber of Commerce and Industry (DCCI) has requested the Bangladesh Bank to create an emergency fund to support the businesses that are struggling to pay the salaries of their workforce due to the Coronavirus outbreak.

The leading trade body wanted the fund to be formed using the foreign exchange reserve and the interest rate to be set at 1 per cent.

The chamber made the call along with some recommendations in terms of policy measures and reforms to help the economy to recover from the COVID-19 pandemic, which has already triggered the fear of global recession.

The chamber said the Asian Development Bank (ADB) predicted earlier that Bangladesh economy may contract by 1.1 per cent of its gross domestic product with 894,930 job loss.

Bangladesh has already experienced a disruption in the supply chain of garment, leather, pharmaceutical, tourism and aviation sectors, while the small and medium enterprises have been affected, too.

The geo-economic meltdown also affected the major export destinations of Bangladesh like EU, the US, UK and Canada.

To tackle the outbreak, many EU countries and other parts of the world have enforced lockdown, which resulted in shutdown of high street retail businesses and trade network to a large extent.

In the wake of this, Bangladesh's exports to the destinations have fallen. This downward trend of cross-border trade is set to undermine both the local and export-oriented industries, the chamber said.

The garment sector alone will lose work orders worth $2 billion, while pharmaceutical, leather and agro-processing and other sectors may incur substantial losses.

Amidst this looming situation, the private sector, the lifeline of the economy, needs to be supported for the economic interest of Bangladesh, it said.

The chamber suggested that the banking regulator can waive the bank interest of the export-oriented manufacturing sectors for the next one year.

Alongside, the other promising export sectors can be brought under the scope of Export Development Fund (EDF) scheme, the chamber said in a statement yesterday.

"Bangladesh Bank can also consider extension of repayment period for the worst-affected businesses."

For liquidity in the banking sector, the BB may relax the cash reserve ratio threshold for next one year, it said.

The chamber said the recent precautionary measures of the central bank, including credit repayment flexibility, time extension of EDF and back-to-back LC, are apparently private sector friendly.

For micro-, small- and medium-sized enterprises, the chamber recommended low-cost financing, which can be linked with the existing re-financing scheme of the central bank.

The across-the-board value-added tax (VAT) on commercial rent, electricity, gas and water bills and licence renewal fees can be withdrawn for the next one year to support the smooth operations of MSMEs.

DCCI also feels, as a fiscal burden reduction move of the private sector, the government may waive all forms of advance tax and VAT for both import and local stages, including food and essentials items, health, hygiene instruments, medical kits and export-oriented manufacturing industry, for the next one year.

The move will help businesses to some extent, according to the statement.

Alongside, the National Board of Revenue may consider individual and corporate tax concession to support the victims.

In a bid to protect the people and economy from the adverse impact of coronavirus, the DCCI urged the government to bring together its global allies and partnership in a coordinated endeavour.

The government may approach emergency financing facilities of the International Monetary Fund, ADB and the World Bank as an alternative financing stream against the low internal revenue trend.

Alongside, the government may negotiate with international development partners seeking interest waiver of the debt payment for the next one year.

For greater socioeconomic balance, the social safety net can be expanded to encompass all the vulnerable and marginalised people, especially daily labourers, job loss victims and informal micro and small businesses as this informal sector is the key actor of local SME industry supply chain process.

To help the safety net, the sales limit and strong market monitoring of daily essential commodities need to be strongly enforced to ensure fair price for mass people, the chamber said.

"DCCI hails all decisions of the government for the economy in the given time so far."

However, the trade body affirms and supports any future measure of the government to control the spread the ripple effect of coronavirus on the economy.

"We also feel consideration of these opportune recommendations will enable private and public sector to underpin our local economic growth and overcome the global crisis," the chamber added.