SMEs Facing Serious Fallout
Industry leaders seek quick bailout for the ailing sector
Published : Thursday, 2 April, 2020 at 12:00 AM Count : 161
Small and medium enterprise (SMEs) sector is facing huge financial losses from the impact of coronavirus (COVID-19) and field information suggest many entrepreneurs are going to close their business while others are slashing workers.
Every day, the situation is getting worse across the country aggravated by disruption in export and imports and shutdown of trading.
Business leaders say COVID-19 is not only a major threat to human life, but more so to the economy and trade. It will be the biggest destabilizing factor to undermine the country's small and medium business sectors. Small investors will be worst affected.
Kazi Sazedur Rahman, proprietor of the KPC Industry and recipient of SME national award-2016 told The Daily Observer on Tuesday that the small businesses have been completely shut in the last two weeks. Sales and distribution chain remain totally stalled.
He said entrepreneur will not be able to pay salary to employees, office rent and other expenses to other stakeholders. Beside this, interest on bank loans will be spilling up daily. Sazedur said, "We have not got raw material supply in last one month. Production lines are sitting idle."
After three to four months the situation may return normal, but many entrepreneurs will not be able to sustain the losses at this time. He called for immediate bailout benefit to the industry poised to be hard hit from COVID-19 impact.
SMEs now occupy an important position in the national economy. There are about 60 lakh SME entrepreneurs across the country while majority of them are women as per figure released by Bangladesh Bank.
They account for about 45 percent of manufacturing value addition, about 80 percent of industrial employment, about 90 percent of total industrial units while they employ about 25 percent of the labor force.
Their total contribution to export earnings varies from 75 percent to 80 percent. The industrial sector makes up 25 percent of the country's gross domestic product (GDP), most of which is coming from SMEs.
According to a survey by Bangladesh Statistics Bureau (BBS), there are 50 lakh industrial units in the country. About 95 percent of the total industry is SMEs.
Fazle Fahim, President of the Federation of Chamber of Commerce and Industry (FBCC) said, "Big businessmen will be able to manage everything. But the problem is that small and medium-sized traders are doing their most to make them less vulnerable." He said they would need government help to overcome the setback.
Osama Taseer, President of the Dhaka Chamber of Commerce and Industry (DCCI) has also emphasized the need for greater socioeconomic balance and wider outreach of social safety net to protect small and medium businesses and their workers. If production and supply chain suffers major disruption its impact may be far reaching.