'Businesses must be kept open'

The government is imposing a fresh lockdown to contain the spread of Covid-19. Business communities are worried. What should the government provide – stimulus or the scope to do business?

All kind of businesses are still open in Dubai. Big businessmen of Bangladesh are going to Dubai on vacation. But you cannot walk even 10 steps there without a mask. The law enforcement personnel will fine you heavily.

It might not sound good, given the prevailing circumstances, but the reality is that we must keep businesses open in Bangladesh. People will take to streets if a strict lockdown forces them to stay home. After all, most of the micro, small and medium businesses are on the verge of bankruptcy due to the pandemic. The government should keep businesses open and deploy law enforcement agencies to strictly implement the health guidelines. Offenders must be punished. If needed, an example could be made my fining an important personality for violating the guidelines.

In case the government has no alternative but to shut down business activities, the affected business people should get proper stimulus packages.

During the first wave of coronavirus pandemic, the stimulus declared by the government did not reach to most of the micro, small and medium businesses. Can you tell us about this?

The government had announced stimulus package worth Tk 1,230 billion to support different business communities during the first wave of coronavirus, Although a big chunk of the stimulus fund was utilised, micro, small and medium businesses were deprived. A recent study by DCCI found that only 34 per cent of the small and medium entrepreneurs had applied for loans from the fund. Of them, 45.7 per cent did not get the loan. Only 23.9 per cent received the loan and applications of 30.3 per cent are still pending. The DCCI study only reveals the situation of Dhaka-based business communities. So it is easy to assess the plight of business communities in the district towns and villages.

Why were the small businesses deprived of the stimulus declared by the government?

Stimulus in the first wave was mostly focused on the export sector. But now the small and medium businesses require stimulus because they create the highest volume of employment. According to World Bank, small and medium entrepreneurs contribute to the employment of seven out of 10 people in Bangladesh. So far, 62 per cent of the stimulus packages meant for the small and medium entrepreneurs has been implemented. The remaining 38 per cent has yet to be utilised in this one year because banks are not eager to facilitate small businesses with loan. The regional managers of each bank are given a loan disbursement target. To meet the target in a short time, the bank managers always prioritise disbursement of big loans. Bangladesh Bank should have bound the commercial banks to facilitate the small businesses too. But this was not done.

Also, we have still not reached that position where we have the luxury of giving loans from the deposits. It hasn't even been possible to bring most of the businessmen into banking channel. Unless security money is waived for the small entrepreneurs to avail loans, the stimulus meant for them will remain unspent.

Big entrepreneurs have been facilitated with maximum support in this one year of the pandemic. Despite displaying its willingness, the government had failed to support the small businesses. How can this situation be improved?

This is not an exceptional case. Big powers rule in nature too. Big entrepreneurs can grab most of the opportunities because of their capabilities and skilled management power. On the other hand, small businesses lag behind in competition due to weak management and financial constraints. If we want to support the small ones, we need to change our mindset. Stimulus facilities must be distributed according to the contributions by the target communities. I think, the small and medium entrepreneurs should get 80 per cent of the stimulus. Because, their contribution is 82 per cent of our national economy. If they get support accordingly, no one will question the stimulus.

The coronavirus pandemic has resulted in drastic changes in the global economy Investors have shifted their focus from one destination to another which prove more conducive. What were the main problems Bangladesh faced in attracting foreign investment?

This has not happened only because of the pandemic. Single destination-centric investment is not sustainable in globalisation. Only the investment-friendly hosts can attract more investments. During the first wave of coronavirus, Japan provided incentives to many of its enterprises to relocate from China. Bangladesh is lagging behind in the Ease of Doing Business Index. The country imposes highest corporate tax compared to the other SAARC countries. In India, a new venture has to pay 15 per cent corporate tax while an old one pays 20 per cent corporate tax. So why, for what reason, will foreign investment come to Bangladesh? Another fact is that, foreign investors always scrutinise the condition of local businesses before investing money in that country. Hence, gearing up the local businesses is a prerequisite to attract foreign investment.

Despite facilitating some initiatives, Bangladesh still lags behind in Ease of Doing Business Index. What are the existing barriers?

Bangladesh has progressed 8 notches in the index since Salman F Rahman took charge as the private sector industry and investment adviser to the prime minister. The World Bank refrained from ranking due to the ongoing pandemic. Still, I would say that we are doing better than many other countries. For a quick improvement, the government needs to empower the Bangladesh Investment Development Authority to facilitate coordination among the related ministries. Moreover, some laws need amendment. It takes 8-10 years to settle a corporate case. Recently, the Companies Act 1994 got an amendment to allow one-person companies. However, the provision for the paid-up capital has to be reduced from Tk 25 lakh (2.5 million).