Micro, cottage and small enterprises need to be reached out through alternative banking channels to counteract the Covid-19 fallout, economists and business people have said.
At a discussion on Sunday they also advocated for a development bank for women entrepreneurs.
They have emphasised formulating a separate policy framework for micro, cottage and small enterprises that belong to the small venture bracket – excluding medium businesses.
Most of the medium enterprises secured government stimulus to turn around, offsetting virus fallout while small ventures failed to do so, they told the discussion titled "Constraints and prospects of industrial policy" hosted by the Dhaka Chamber of Commerce and Industry (DCCI).
DCCI President Shams Mahmud demanded a stimulus package for the second time, tax benefits for innovation and technological development, and separate plots for small ventures in special economic zones.
In the keynote paper, Dr M Abu Eusuf, executive director of research organisation Research and Policy Integration for Development, said there has not been much improvement in investment and employment despite the economic growth achieved in the last one decade.
"Employment in the industrial sector has not been in line with the expectations due to a slowdown in private investment, the rise of the capital-intensive sector and adoption of advanced technologies," he noted.
He advocated for separate policies and platforms for small and micro entrepreneurs, increasing foreign investment, disbursement of 15% loan for women entrepreneurs, analysing industrial policy every year, changing SME definition, accelerating credit wholesale programme, and increasing production and quality.
Dr Eusuf also recommended formulating a target policy for foreign direct investment.
Industries Minister Nurul Majid Mahmud Humayun said, "Cottage, micro, medium and small enterprises play a crucial role in employment generation. But the government-announced Tk20,000 crore virus stimulus for this sector has not been distributed yet. The definition of small and medium industries needs to be changed."
He said the forthcoming industrial policy will highlight the SMEs as a backward linkage of large industries and support employment growth. "It will reduce urban-rural inequality."
In addition, the minister said there will be policy support for priority sectors, the fourth industrialisation mastering technology and skills development, and Covid-19 and disaster management in the next national industrial policy.
Emphasising harmonising skills with the industry, Qazi Kholiquzzaman Ahmad, chairman of Palli Karma Sahayak Foundation (PKSF), said education needs to be coordinated with the industry. "We need to determine first the kind of skills needed for industries."
Putting emphasis on region-based stimulus, increasing productivity and technology integration, he said small entrepreneurs have not yet received incentives. "But they have to be provided with cash aid through alternative channels to banking."
Former governor of the Bangladesh Bank Atiur Rahman also stressed reaching out to the SMEs with aid through alternative channels to banking. He advocated for more stimulus packages, converting part of the already announced stimulus into term loan, and raising the repayment deadline.
Abul Kasem Khan, chairperson of Bangladesh Initiative Leading Development (BUILD) and former president of DCCI, said the forthcoming industrial policy should specify the sources of loan for the SMEs after assessing the existing one closely.
Meanwhile, Professor Md Masudur Rahman, chairman of the SME Foundation, said SMEs will be a big source of employment in the fourth industrial revolution. "And to build the capacity of entrepreneurs in this sector, alternative financial channels need to be developed now."
Husne Ara Shikha, general manager of SME and Special Programmes Department of the central bank, suggested that the Bangladesh Bank create a crisis meet-up fund to deal with any financial issue like the pandemic-led crisis.
She said around 45% of loans have been approved and nearly 40-41% of loans have been disbursed since the stimulus package announcement. "The initial disappointing picture over bank loans has improved a lot."
Md Mostaaq Hasan, chairman of the Bangladesh Small and Cottage Industries Corporation (BSCIC), said, "More than 8.5 lakh jobs have been created in BSCIC's 76 industrial estates. Targeting 2041, we have planned to establish 100 such estates across the country."