Small firms suffer most in pandemic
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FRIDAY, MAY 27, 2022
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Small firms suffer most in pandemic

Economy

Abbas Uddin Noyon
07 March, 2021, 10:35 pm
Last modified: 10 March, 2021, 10:33 am

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Small firms suffer most in pandemic

Big companies have done better during the pandemic period, taking advantage of their: big capital, brand value, strong marketing network, and incentives packages

Abbas Uddin Noyon
07 March, 2021, 10:35 pm
Last modified: 10 March, 2021, 10:33 am

Neither a pandemic nor an epidemic differentiates between big and small. Everyone is equally in danger of being affected in a situation like the Covid-19 pandemic.

However, victory or defeat in such a devastating situation depends on the strength and tactical efficiency along with new enthusiasm in the fight for survival. Some lose the battle even even after trying heart and soul, while some win it with the blessings of nature.

The Covid-19 pandemic, which hit the world in early 2020, reflects such an inescapable reality in the country's business and trade and personal incomes. Many have won the battle with innovation and strategy to face the situation while many lost their businesses.

According to economic analysts, the biggest winner in Bangladesh amid the pandemic has been the banking sector. Banks received more than Tk2 lakh crore in liquidity due to incentives packages and foreign remittances. With the increase in digital transactions and loan provisioning opportunities, the profits of the banking sector have increased due to various concessions given by the central bank.

Although the operating profit of some banks – including Islami Bank, Dutch Bangla Bank and IFIC Bank – has decreased, it has increased for most banks.

Ahsan H Mansur, executive director of the Policy Research Institute (PRI) and chairman of Brac Bank, said loan disbursement has increased due to the Covid-19 incentives packages. Export-import activities have also improved.

Although there was no new loan classification, the banks have added interest income due to the concessions provided by the central bank. The operating profit has also increased due to the cost reduction of banks.

A blessing for the housing sector

Many sectors collapsed during the Covid-19 pandemic. However, the real estate sector of the country has seen a good time. Many people have bought flats to take advantage of the opportunity, given by the government, to whiten black money, to make the economy dynamic. As a result, the housing sector has returned to a growth amid the pandemic after a few years of recession.

Concord Ltd, one of the country's top real estate companies, had more than 10% growth last year. All of their flats have been sold.

Tareq Alam, managing director of Concord Real Estate Limited, told The Business Standard, "Apart from the three months from March to May, our business was fairly normal throughout the year. In the last two months we have had better business than average. We have several new projects coming up this year. Hopefully, our business will be better this year."

Big pharmaceuticals see profits grow

Demand for different medicines has grown significantly due to the Covid-19 pandemic. In the seven months after the 66-day lockdown ended, sales of medicines in the country have risen by more than 10%. However, this growth was limited to the top 10-15 companies. Last year, the top 10 companies of the country sold 70% of the total drugs. However, there are currently 174 companies producing drugs in the country.

A review of data from pharmaceutical companies listed on the stock exchange reveals that Square Pharma Limited has achieved the highest growth in drug sales amid the pandemic. In July-December, it achieved 31% profit growth in drug sales. The profit growth of Beximco Pharma was 29%, ACI 11% and Renata 15%. Incepta Pharma has also seen double-digit growth. In normal times, the profit growth rate in drug sales in the country is slightly less than 10%.

However, smaller pharmaceuticals companies are in crisis as opposed to the growth of top companies. One such company is Hudson Pharmaceuticals. The company's drug sales have decreased at least 10% from the previous year.

Hudson Pharmaceutical's Managing Director and Secretary of the Pharmaceutical Industry Owners Association Md Shafiuzzaman said, "Small and new companies were not able to hold on to the market as doctors remained absent from their chambers for a long time. The sales representatives were also unable to move during that time. As a result, people came to the shops and bought medicine from well-known companies."

Big expand, small contract

Big companies did better during the pandemic period taking advantage of their: big capital, brand value, strong marketing network, and incentives packages.

By the end of 2020, all sectors – including consumer goods, home appliances, electric, rod-cement, housing, and clothing – had returned to business. Some also made new investments.

However, most small enterprise entrepreneurs in different sectors have reduced their businesses due to a lack of capital and weak marketing activity amid the limited movement of people because of the pandemic. Many have also closed their businesses.

Beauty Plastic, a company which started producing plastic products more than two decades ago, shut down its business due to a capital shortage and marketing problems amid the pandemic. On the other hand, RFL's market has grown as it has continued to sell products through its show-rooms and dealers. It has also kept up production at its large factories maintaining health safety rules.

R N Paul, managing director of RFL, told The Business Standard that they have seen 20% growth in product sales in 2020.

"This growth has been made possible by product diversification and continuing the production of essential goods," he said.

Rise in safety equipment production

Safety equipment has become an essential daily necessity during the Covid-19 pandemic. A big market for: shoe covers, face masks, face shields, surgical masks, mop caps, medical aprons, medical hand gloves, goggles, personal protective clothes, ear plugs, medical aprons, handwash, hand rub, and hand sanitiser has grown in the country.

Analysts say that the Tk5,000 crore market of hygienic products, including detergent powders, could exceed Tk10,000 crore amid the pandemic. The market of Tk500 crore life-saving products has already crossed Tk5,000 crore. The market for masks and PPE has also crossed Tk5,000 crore. All the major conglomerates of the country – including ACI, Pran-RFL, Beximco, Walton, and Square – have invested in this sector.

Mohammad Saeed, head of operations at ACI Toiletries, said that the demand for hand wash has increased four to five times and the demand for other disinfectants has increased several times amid the pandemic.

Demand for products such as hand rub, disinfectant liquid antiseptics, baby wipes, and sanitary napkins has also increased significantly.

Garments industry big loser

The garments sector, one of the largest sectors in the country, has been affected badly due to the Covid-19 pandemic. Exports have decreased by about 4% in the last eight months of 2020 compared to the previous year. About 3.5 lakh workers have lost their jobs in this sector.

According to EPB sources, in the first six months (July-December) of the current fiscal year, garment exports amounted to $1,554 crore which is 2.99% less than the same period of the last financial year and 4.12% less than the target. The target for garment exports in the first half of this year was $1,621 billion.

People concerned said they are not expecting the situation to improve soon due to the rise in raw material prices.

Mohammad Qutub Uddin, chairman of Envoy Group, one of the country's leading ready-made garment exporters, recently told The Business Standard, "We are counting a loss of Tk2 crore per day. We have continued production hoping for a normal future."

Hotel-restaurant and transportation sectors damaged

The country's hotel-restaurant and transport sectors were shut down due to Covid-19 in March 2020. After being closed for about four months, these services were reopened in a limited range from June. However, the business of these sectors has not yet returned to normal.

Khandaker Ruhul Amin, president of the Bangladesh Restaurant Owners Association, said, "Hundreds of thousands of hotel workers across the country have gone through very tough times due to the pandemic. Their lives have not returned to normal yet."

The transport sector came to a standstill on 25 March, 2020 after the nationwide shutdown was declared by the government to contain the pandemic. As a result, the lives of more than 70 lakh people involved in this sector fell into misery. Their lives have not normalised after the vehicles started running from July 2020.

Osman Ali, general secretary of the Bangladesh Road Transport Workers Federation, said 70 lakh transport workers suffered during the pandemic period. Although most of the transport workers have joined work now, their economic condition is yet to be stable.

Income decreased for 70% of rural people

The income of around 70% of people at the district level has decreased due to Covid-19. Some 39.5% of the households had to run their families by borrowing money from different sources, according to South Asian Network on Economic Modeling (Sanem) and ActionAid Bangladesh.

The profit of self-employed people also decreased along with the income of job holders. The profit of around 82% of self-employed people decreased during the pandemic. Only 3% saw a rise in income. Around 31% of the district level companies were shut down permanently.

Meanwhile, 4.52% people changed their jobs due to low pay, salary cuts and job termination.

A part of these people whose income and profits have decreased have fallen into poverty, said Professor Dr Selim Raihan, executive director of Sanem.

Infograph / Top News

Small Companies / pandemic / Economic Damage due to Pandemic / Pandemic Losses / Companies

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