Though large businesses could avail the stimulus packages to offset the pandemic fallout, the low-cost loans did not reach small and medium-sized enterprises (SMEs) due to the lack of an exact SME list and complex loan disbursement process, said business leaders.
The complications over defining small ventures deterred stimulus implementation, they said at a roundtable discussion on private investment in the midst of the pandemic. The roundtable was hosted by Dhaka Reporters' Unity (DRU) in Dhaka on Monday.
The programme also shed light on private investment portfolio, stimulus package implementation, gross domestic product (GDP) growth, Ease of Doing Business Index and potential Covid-19 vaccines.
Speakers said the government has been able to counteract the first wave of the virus, though businesses had been dealt a blow by the pandemic. They expressed optimism about reviving the economy and investment as fears of a second wave loom large.
Speaking as the special guest, business leader Abdul Awal Mintoo disagreed with the country's GDP growth, saying, "Those who believe in these figures, I would say, do not understand them. The World Bank says Bangladesh's GDP growth will be 1.6%, but the government forecast it in the budget speech to be 5.2%."
Claiming the figures are hampering investments, he demanded that the government make the Bangladesh Bureau of Statistics (BBS) autonomous.
Mintoo said, "If economic growth reaches 5-6%, the country needs at least 40% of investment of the GDP. Investment was once 31% of GDP, but now it is below 29%. Although investment in the private sector is declining, it is increasing in the public sector, which is not creating new jobs."
He lambasted what he called a "bank loan-dependent government", and said,"Burgeoning foreign reserves do not fall in any economic indicator."
Though he praised the implementation of the 9% interest rate since last April, the business leader questioned how reasonable it was in a free market economy. He, however, appreciated the government for measures to increase agri-production.
Referring to politics as a big business in the country now, he said, "If you can become a member of parliament for five years with or without being voted to it, then you will not require a business anymore. You have actually gone somewhere to earn as much money as to support your next three generations: and we are witnessing it now."
In response, the prime minister's adviser for private industry and investment, Salman F Rahman, said that there was no way to disagree on the massive developments which have taken place since 2009 and till the pre-Covid period. That was unprecedented.
"The country's outlook will change beyond imagination in the next ten years," he commented, welcoming "constructive criticism".
Small ventures in trouble due to SME definition
At the discussion, Salman F Rahman agreed that small ventures were facing trouble in availing low-cost loans. He said the government is looking into the matter in order to come up with a solution.
"Many small ventures remain out of the radar as well as detection. How can they be identified? The government has the list of those who work on micro-credit, but does not have the details of the borrowers," noted Salman F Rahman.
Dhaka Chamber of Commerce & Industry (DCCI) President Shams Mahmud said the pandemic-led situation was new for all, but the government had responded quickly.
"Despite the government's efforts, the stimulus did not reach many SMEs due to the entrepreneurs, while big businesses easily availed the facility."
"The government's policy is very investor friendly," he said, noting that the government is sincere about industrialists and businessmen.
Agreeing with Shams Mahmud, Abdul Awal Mintoo said small ventures are not getting loans due to the definition of SMEs.
He said, "Even though small entrepreneurs account for 80% of structural production, stimulus packages elude most of them. I do not understand how the country's economy will be set on a strong foundation as 20% of big businessmen alone availed the stimulus loans."
Noting that the government has announced the stimulus in time to avoid the virus assault on employment, former Federation of Bangladesh Chambers of Commerce & Industry (FBCCI) President Mir Nasir said, "It helped the private sector move forward. Marginalised people are still in crisis. But the stimulus package announced for SMEs has not been implemented. It needs to be emphasised."
The Financial Express Joint Editor Shamsul Huq Zahid said, "Many pragmatic policies are undertaken, but these get politicised in implementation. The minnows are not getting the stimulus, but the loans reach out to the biggies. Public investment is rising while private investment still struggles, which leads to a hit on employment generation."
Ease of Doing Business Index
DCCI President Shams Mahmud said, "If the growth rate of the country has been so bad for the last ten years, there would not have been so much investment. Yes, we have some issues. A business has to take several permissions. But it is getting much easier."
Terming the Ease of Doing Business Index a political tool, Abdul Awal Mintoo said, "I had an issue over a contract which was a fundamental topic of the index and went to court in 2008. But the final verdict did not come out even in 2020."
He said investment in the country will increase if investors are offered more protective schemes, their tax issues are settled and border-related topics are resolved promptly.
Salman F Rahman said that though the publication of ranking has remained suspended for the last couple of years, it is assumed that the country needs to improve in it.
"And I am doing everything I can to make it happen. If the new ranking is published, Bangladesh will score a double digit position," he concluded.