The Covid-19 pandemic had a considerable adverse impact on the global, regional and national economy. For the first time in several decades, Bangladesh's economy grew by less than 7.5 percent (e.g., 5.2 percent) in terms of GDP during FY 2019-20.
Under such dire circumstances, the Government of Bangladesh came up with a "Trillion Taka Package" to keep the economy stable and to compensate for the losses faced by the private sector. The stimulus package would supposedly keep the entrepreneurs competitive in the local and international markets as well.
To be specific, low-cost credit facilities were offered to export-oriented garments. Other recipients of the stimulus package included the agricultural sector, cottage, micro, small and medium enterprise (CMSME), low-income groups as well as vulnerable professionals within the limited income group.
The first round of the stimulus packages was focused on supplying low-cost credit facilities to make up for the deficit of working capital.
However, most health experts are warning about a potential second wave of the pandemic with no mass-produced vaccine in sight for at least the next few months. Given that, the government may have to think of offering a second round of stimulus packages.
The second round of stimulus packages should focus on working capital as well as on offering credit for young entrepreneurs, jobless youths, and professionals who had been laid off during the pandemic.
The current National Industrial Policy of Bangladesh was enacted in 2016. Hopefully, the next version of the policy will be introduced in 2021.
The nation experienced few limitations of the National Industrial Policy 2016 including definitional, classification wise as well as focus relevant shortfalls. Then the Covid -19 crisis gave rise to some new issues and made some aspects of the policy obsolete. Therefore, the next industrial policy should come up with some new dimensions.
For example, many countries globally classify enterprises as micro, small, and medium enterprises (MSME) where Bangladesh defined enterprises as CMSME by adding cottage industry into it. This limits the international community's understanding of the industrial segments in Bangladesh.
Secondly, the National Industrial Policy 2010 defined SMEs with a homogeneous interval. But Industrial Policy 2016 defined CMSMEs from a heterogeneous interval. For example, Medium enterprises had a considerably bigger threshold ranging from 121 workers up to 1000.
Such anomalous policy allowed most of the garment factories and other bigger players to avail especially designed SME loans from the commercial banks. As a result, original SMEs faced a tremendous crisis to acquire SME loans throughout the country.
At the same time, these big players became defaulters resulting in a higher rate of non-performing SME loans.
Apart from the aforementioned irregularities, the National Industrial Policy 2016 also failed to address the actual condition of maximum enterprises. These enterprises mostly fall under the Cottage & Micro (above 95 percent of enterprises of the country) categories.
No commercial banks offer a single loan package that focuses on the limited capacity of these enterprises. As a result, they were bound to avail loans from informal or non-banking sectors and pay a higher rate of interest than any other segment of the industries. What is a policy regime where the smaller have to pay the highest rate?
On top of that, a larger chunk of the enterprises is excluded from other government support measures. For example, They do not receive plots in the BSCIC industrial estates, training facilities from SCITI or SME Foundation and Market Linkage Supports from other development projects implemented by different organs of the government, donors, and private organisations.
Therefore, the classification and definition of the enterprises in the new industrial policy should address this sort of limitations carefully. For example, the Micro and Cottage segment could be merged as "Starters" with special treatments like tax-freedom, lower electricity tariff, 25 percent quota in every industrial estate, and an economic zone for the starters.
The threshold of the small and medium enterprises should be containing the same socioeconomic features and nearby reach to access to finance, access to technology, access to policymakers, etc. The upper segment of current medium enterprises should be tied up with large industries.
Upcoming National Industrial Policy should also facilitate Bangladeshi youth participation on global e-commerce platforms like Amazon, Alibaba, etc. A digital entrepreneur having a digital store on Amazon or Alibaba should have shipment facilities of his product to reach Amazon or Alibaba warehouses in different locations of the globe without LC and other export documents.
The foreign currency receipt system has to be eased up for the digital entrepreneurs as well as freelancers through this industrial policy. Participation of Bangladeshi entrepreneurs in the international market with respective brands has to be alleviated as well. Otherwise, it is highly unlikely that a Bangladeshi-owned international brand will emerge in near future.
A comprehensive industrial policy could be drafted but it may fail again in the absence of a coordinated implementation strategy and built-in monitoring and evaluation mechanism. Therefore, the upcoming industrial policy should have a built-in, identified network of implementers with a common monitoring and evaluation mechanism.
Without public-private partnership in implementing the national industrial policy, achieving our development goals in a post-COVID Bangladesh may end up taking more time than projected. Therefore, organisations like FBCCI, DCCI, and MCCI should be incorporated as active partners in implementing national industrial policy.
Md Joynal Abdin, secretary, Dhaka Chamber of Commerce & Industry (DCCI)
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.