Former president of Dhaka Chamber of Commerce and Industry (DCCI) Shams Mahmud said even he had faced difficulties in getting loans in spite of his reputation as a businessman, so it is no wonder small and medium entrepreneurs did not get any loan from the government's stimulus package during the pandemic.
"My business turnover is $100 million. I received the prime minister's export trophy four times. I also got a gold trophy. When I went to the bank, they said I was not an exporter," said Mahmud in a virtual dialogue on Thursday to illustrate the small entrepreneurs' sufferings.
"I told the bank that my factory is in the export processing zone. We produce 100% export oriented products. I had to face many questions. Only then the bank helped me," he said in the dialogue titled "Social Protection and Employment in Budget FY2021-22: Was the focus adequate?"
"Now think that if I have to face such a situation, what the small entrepreneurs who do not have that much relationship with the banks faced," said Shams Mahmud.
At the programme, he demanded connecting the corporate tax exemption with employment.
He said, "The government has cut corporate tax by 2.5% in the upcoming budget. It should have been linked to job creation. If the government thinks of giving any stimulus this year, it should be associated with job retention and job creation.
"For example, if I can create new jobs or show that I did not lay off anyone from my workforce last year, then the government should give me 2.5% tax exemption. If I increase my workforce by 10%, the government should give me 5% tax exemption, because I create employment."
Mahmud said, "The growth rate of the private sector has been low in the last four-five years. Earlier we said that the investment is low because the interest rate of the bank is high. That interest rate has been reduced, money is cheaper now but investment is not increasing. There are limitations in the budget policy and the government's investment policy."
Shams Mahmud, who is also the managing director of Shasha Denims Limited, demanded the formulation of SME linkage policy.
He said, "The budget has given tax holidays to the light engineering and automobile sectors, which is very good. The government is also planning to increase investment in economic zones. However, we do not see any SME linkage policy here. "
"We have to buy spare parts with VAT from firms outside the economic zone, but we can get them duty-free if we import them from China. The SME linkage policy is very important to bring balance here," he said.
"They said FDI (foreign direct investment) is not coming. Many companies are moving from abroad but they will not come here easily. In fact, bringing in FDI will not come as easily as it is said. The government should pay more attention to this," said Mahmud.
"The government is paying capacity charges even if electricity is not used, but in the next budget, the government could have given this subsidy to the entrepreneurs if it wanted. All entrepreneurs, big and small, are suffering from a working capital crisis. " He added.
The dialogue was arranged by the Centre for Policy Dialogue, in partnership with Oxfam in Bangladesh and in association with Citizen's Platform for SDGs, Bangladesh.