In face of the adverse impact of countrywide locked down due to coronavirus pandemic, to save the low-earned people, the government should safeguard employment and ensure that businesses do not cut jobs for the economic down turn.
Besides, the authority should develop some mechanisms to keep jobs of the hard-earned people and announce a new fund package at 2 percent interest rate for this purpose with flexible repayment period.
For creation of new jobs, it can offer incentives for employers through tax benefits and announcing additional 2 percent tax relief to firms where there is no job cut for the next one year. Besides, Taka 5000 crore can be announced for local industries.
Business Initiative Leading Development (BUILD), a think-tank of the country’s leading business chambers made the recommendations.
In a statement issued Saturday, BUILD mentioned that the government has announced a number of stimulus packages to support industries, financial and farm sectors, and vulnerable groups and thus help the economy rebound during this period.
Prime Minister Sheikh Hasina has announced a stimulus package of about taka one trillion to support private sector so that they can sustain their business and investment to combat the impact of COVID-19.
Of the total fund, about 23 percent is government incentives, while the stimulus are in the form of loans, incentives, and subsidies mostly to be provided by the banks, BUILD mentioned.
Of the package, Tk 30,000 crore earmarked for affected large industries and services for working capital on the basis of banker-client relationship may not be enough, as banks can consider a demand-based formula to provide loans to the enterprises, BUILD said expressing its concern.
Banks must confirm that willful defaulters and those enjoying rescheduling facilities do not get funds. Besides, sector prioritization for sustaining the highly affected industries, adequate liquidity support should be given by the central bank to conventional banks, it suggested.
Loan size should be adequate to keep the borrowing companies afloat during the crisis. Duration of subsidy on interest should not be limited to 1 year, rather, if the crisis prolongs, duration of subsidy on interest rate should be increased accordingly, BUILD further recommended.
Government has announced packages of Tk 20,000 crore for CMSMEs for working capital. Banks would like to see their guarantee of funding. In that case, a Credit Guarantee Scheme can be formulated so that disbursement can be easy and actual SMEs are benefitted. The government could add a part to the stimulus to create a credit guarantee and risk sharing programme for financial institutions to provide adequate access to finance for SMEs. PKSF, BSCIC/SMEF can be assigned to handle cottage and micro enterprises and Scheduled Banks(SCBs) can handle SMEs.
Export Development Fund (EDF) can also be allowed to use for procuring goods to be imported under supplier’s credit, it said adding, this can also facilitate to procure goods under deemed export.
To help the agriculture sector come out of the losses due to Covid-19 impact, the interest rate for agriculture under the stimulus should be reset to 2 percent, BUILD pointed out suggesting that loan repayment schedule should be 2 years. Besides, the amount can be increased.
Import-substitute industries like food processing, shrimp, crab, eel & frozen food sector need to be included in the eligible list for the loan. Some other potential sectors such as essential organic oil, seed collection and preservation, jute also should get the benefit. A monitoring committee needs to be formed to manage and monitor proper utilization and transparency of the scheme.
