Islamic Development Bank (IsDB) has earmarked Tk 398 crore for cottage, micro, small and medium enterprises (CMSMEs), which are hit hard by Covid-19 pandemic. According to a media report on Monday, the IsDB will disburse the loan through Islamic banks, Islamic windows of conventional banks, and Non-Bank Financial Institutions under the supervision of Bangladesh Bank. The government signed an agreement to this end with the multilateral development bank based in Jeddah in June last year aiming at bailing out the pandemic-hit CMSMEs. As per the deal Bangladesh Bank is made “executing agency” of the project. The loan will be available on the ‘first come first served’ basis.
According to the Economic Census 2013, there are as many as 78.18 lakh business establishments of which 99.93 are Cottage, Micro, Small Medium Enterprises (CMSMEs) and their share is 25 per cent of the Gross Domestic Product. Many institutions apart from the industry ministry, which is the regulating authority, are working for the CMSME sector. The Bangladesh Small and Cottage Industry Corporation (BSCIC) was established in 1957 and the SME Foundation in 2007 to facilitate the growth of the sector. The central bank itself has been expediting the sector. In the private sector, MIDAS, BRAC, ASA, PKSF are now working. The government has formulated SME Policy 2019.
Before maximizing the output of a sector, what it needs most is a comprehensive definition. SME in Bangladesh lacks such a definition. That’s why those outside the sector may eat up any fund earmarked for the sector. Against the backdrop, SME Foundation and BSCIC on February 19, 2022 mooted some proposals, including change to the definition of SME. According to the existing industrial policy, a manufacturing enterprise should be categorized as medium if its fixed asset except land and building is more than Tk 10 crore but less than Tk 30 crore. In the existing industrial policy, the ceiling of medium enterprise is Tk 50 crore except land and building, which industry insiders find as a flaw.
Cashing in on the faulty definition, many large enterprises enjoyed the policy support and incentives earmarked only for the SME sector during the pandemic. To check the pocketing of IsDB funds – meant for ailing small and medium enterprises – by the large enterprises, the CMSME sector needs to be articulately redefined by policymakers in consultation with industry insiders.
