ECC to mull package for small businesses today

Industries ministry also working on a collateral-free financing for SMEs affected by Covid-19 pandemic

ISLAMABAD: A relief package for small businesses affected by the coronavirus pandemic will be presented before the Economic Coordination Committee (ECC) of the Cabinet on Monday (today).

Federal Industries and Production Minister Hammad Azhar on Sunday said millions of small businesses would benefit from the package once it was approved by the ECC and the cabinet.

“The Ministry of Industries and Production shall table in the ECC the phase one of “Chota Karobar Imdad Package [Small Business Support Package],” he tweeted.

The minister further wrote that his ministry was working on a collateral-free financing for SMEs [small- and medium-sized enterprises] in phase two of the relief package.

“That phase [two] would also include targeted/prioritised relief measures for sectors most hit by Covid-19,” he added.

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In its previous meeting, the ECC had asked the industries and production ministry and the Poverty Alleviation and Social Sector Development Division to jointly work out a comprehensive mechanism and modalities to ensure transparent and efficient disbursement of money to deserving people.

Apparently, the support package has been designed because a survey of the ministry of industry and production’s premier institution – the Small and Medium Enterprises Development Authority (SMEDA) -- recently revealed that 95% of small businesses had experienced a reduction in production, work activity and contracts because of the coronavirus outbreak.

The SMEDA survey also found that lockdown imposed to stem the spread of the Covid-19 pandemic a caused a reduction in operations of 95% businesses, 92% complained about a disruption in their supply chain and 23% reported a total loss in their export orders.

The ‘Impact of Covid-19 on SMEs’, an online survey, was launched on April 3 and lasted till April 14. A total of 920 businesses participated in the survey.

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The respondents said 73% of them had completely stopped operating during the lockdown while 27% partially halted their operations.

The lockdown across the country is expected to make the situation dire for the estimated 5.2 million enterprises in the country, the report read, adding that the small businesses may experience supply chain disruptions because of the irregular supply of raw material and intermediate goods, revenue loss and shortage of liquidity to continue business operations.

The respondents reported facing multiple issues during the crisis -- 89% of them putting up with financial issues, 60% having difficulties in selling their products and service, 43% pointed out supply chain disruption followed by 39% having problems with marketing, 38% transportation, 37% labour, 17% inventory issues, 14% importing and 11% exporting.

Around 46% of the surveyed business sacked some of their employees. However, 26% reported that they would rehire their employees in a month after the end of the lockdown.

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The areas identified for supporting these businesses and mitigating the impact of Covid-19 included SME-specific support measures including financial packages, tax relief, guarantees and grants, relaxation in payments of utility bills, support in paying salaries and easing conditions for loan repayments.

Earlier this week, the ECC had approved Rs75 billion for labourers and daily-wage earners severely affected by the lockdown.

Previously, a cabinet committee had approved a Rs1.2 trillion relief package to shield the economy from the adverse effects of the pandemic.