Thursday, 24 September, 2020

Business Rescue Plan

The humanitarian loss due to the novel coronavirus (Covid-19) has sent shivers to the citizens and governments across the globe. By Wednesday morning approximately 425,987 cases were detected and 18,957 people have died. The pandemic is spread to more than 168 countries. Equally threatening is the loss of employment and livelihood opportunities of billions of people especially the wage-labourers and micro, small and cottage enterprises. At the same time, medium and large industries and businesses are also having tough time as the production and service is shut and people have been forced to stay home. They have to pay the salary to the employees and interests of the bank loans while their business is not functioning or faring poorly. Industries other than the essential goods and foods are completely shut.

The coronavirus toll on business and industry has resulted in the business community demanding rescue and relief measures from the government, and some of the countries in Europe and the United States have announced rescue packaged. The recent one is the US announcement of $2 trillion virus rescue package to provide aid to businesses, workers and health care system hard hit by the coronavirus pandemic.

In our neighbouorhood, Indian Prime Minister Narendra Modi has announced to unveil special rescue package for the business. Nepali business community has been vocal about the same for the last couple of weeks. Economists and former finance and industry secretaries and business bodies like the Federation of Nepalese Chambers of Commerce and Industry and Confederation of Nepali Industries have urged the government to announce economic packages to support business.

Nepal is a small economy with just $34 billion Gross Domestic Product (GDP). According to the National Economic Census 2018, there are just about a billion enterprises – ranging from small grocery or tea stall to large manufacturing industries. Since every business is severely affected by the coronavirus pandemic, the government in Nepal does not have resources to address the demand of the most businesses but it should create a package to support the ones that are most affected and need a rescue plan in order to remain in business.

The Covid-19 has come as another blow to the business in the country in a row – the earthquake, the blockade and the pandemic. Some of the businesses that survived the earlier two crises might give up this time. Therefore, the Ministry of Finance and Ministry of Industry, Commerce and Supplies must be vigilant on the situation and begin a work on the plan to provide relief to the business and industry. Such relief can be in the form of cash grant, tax or bank interest waive off, cash incentives and other innovative measures suggested by the business bodies.

However, such packages in the past have largely unexecuted or were marred by bureaucratic hassles and lengthy procedures which sent the message to the beneficiaries that whether the government actually wanted to support them. The business reconstruction fund and concessional loan for house reconstruction in the aftermath of the 2015 earthquake are the two recent examples that were ineffective in terms of supporting the companies and private house owners. The government must learn from the weaknesses of the past and devise an effective plan that actually supports the needy during the crisis.  

How do you feel after reading this news?