The coming month will bring with it one of the biggest challenges for small business. Strewn all over Bangladesh are an estimated 5.6 million shops and markets that depend on sales uptake centring Bangla New Year and the two Eid festivals for as much as 80 per cent of yearly business. Following the heartbreak of the past two years there are great if apprehensive expectations for this year. A slew of backward linked businesses churning out products will share visions of something better. The taste of the pudding is in the eating. Hope glimmers from the emergence from hibernation of people resuming spend on vacations and events.
Bigger businesses will be scrambling over economic data and spending trends in their forecasting. Those that don't have such luxuries will rely by that age-old, proven method street-based information and knowledge. Forecasting is inextricably linked with planning for input material, cash-flow and manufacturing schedules. Along with it comes the inevitable crunch of bonuses for the work force. The difference this time is that those that have rainy-day pots have mostly used it up to get through an economic morass, the likes of which are rare globally. One indicator, festive season spending last year did provide some cause for cheer. That was in the stronger economies, buoyed by generous stimuli that allowed for meaningful if scant savings.
Third-World countries bereft of the benefits of proper social security nets are a different kettle of fish. Barring the public sector where salaries and benefits have increased manifold, unstructured private business as a whole and the farming community are left to fend for themselves. There's plenty of money out there courtesy of engrained corruption, profiteering and downright extortion that covers a certain percentage. For the celebratory occasion to bring relief to businesses a large chunk of the black economy will have to contribute. The snaking queues leading to the trucks selling fair-priced essentials provide a counter argument to the concept of improvement in disposal family budgets.
Desperate times call for desperate measures. Faced with obliteration, the shop owners' association revealed figures of Tk 290 billion in lost sales during last year as they pleaded for stimulus support. For each day of the shut-down, their calculations of daily expenses led to Tk 10.00 billion plus. Pohela Boishakh (Bangla New Year's Day) sales were tipped at Tk 200 billion. Textile Mills estimate Tk 300 billion were lost in Eid sales. The fashion industry were Tk 70 billion in the red. It all made a lot of sense when the premier footwear seller Bata landed up with a Tk 1.32 billion loss in the last financial.
There are no guarantees any of these targets will or not be achieved this year. Apart from the slump in economy there's the new factor of higher cost of inputs to be factored in. It mostly depends on how much the factors of recovering previous losses and adding to profits are put in to costing. Over-burdened consumers have visibly reduced consumption of daily needs. The chance of splurging on nice-to-haves isn't encouraging. Two years of forced thrift may also work in the opposite, the basic urge to restock on clothes and such. Two positives will be at work. New year bonuses for public sector employees that didn't feel any compunction of accepting such as many took to the streets with extended hands is one. Bonuses by most businesses is another. These belie the overriding fact that existing salaries are just not commensurate with galloping inflation and increased costs of food items, energy and water bills.
The best of multinationals have found rolling forecast models turn turtle. Few have been able to predict realistically. In the absence of better models, the process continues. The government has its own headaches. Panic measures such as removing import duties and VAT on many items cuts further into the deficit of revenue generation. If taxes were properly paid on the huge numbers of estimated sales, the matter would have been different. Obviously that won't be the case as businesses seek to hide behind the 'small and cottage industry' or SME definitions.
For now and the immediate foreseeable future rifled with international conflict and economic stress, it may well be a better option to let the economy recover fully before adding or implementing punitive tax measures. Consumption has to be encouraged and enabled for industry and business to grow and thrive. Revenue sources are available provided there's the willingness to bell the cat.
mahmudrahman@gmail.com