SMEs Bear the Brunt of Adverse Impacts of Lockdown

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SMEs Bear the Brunt of Adverse Impacts of Lockdown

June 2: After shutting down for nearly three months, small and medium enterprises (SMEs) have resumed their activities to find themselves surrounded by several issues due to very little or no business at all.

Business owners in key market areas of Kathmandu including New Road, Khichapokhari, Sundhara, Ason, Indrachowk and other large commercial centers are spending their days waiting for customers to come. They say though allowed to open their stores, it has become very challenging for them to pay house rents and bank loans. According to the storekeepers, they have to stay idle for the whole day. “We are also not able to supply many types of goods demanded by customers as the import of goods has slowed down,” said Kamal Agarwal, president, National Trade Association, an association of merchants of New Road and adjacent areas.

According to him, business owners are looking towards the government for financial assistance at this time of crisis. “We have not paid taxes from Chaitra (March-April) onwards due to the lockdown. Now, we are required to clear tax dues of six months,” he said, adding, “On top of that, there is a pressure to pay house rents and staff salaries. The business is close to nil right now.” Business owners are required to pay house rent ranging from Rs 15,000 - Rs 150,000 in areas such as Khichapokhari, Newroad, Sundhara and Ason. According to Agrawal, there are more than 20,000 small businesses operating in ward no 22 and 24 of the area.

The lockdown has disrupted the wholesale trade in Kathmandu which is dependent on small businesses from across the country including Pokhara, Butwal, Narayanghat, Nepalgunj and other cities.

Similarly, businesses in malls and shopping centres are also facing several difficulties currently. The Kathmandu Mall in Sundhara is still shut down, though all other malls are open. Diwasapana JV, which is responsible for the management of Kathmandu Mall, has not allowed the storeowners to open their stores citing problems in the Mall’s electricity supply. Due to this, many have already left their businesses, and many are about to leave soon, say store owners at Kathmandu Mall. Currently, around 120 stores are operating in Kathmandu Mall and they pay monthly rent ranging from Rs 20,000 – Rs 500,000.

SME Owners Demand Loan Repayment Deferral

A committee formed for management for businesses of Kathmandu hit by Covid-19 crisis has demanded the banks and financial institutions (BFIs) not to recover interest and principle payment of loans forcefully from businesses.

The committee formed by the Kathmandu Chambers of Commerce and Industries (KCCI) has demanded to announce the lockdown period as ‘zero hour’ and provide deduction on principle, interest and installment of loan repayment. The committee has asked full deduction on interest payment for loans up to Rs 10 million, 50 percent interest for loans above Rs 50 million and 25 percent of deduction for loans above Rs 50 million.

The committee has warned of protest if their demand is not met. Dinesh Shrestha, president of KCCI said that they are preparing to organise protests from Friday.


 

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