Sanitary, pipe and tube-well business on a nosedive

The business of sanitary products, pipes and tube-wells, worth around Tk8,000 crore, has long been bearing the brunt of the pandemic, with sales having dropped by around 70%-80%.

Due to non-listing of the sector for incentives by the Small and Medium Enterprises Foundation, people serving the sector did not receive any financial assistance from the government.

Sources said some traders have given up their business owing to their failure to pay shop rents and salaries of their employees and repay bank loans.

The affected businessmen have demanded that their loan repayment period be extended and a new 5% VAT levied on the sector after import duty is slashed. Otherwise it will be difficult for them to survive the pandemic effect.

One of the affected traders, Ashraf Ali, said he had been dealing in sanitary products, pipes and tube-wells in Dhaka's Siddique Bazar for over 20 years.

"My business has been in recession since 2016. A 5% VAT coupled with the pandemic effect has led to a further collapse of our business," he added.

"My shop has been completely closed for five months, and I am being forced to give up this business since I cannot afford to pay shop rent and the salaries of my employees."

The businessman said his customers were mainly retailers engaged in the construction business, which had almost come to a halt in the wake of Covid.

This is not the case for Ashraf Ali alone, for most businessmen in this sector have been going through a rough patch.

Like Ashraf, another trader is Kamrul Islam Khokon, who has been involved in the sanitary products, pipes and tube-well business in old Dhaka Alu Bazar for 23 years.

Khokon said while his business used to sell items for Tk25-Tk30 lakh a month before corona, it now earns only Tk5-Tk6 lakh a month.

"I have sold products worth Tk12,000 from morning to 5pm today. There used to be eight people working for my shop. Now there are only two," he added.

"I want to sell off my shop, but I can't find any buyer now under these circumstances." 

There are about two and a half thousand shops dealing in sanitary products, pipes and tube-wells in Alu Bazar, Nawabpur, Siddique Bazar and Haji Osman Gani Road in old Dhaka. They are engaged in retail and wholesale products. 

Once these shops were teeming with customers, but now such customers are almost non-existent.

In this regard, Bangladesh Pipe and Tube-well Merchant Association leader Muhammad Rabiul Haque Badsha told The Business Standard, "Our business during corona has suffered a huge loss. About 80% of our traders have bank loans while sales at most stores have dropped by about 70%-80%."

About 20-30 traders have already sold their shops since they could not bear the losses, added the businessman.

Rabiul maintained that earlier the government had only imposed import duty on their products, but since the budget of fiscal year 2017-18, it had imposed a 5% VAT on every new product sold. That has pushed up the prices of many products while the number of buyers has gone down.

"We have not received a single penny from the government stimulus package. Most of our traders are not able to repay their shop rents and bank loans," said the business leader.

On 5 April last year, the government announced an incentive of Tk72,750 crore to cover the pandemic-induced economic losses. 

Of the package, it announced an incentive package of Tk20,000 crore for cottage, small, small and medium sectors, but the Small and Medium Enterprises (SME) Foundation did not include the sanitary, pipe and tube-well sector in the list of beneficiaries for the incentives.

Anu Muhammad, professor of economics at Jahangirnagar University, told TBS that most of those who received incentives have had to lobby for the stimulus package. 

Moreover, the government does not have the latest information on the prospects or losses of all the industrial sectors in the country. 

As a result, the victims in many sectors, such as the sanitary, pipe and tube-well industries, did not receive the incentives, he observed.

The academic suggested that the government should pay due attention to all these sectors before going for incentives in the second phase.

In this regard, CPD Research Director Khandaker Golam Moazzem said small and medium entrepreneurs had not received much in terms of loan facilities from the government-announced package. 

The big industrial groups have benefited more from the incentives, which should go to small and medium enterprises as well, and industries affected the most should be given priority, suggested the CPD official.

According to the Bangladesh Pipe and Tube-well Merchants Association, there are approximately 15,000 sanitary, pipe and tube-well shops in the country, of which about 5,000 alone are in Dhaka. 

Investment in this business is to the tune of about Tk8,000 crore. 

Anwar Hossain, an employee at a sanitary business in Haji Osman Gani Road area of old Dhaka, said he had been working at the shop for 10 years. 

"I have never seen such a recession before. There is no buyer in the market. Earlier, there were seven employees here; now there are only five due to no sales. I am worried that the owner might show me the door anytime," he said.

Parvez Alam Chunnu, general secretary of the association, told The Business Standard that after the import duty, the imposition of an additional 5% VAT had affected the business very much. 

"We urge the government to help us through its incentives, extend the repayment period for bank loans further and eliminate the new 5% VAT," added the leader.

SME Foundation Managing Director Md Mofizur Rahman said: "We have tried to give incentives to all small and medium enterprises in a proper manner. Entrepreneurs in the sanitary, pipe and tube-well industries could not be given incentives due to a lack of communication with them." 

He added that the government had already decided to allocate around Tk300 crore as incentive for small and medium enterprises in the second phase, and a list in this regard would be finalised by next week. 

"If people involved in this industry contact us through their association, they will be included in the list in order to get allocations in the second phase," said the official. ***