Bangladesh is experiencing an unstable economic growth trajectory with slow gross domestic product (GDP) growth, said Dhaka Chamber of Commerce and Industry (DCCI) Ashraf Ahmed at a roundtable on Saturday.
He said this situation is coupled with few other challenges like currency devaluation, rising inflation, financial instability, labour unrest, concerns over energy security and disruptions in key export industries that threaten the country’s economic stability.
“To navigate these challenges, a strategic and coordinated response is essential,” he stressed.
DCCI organised the discussion titled “Current State of the Economy and Outlook of Bangladesh” at DCCI auditorium.
The DCCI president suggested that immediate restoration of the law and order situation is needed, “which is very much required for the stability in the current business environment.”
He put emphasis on faster reforms in the banking governance and suggested addressing non-performing loans (NPL) and liquidity shortage issues that must be prioritised to restore confidence in the financial system.
“To combat inflation,” he said, “the government can pursue supply-side reforms to ensure smooth distribution of essential goods and services.
Diversifying the energy mix and new energy supply routes, while improving investment in the energy sector, will be essential to safeguarding industrial productivity, he added.
He also suggested establishing planned housing, education and healthcare facilities in Ashulia and adjacent areas to provide a low cost living to the workers of that particular area.
Former President of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Mir Nasir Hossain said, “The recent labour unrest has shattered our image in the global market.”
He said that not only the export-oriented industries but the domestic market-based industries are also important.
Regarding interest rate for manufacturing industries, he said that the real effective rate of interest is too high in Bangladesh and it hampers the entrepreneurs to compete with the international market.
Hossain said reforms are badly needed in the National Board of Revenue (NBR) and customs houses.
“Moreover, customs houses should be automated, though, once the initiative was taken a few years back, but it made no progress.”
He said that an affluent middle income group of people have grown in the recent past in the country, but in line with that, “the tax net was not widened which is unacceptable”.
Later, the former FBCCI chief said that due to lack of uninterrupted gas supply, the manufacturing industries are suffering a lot. He, therefore, suggested strengthening on-shore and off-shore gas exploration in the sea.
President of Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh Syed Nasim Manzur, said that the businessmen now feel insecure due to labour unrest and vandalism.
“Recently, the consumption by the consumers – be it food or services, remarkably fell,” he said.
Manzur thinks the double-digit rate of interest on industrial loans is not viable for sustaining in the competitive market.
He said FDI is needed for a country like Bangladesh, but due to low confidence it remains stagnant now.
He, however, hopes that they will see a positive move within a few days. “Moreover, the administration system in the government is still not working properly, which plays a negative role for lower confidence among the investors.
“We have to save the RMG (readymade garment) industry as it has a multiplier impact on our overall economic value chain,” he emphasised.
The former president of the trade body said, “The workers are the main asset for a factory, and if they live well, the factory will get better output at the end of the day.
President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem, said that a good understanding and relation between the owners, workers and labour leaders can mitigate any unrest as well as violence in the factory.
He said that when factory owners do not get fair prices from the buyers, they have to suffer for that and most of the people, even the labourers, do not know this issue.
He also requested Bangladesh Bank to allow the industry owners adequate time to repay their loans.
He also echoed the same problem of the gas crisis in the industries that looms over lower productivity resulting in delay in shipment.
Chairman and CEO of the Policy Exchange Bangladesh Dr. M. Masrur Reaz said, “We could not take the right policy at the right time and this caused the macro-economic crisis in the recent past.
“Confidence level for investment is shattered now, law and order, especially disorder in the ‘order’ part, labour unrest, inflation are some of the pressing issues for the macroeconomic challenges for Bangladesh,” he observed.
“We have seen commendable progress in the banking sector reforms recently but in the other areas we are yet to see the policy governance,” he said, adding, “we have to keep our dollar reserve stable by remittance, exports and FDI (foreign direct investment). For that, confidence is mostly important.”
Former President of DCCI & Managing Director of Shasha Denims Limited Shams Mahmud, pointed out the labor unrest in Ashulia region disrupts the production in the factories over there.
“If the law and order situation does not come into normalcy over there, buyers’ confidence will be hampered and order may shift from Bangladesh to other competitors.”
There may be issues related to wages and other matters and all these should be resolved through discussion not by vandalism, he said.
He also underscored that all possible protection should be given to small and medium enterprises (SMEs) and the import-substitute sector.
Regarding NPL, former DCCI chief said that for the mismanagement of banks, genuine businesses should not suffer in getting loans and the banks should also be accountable for any mismanagement that happened.