Currently, Bangladesh is experiencing an unstable economic growth trajectory with slow GDP growth, 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 country’s economic stability. Ashraf Ahmed, President of Dhaka Chamber of Commerce & Industry (DCCI) told these at a roundtable on “Current State of the Economy and Outlook of Bangladesh” organized by DCCI on 5 October 2024 Saturday at DCCI auditorium.
To navigate these challenges, a strategic, coordinated response is essential, opined Ashraf Ahmed. He also suggested that immediate restoration of law-and-order situation is needed, which is very much required for the stability in the current business environment. He also stressed on faster reforms in the banking governance and suggested to address NPL and liquidity shortage issues that must be prioritized to restore confidence in the financial system. To combat inflation, he said that 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 further told. He also suggested to establish planned housing, education and healthcare facility in the Ashulia and adjacent area to provide a low cost living to the workers of that particular area.
Mir Nasir Hossain, Former President, FBCCI said that the recent labour unrest has shattered our image in the global market. He also 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. He said reforms are badly needed in the NBR and customs houses. Moreover, customs houses should be automated, though, once the initiative has been taken few years back but it did not see the light. He also said that an affluent middle income group of people have grown in recent past in the country, but in line with that, tax net was not widened which is unacceptable. Later, he said that due to lack of uninterrupted gas supply, the manufacturing industries are suffering a lot. He therefore suggested for strengthening on-shore and off-shore gas exploration in the sea.
Syed Nasim Manzur, President, Leather Goods and Footwear Manufacturers & Exporters Association of Bangladesh said that the businessmen now feel unsecured due to labour unrest and vandalism. Recently the consumption by the consumers either it is food or services, remarkably fall, he said. He also said that the double-digit rate of interest on industrial loan 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, but he hoped that it will see a positive move within few days. Moreover, the administration system in the government is still not working properly that plays a negative role for lower confidence among the investors. We have to save RMG industry as it has a multiplier impact on our overall economic value chain, he added. Later he said that workers are the main asset for a factory, and if they live well, the factory will get the better output end of the day.
Mohammad Hatem, President, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) 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 labours 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 gas crisis in the industries that looms over lower productivity resulting in delay in shipment.
Dr. M. Masrur Reaz, Chairman & CEO, Policy Exchange Bangladesh said that we could not take the right policy in right time and this causes the macro-economic crisis in 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 said. We have seen a commendable progress in the banking sector reforms recently but in the other areas we are yet to see the policy governance. We have to keep our Dollar reserve stable by remittance, export and FDI and for that containing confidence is mostly important.
Shams Mahmud, Former President, DCCI & Managing Director, Shasha Denims Limited 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 have 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 SMEs and import-substitute sector. Regarding NPL, he said that for the mismanagement of banks, genuine businesses should not suffer in getting loan and the banks should also be accountable for any mismanagement happened.
Mr. Ahsan Khan Chowdhury, Chairman & Chief Executive Officer (CEO), PRAN-RFL Group told Bangladesh is a land of opportunity; he also termed that Bangladesh could be the factory of the world for having its immense potentials. He said that the main task of the business community is to create employment but sometimes, it gets a setback due to labour unrest. “We want to see the police as it was”, “we want to see all law enforcing agencies back again with their full capacity” he expressed his hope. He also said that with the high rate of interest, it is difficult to sustain. We may have a rewarding system for the good borrowers to discourage NPL, he suggested. Moreover he said there should not be any LC restriction now, since, to create employment, wheel of industries must run.
Syed Mohammad Kamal, Country Manager, Mastercard Bangladesh said from July-August, digital spending has remarkably fell down as consumption also in the downward trend. Due to recent political turmoil, later flood then unrest in the hilly area, the tourism sector is badly hit. Supply chain in the e-commerce and f-commerce has also disrupted, he told. He then suggested to incentivize digital payment system over cash payment. At present the remitters get 2.5% incentive on their remittance sent to Bangladesh. If this facility is withdrawn, they will go for unofficial channel to remit their hard-earned money to home that may affect forex reserve, he added.
Ambareen Reza, Co-Founder, Chairman & CEO, Foodpanda Bangladesh urged for low cost fund for the SMEs. She also said that number of loan defaulters in the CMSMEs or startups is very negligible. She also emphasized to spread low cost internet facility across the country to ensure digital connectivity and consider internet as a utility like gas or energy.
DCCI Senior Vice President Malik Talha Ismail Bari was also present on the occasion.