The business and commercial sector is facing a fragile phase. Worsening law and order has created widespread insecurity and a lack of trust, which is impacting both investment and employment. High interest rates, a strong dollar, and declining consumer purchasing power have reduced the import of industrial raw materials and machinery, while demand for goods has also dropped.
Consequently, entrepreneurs are not focusing on investing in new businesses or expanding existing ones. When the entire business sector is stagnant, revenue collection is also impacted. The closure of one factory after another has left millions unemployed, increasing both unemployment and poverty.
Although attempts have been made to control inflation by raising interest rates, the latest figures show that inflation in Bangladesh has reached a record high in South Asia. Businesspeople and entrepreneurs are spending their days in extreme worry and anxiety over the country’s commercial situation, claiming that they are receiving no reassurance from the government.
A day ago, the World Bank released an observation report on Bangladesh’s economy. According to the report, private sector investment in Bangladesh has taken a severe hit, casting a shadow of recession over the overall economy. The report notes that private investment has fallen to its lowest level in 22 years. Private sector credit growth has also reached a 22-year low. Bank loan defaults have hit a record high.
The interest rate has risen to 24.1%, while the tax-to-GDP ratio has fallen to 6.8%. Unemployment has risen to 3.7%. Although there is a positive trend in exports, it has been declining continuously for the past two months. Export growth fell by 3% in August and by 4.61% in September. The report identifies ongoing political instability and weaknesses in the banking sector as major reasons for the slowdown in economic growth.
Overall, the economy is under significant pressure. Businesspeople and entrepreneurs are expressing increasing anxiety, concern, and uncertainty about the situation. They report that they are forced to operate at only 50% of their capacity, if not less, and even the most promising sector, garment exports, is showing signs of decline. Government development projects are also stagnant. Business operations are being maintained almost like a patient on life support—barely surviving. Many entrepreneurs report that their factories have closed one after another due to high interest rates and increased costs of materials, and the government is paying them little attention. No official from the government has met with businesspeople to discuss how to overcome these crises. Some factories have been shut down due to allegations, even though legal proceedings could have continued while keeping them operational. Some entrepreneurs are unable to pay wages because their bank accounts have been frozen. Many face harassment, lawsuits, or attacks, leaving them trapped. They are unable to attend business and investment meetings abroad and feel frustrated and angry.
Abdul Hai Sarkar, former president of the Bangladesh Textile Mills Association, told Kaler Kantho: “If I may say, all economic indicators are currently in bad shape. The environment is not business- or investment-friendly. Many mistakes have already been made at various levels. The biggest problem is that no one tries to understand the entrepreneurs. Especially bureaucrats and policymakers do not understand our problems—they just sit and think about how to make money. Policymakers need to have a good understanding of business and commerce. If they knew why businesses face obstacles, it would have been easier for us. They have big academic degrees, they are theoretical, but they do not want to understand how we do business. There is a gap in understanding practical obstacles. This gap needs to be reduced. Foreign investors first look at the local conditions. They consider many factors. They don’t rely solely on our words. Also, the main driving force for investment is energy and electricity. Without these, nothing else matters, no matter what is available.”
Signs of decline are also appearing in the export sector. Net garment export entrepreneurs and former president of BKMEA Fazlul Haq told Kaler Kantho: “Business and commerce are currently suffocating. Operations are continuing, yes, but barely. It’s like a patient who hasn’t died but is barely alive, and everyone is just happy it hasn’t died. Government officials say the economy is running. They are happy as long as it is running. There is no major progress in the economy. This is extremely unfortunate. We have been saying from the start that it is necessary to meet with entrepreneurs and restore their confidence, but that hasn’t happened. The government probably does not feel the need to meet. Now, perhaps it is too late—this could also be a reason. I see no hope of recovery until a new government takes office.”
Private entrepreneurs report that both government and private sector investment are stagnant. Confidence is at an all-time low. Hossain Khaled, former president of the Dhaka Chamber of Commerce, told Kaler Kantho: “There is a shadow of recession in the economy, one main reason being that government development projects are almost stagnant. One-third of GDP comes from these projects, which also involve the private sector. The government only allocates funds; the private sector implements. This includes hiring labor, providing food—everything is part of a supply chain. The work has been halted for a year. Proper implementation is not happening. The expected economic impact is therefore not being realized. Many other industries are also experiencing shortfalls. In the past year, equity or capital investment in the government sector has been almost zero. No new capacity has been added. There is no confidence or demand in the private sector. People’s purchasing power has declined.
Everyone is operating at roughly half capacity. Even with a new government, the situation may take at least six months to improve.”
Women entrepreneurs are also facing crisis. Everyone is hoping for a stable environment after the election. Nasrin Auwal Mintu, president of the Women Entrepreneurs Association of Bangladesh (WEAB), told Kaler Kantho: “Currently, the interim government is in power. It is not a political government. So everyone does as they wish. There is no accountability. Law and order is deteriorating rapidly. No one is speaking out. Investors are watching the political government. Women are being abused. Looting is happening. Vaults are being broken and jewelry stolen. A fair election is needed to escape this situation. Once a stable political government comes, the situation can normalize. Otherwise, this will continue. Everyone is waiting for a new government before investing. People are scared now. Unemployment has increased significantly over the past year. Everyone is struggling. Women entrepreneurs are also facing severe crises.”
Mohammad Shahriar, president of the Accessories Manufacturers Association (BGAPME), told Kaler Kantho: “43% of factories in my sector have closed. High interest rates are the main reason. Previously, the loan interest rate was 9%; now it’s 16%. Even paying a higher price, we are not getting proper energy supply. Moreover, purchase orders are not coming like before. Product prices have fallen. Overall, everyone is in crisis. Political factors are also present. Owners are living in fear. They cannot run factories properly, and no new factories are opening. Around 8,500 workers in our sector have lost jobs due to continuous factory closures.”
Bd-pratidin English/TR
