Md Jashim Uddin is the president of SAARC Chambers of Commerce and Industry, which is the largest trade body in South Asia. He also served as the president of FBCCI, the apex trade body of the top businessmen of the country. In addition, he is the chairman of Bengal Commercial Bank.
In an interview with The Bangladesh Pratidin, he spoke about business, trade, politics, economics and other contemporary issues. He said, “Once the interest of loan was 9 percent, which turned into a staggering 15 percent now. The fuels to run the machines aren’t available properly even after its prices were hiked. The import of capital machineries and raw materials were decreased. A few days ago there was incident of attack on the factories and the owners aren’t able to pay the salaries and arrears properly. So, the businessmen are in enormous struggle now.”
Bangladesh Pratidin: In the current situation, all businessmen, from small to big, have not been able to repay their loans, unable to pay salaries to employees. The plight and bleeding of traders is going on. How do you see it?
Jashim Uddin: This plight of businessmen is not created today. It was created a long time ago. Ever since covid-19, we have been going through one problem after another. The post-Covid-19 and Russia-Ukraine war has pushed up global commodity prices, creating a dollar crisis. These are the reasons for today's predicament. Bangladesh is affected by loss in two sectors. First of all, banking sector. Secondly, energy sector. I have been talking about these two issues since my tenure as FBCCI President. In a country like Bangladesh, capital equipment, raw materials and many daily commodities have to be imported. Almost all of the fuel has to be imported. When the dollar appreciates, these prices have risen. Electricity, fuel has come to a bad state. Many people think that this problem has arisen after August 5. No, we have been dealing with this problem since the previous government. When the economic condition worsened due to Covid-19, Bangladesh Bank issued a circular stating that the bank will not default even if it does not pay the loan installments for nine months. Bangladesh Bank has gradually reduced the period for borrowing from the International Monetary Fund (IMF) to 90 days now. But the economic situation did not improve. Many traders sometimes tell me, we were good during covid-19 period. That means I am in worse condition than the period of covid-19. Now, I cannot run the factory properly due to gas and electricity. Labor unrest lasted two months. Where do I get the money from the bank? The biggest problem is that if one company in a group of companies defaults, the entire group defaults. We discussed with Bangladesh Bank Governor for a long time to fix it. A law has also been passed for this, but it has not been implemented, nor has the problem has been resolved. The law must be implemented. Our low and middle income people are suffering under the pressure of inflation. The Governor of Bangladesh Bank believes that inflation will be reduced only by increasing the interest rate. As a businessman, I don't think raising interest rates will reduce inflation. More than 80 percent of the country's people are in the informal economy at present. 70 percent of people do not go to the banks. How will the interest rate increase be justified? Rather, we have to import raw materials, capital equipment, fuel etc. If the interest rate increases, the price of goods and inflation increase. I think the opposite is happening as many things are responsible for the inflation. So among so many items, if you only play with the interest rate instead of putting your hands elsewhere, inflation will not reduce. The biggest area to reduce inflation is the supply chain. A farmer in Saturia is selling brinjal at Tk 60 per kg. The price is Tk 75 after changing hands from the farmer. In Dhaka, you have to buy that eggplant for Tk 150 per kg. Is there any issue of bank interest in this case? That means supply matters here. Actions should be taken here. If the interest rate increases, there will be no competition in the world market. Due to the high interest rate, the factories are compelled to run with LPG-CNG-Diesel without getting gas. But the cost is increasing. We are losing competitiveness in the export market as well as in the country. Imports of consumer goods have fallen by 27 percent in the last few months. Furthermore, imports of machinery and raw materials have decreased.
Bangladesh Pratidin: You are talking about interest rate hike. Interest rate hike will be another shock in debt repayment. You say that many traders have become defaulters in the last three months. What is the way out of here?
Jashim Uddin: We are not in a normal situation now. This situation did not happen overnight, it has been happening for a long time. You can't fix it in one day. Loan repayment has been reduced from nine installments to three. Businessmen will become defaulters only if they fail to pay one installment every month from next year. If one company in a group defaults, all its other companies stop importing, cannot run business. Compliance must be implemented gradually. The situation should be handled slowly. Instead of nine installments introduce at least six installments. Gradually reduce the time when the situation improves. Who published the list of defaulters who just did it willingly? 95 percent of traders return money to the bank. How come the banks are so big if they don't give back? I will not get gas, electricity as required, I will not be able to import raw materials; then how will I return the money to the bank? Traders are in serious struggle time. These problems should be resolved through discussion.
Bangladesh Pratidin: According to your words, the businessmen are on the edge. Is it really?
Jashim Uddin: Of course. I borrowed money from the bank at 9 percent interest and started the factory. Now the interest rate is around 14 percent. Recently, Bangladesh Bank has once again increased the policy interest rate. That means interest will increase by 1 percent more. The interest of non-bank financial institutions has become 15 to 16 percent. How to survive in this situation? The government had guaranteed me gas, electricity and fuel while we were constructing the factory, but now they’re unable to provide it. There is no guarantee that it will be able to pay as everything is now depends on imports. Coal is now contributing 60 percent of the energy in the United States, and about 80 percent in India. But even though we have coal, we have not used it. Where will 2-3 billion dollars of energy imports come from? We need a roadmap on energy. To increase the capacity of BAPEX, coal mining needs to be utilized.
Bangladesh Pratidin: How do you see the current government's initiatives regarding the energy sector?
Jashim Uddin: The interim government is continuing its regular or routine activities. There should be a roadmap for fuel imports. I think the elected government can make proper plan for this. People's expectations from the head of government are very high. Dr Muhammad Yunus has a unque kind of popularity. Our expectation is that if the current government does reforms in various places, it will be surely be good as any partisan government cannot come and do the reforms. Reforms in electoral system, separation policy and implementation department of National Board of Revenue, increase in tax-GDP ratio, Bangladesh Bank are seriously needed. To increase the revenue, the scope of tax should be increased without increasing the amount of tax. The burden is being increased on those who pay VAT, and it has been going on for a long time. We expect the Board of Revenue to be restructured to increase the scope of taxation. Many are eligible to pay taxes. They should be brought into tax-responsibility. Then traders will not suffer. Small traders are in danger regarding VAT and tax issues. If there are 100 shops in the market, EFD machines are available in 20 shops. Tha means the remaining 80 people are exempt of paying VAT. We have to get out of this discrimination.
Bangladesh Pratidin: The government has taken several reform initiatives. you have also talked about reforms at various times. What should the government prioritize in reform?
Jashim Uddin: The present government should give the highest priority to organize the democracy of Bangladesh. Our big problem is that one government cannot just transfer power to another government. The Election Commission has to fix it to ensure it. If democracy is well organized accountability will be ensured.
Bangladesh Pratidin: Many say there is a lack of democracy among businessmen. An example of which is no-voting in the elections of FBCCI, the top organization of businessmen!
Jashim Uddin: As FBCCI President, I sent a letter to the Ministry of Commerce requesting not to register any more trade organizations. We have 42 business sectors. And there are about 460 associations. There is provision for an association for a sector. However, there’re more than 10 associations in each sector. Why did it happen? At one time, the number of nominated directorships was 8. Now that's 37 to 38 nominee director positions on the board of 80 persons. I proposed reforms. A law was passed in 2022, yet to be implemented. Many of our associations lack good governance. Real stakeholders can’t join FBCCI. The same person has been the director year after year. We need new leadership. I think it will not be right to hold the next election of FBCCI without reforms. Without reforms, things will be the same as before. The reforms should be done for those who are doing business. Real traders need representation. Democracy should be ensured by abolishing pocket associations. The right person should be selected.
Bangladesh Pratidin: In the past, businessmen became interested in politics and politicians also exploited businessmen. As a result, the businessmen are now in a kind of pressure?
Jashim Uddin: Of course. Businessmen have gone into politics due to finding no other way as many politicians have been subsidized by businessmen. Then the businessmen thought why I am not going to politics! This is how our businessmen have joined politics. Politicians have done business and vice versa. I think not everything goes with everyone and we should not be involved in politics. But the business environment should be created. The business environment has not really been the same since independence. So many times traders had to do a lot of things. Not everything was as the traders intended. The entire business community is being called bad for corrupted 2 to 3 percent people.
Bangladesh Pratidin: Is there really a syndicate in the market?
Jashim Uddin: Due to the arrest of many traders during the time of 1/11, many have left their businesses. Now the people do consumer goods business. The 27 percent decrease in consumer goods imports will have an impact on the market. If there is a crisis, the price increases. Traditional methods still remain in consumer goods business, which needs to be reformed. The sale of the product outside the dealers should be stopped. Many things can be manipulated in the traditional way. Hence, the supply chain needs to be reformed. Products are coming to the market after many changes. The authorities concerned have to work on it. It is necessary to use the models that are used in Europe and America.
Bangladesh Pratidin: In the past, it was seen that bureaucrats became one kind of politicians, why?
Jashim Uddin: Politicians did not give introductions like what bureaucrats used to give at the beginning of the speech. The authorities concerned should discuss with the businessmen while formulating policies as the businessmen have to do the implementation process. So taking our opinion before formulating the policies will make things much easier. The bureaucrats imposed many policies on us. The Board of Revenue used to meet us before the budget, but the demands of the traders were ignored. That means a play was conducted with us. I hope these plays of NBR will be stopped in the present reality. This is our expectation to the interim government.
Bangladesh Pratidin: In which direction is the future of the country's garment industry going?
Jashim Uddin: After August 5, customers have lost confidence due to the attack and vandalism in garment factories. They said what's the use of it if you don't get the product by ordering cheaply? Fearing this, some buyers have gone to China, India, Pakistan, and Vietnam. Now if we can stabilize the situation, the orders will come back.
Bangladesh Pratidin: Do you see anything to be hopeful amid all these things?
Jashim Uddin: Bangali is the nation of heroes. We didn't have much apability in 1971 like now, but the country became independent. We hope that the change our youth has brought in, the blood they have sacrificed to build a society free of discrimination won’t go in vain. I hope the current government will hand over power to a political government with significant reforms through acceptable elections; So that we don't have to go in the dark in the future.
Bangladesh Pratidin: Under the changed circumstances, many businessmen have been accused in the murder case. Journalists and people from different professions have been involved in the case. Many were not in the country at the time of the incident. How do you see the matter?
Jashim Uddin: The government has also said that it is not right to file cases unsparingly. To take unwanted advantage, some people have accused businessmen-industrialists and journalists in these cases remaining behind the scene. Hence, businessmen are mentally scared. Business is threatened. Uncertainty is created about the salary of the employees. Government should look into these. Arrangements should be made to acquit innocent persons as soon as possible. The situation in Bangladesh, you never know when it will catch you. Political party leaders are behind filing these cases. I hope the parties will take action against the instigators of the cases.
Bangladesh Pratidin : Thank you for giving time to The Bangladesh Pratidin.
Jasim Uddin: Thanks to Bangladesh Pratidin, too.
(Translated by Lutful Hoque)
