Decisions recently implemented by the Bangladesh Bank, and harassment committed by a segment of officials from the National Board of Revenue (NBR) are putting the squeeze on local businesses, as they warn that the policies could slow down or even halt the wheels of the economy.
On multiple occasions, business leaders attempted to resolve such issues by taking these matters to the top officials of both state organisations, but to no avail. They are yet to secure a meeting with central bank Governor Abdur Rouf Talukdar to discuss such issues.
Although the business leaders managed to meet NBR Chairman Abu Hena Md Rahmatul Muneem, no solutions came from the meeting.
Under the circumstances, the country’s three leading business bodies – Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA) – with the apex trade organisation Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), are planning to meet Prime Minister Sheikh Hasina seeking for her intervention.
The FBCCI has also started discussions with other major trade organisations in this regard.
Commenting on the issue, BKMEA Executive President Mohammad Hatem told The Business Post, “Recent activities of The Bangladesh Bank and NBR go against business. We do not know what agenda they are implementing here.
“We want to do business, but is there any atmosphere for this? The governor reduced loan repayment time and increased bank interest rates citing these moves as an effort to reduce the number of defaulters and curb inflation. But what is the reality?”
Hatem, also the MB Knit Fashion managing director, continued, “A syndicate looted and laundered crores of taka from the banks, and they are the real defaulters. This is also a reason for rising inflation and declining forex reserves.
“If the governor wants to reduce classified loans and inflation, he should take proper initiatives against the loan scammers, and launderers.”
Echoing the same, a former president of BGMEA and also a former vice-president of FBCCI Md Siddiqur Rahman said, “While the prime minister is trying to boost business, the central bank governor and NBR chairman’s activities forced businesses on the back foot.
“We are working to find out key issues, and will discuss these matters with the government’s higher authority.”
What’s the criticism against BB?
The central bank reduced the cash incentive in preparation for the upcoming LDC graduation.
Besides, the regulator issued a circular on April 9 this year, cutting default tenure from six months to three months, and the move will come into effect from September 30 this year. The tenure will further go down to only three days effective from March 31, 2025.
If a borrower fails to pay an instalment within this time, the loan will be considered as classified, the circular read.
In another circular, issued on April 25 as per the cabinet decision held on February 7, the central bank asked all financial companies not to issue loans if any factory located outside of economic zones or government-approved industrial areas, and does not have gas and electricity connections.
The central bank had also reduced export development funds size citing the International Monetary Fund (IMF) recommendation, and increased bank interest rates as well.
Stating that such moves are detrimental to conducting business smoothly and efficiently, Industry leaders claimed that the decisions – especially the reduction in cash incentives and instalment deferred tenure.
Businesses want to set up new factories in government-approved zones, but it takes at least five years. However, the central bank issued the circular without a discussion with business leaders beforehand.
BGMEA President SM Mannan Kochi said, “The central bank is not cooperating with us amid the ongoing economic crisis. Still, we have two nearly two and half years to LDC graduation, and a grace period in our hands as well.
“I cannot believe how they could reduce cash incentives at a time like this.”
BTMA President Mohammad Ali Khokon said, “Banks are failing to pay us within a reasonable time as well, some banks are even taking up to six months to clear LCs payments.”
“Amid the situation, the banking authority has made such a move, especially redefining who they call loan defaulters. This will force businesses to go bankrupt,” Khokon, who is also a FBCCI director, told The Business Post.
Adding that due to the reduced cash incentives area, the leather and leather goods sector fell into a further severe crisis as this is in a vulnerable situation as well, Tajin Leather Corporation Managing Director Md Ashikur Rahman said, “The sector does not have to absorb the shock.
NBR harassment, bribery
The allegations that a segment of customs officials hassle businesses by demanding bribes, also known as speed money, has been around for decades. However, businesses are claiming the speed money rate has now gone up, with some customs officials citing inflation as the reason.
Industry insiders say such a malpractice is severely disrupting commercial activity in the country, amid economic headwinds.
The malpractice of taking speed money is also causing the government to lose revenue, while the country is being deprived of the opportunity to earn billions of USD, and foreign direct investments (FDI).
A number of industrialists claimed that a section of customs officials and other government officials involved in the industries sector are harassing businesses unless they pay speed money. Feeling helpless, many are choosing not to remain silent on this matter any longer.
On May 8, former BGMEA President Md Siddiqur Rahman said in a programme in the presence of Textiles and Jute Minister Jahangir Kabir Nanak that harassment by the NBR has put businessmen — whatever they export or import — up against a wall.
Siddiqur, also the industry and trade affairs secretary of the Awami League’s central committee, urged Nanak to press the issue in the next cabinet meeting to resolve this crisis, adding, “Not just us, other export and import sectors are also facing unnecessary trouble from the NBR.”
He added, “Even though Prime Minister Sheikh Hasina has a business-friendly mind, she is trying her best. But some people around her randomly harass us. We want relief from this.”
BGMEA President SM Mannan Kochi said, “NBR and customs harassment increased to an intolerable level. Taking speed money by their officials is an open secret.
“The NBR Chairman several times assured us it would be resolved. But the problem is increasing day by day.”
Bangladesh Employers’ Federation (BEF) Director Fazlee Shamim Ehsan recently wrote on the social media platform Facebook, “If you ask someone who is taking services from the NBR, they can state the difference in bribe rates between now and three years ago.
“But they [NBR authority] still claim that they are honest.”
Commenting on the allegations of increased customs harassment, Ehsan told The Business Post, “Almost all of our members claim that they must pay speed money to the customs officials while receiving goods and shipments.
“In recent times, they have increased the bribe amount by three to four times. Businesses say there is no chance of negotiation on the matter. Even after taking bribes, some officials delay the clearance of our goods.”
Ehsan, also the vice president of BKMEA, said, “This malpractice is one of the key barriers to improving the ease of doing business.”
Business leaders say that even though there are a large number of honest customs officials, they are being forced to take speed money due to pressure from dishonest officials.
