Business leaders on Saturday urged the interim government to immediately restore law and order, emphasising its necessity for stabilising the current business environment, reducing interest rates for industries, and implementing banking governance reforms to tackle the prevailing economic challenges in Bangladesh.
"Bangladesh is currently experiencing an unstable economic growth trajectory, with slower GDP growth compounded by a range of issues, including currency devaluation, rising inflation, financial instability, labour unrest, energy security concerns, and disruptions in key export industries. These factors pose significant threats to the country’s economic stability," said Dhaka Chamber of Commerce & Industry (DCCI) President Ashraf Ahmed during a seminar.
The seminar, titled "Current State of the Economy and Outlook of Bangladesh," was organised by the DCCI and held at the organisation’s auditorium in Dhaka. Presiding over the event, Ashraf Ahmed further stressed the need to address non-performing loans (NPL) and liquidity shortages, prioritising these issues to restore confidence in the financial system.
To address inflation, Ashraf Ahmed suggested that the government implement supply-side reforms to ensure the smooth distribution of essential goods and services.
He also emphasised the need to diversify the energy mix, establish new energy supply routes, and increase investment in the energy sector, which he described as critical to safeguarding industrial productivity.
Hurting global image
Mir Nasir Hossain, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), expressed concern over recent labour unrest, stating that it has severely damaged Bangladesh’s reputation in the global market.
He said that not only the export-oriented industries but also the domestic market-based industries are important.
Nasir Hossain remarked that the real effective interest rate in Bangladesh is excessively high, making it difficult for entrepreneurs to compete internationally.
Saying that reforms are badly needed in the NBR and customs houses, Nasir said, “Moreover, customs houses should be automated. Although the initiative has been taken few years back, but it is yet to see the light.”
He said although an affluent middle income group has grown up in recent past in the country, but in line with that, the tax net has not been widened, which is not desirable.
The former FBCCI chief said due to lack of uninterrupted gas supply, the manufacturing industries are suffering a lot. To resolve the crisis, he suggested for strengthening on-shore and off-shore gas exploration.
Business owners insecure
Syed Nasim Manzur, president of the Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh (LFMEAB), noted that business owners now feel insecure due to labour unrest and vandalism.
He also pointed out that there has been a significant decline in consumer spending, whether on food or services, in recent times.
Manzur further explained that the double-digit interest rate on industrial loans is not viable for sustaining competitiveness in the market.
He said, FDI is needed for a country like Bangladesh, but due to low confidence, it remains stagnant now. He hoped that FDI will see a positive move within few days.
Calling for protection of RMG sector, Nasim Manzur said, “We have to save the RMG industry as it has a multiplier impact on our overall economic value chain”.
Moreover, the interim government’s administrative system is not functioning properly, contributing to low investor confidence, he added.
Call for unity
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that a strong understanding and relationship between owners, workers, and labour leaders could help mitigate unrest and violence in factories.
He pointed out that factory owners suffer when they do not receive fair prices from buyers, a situation most people, including workers, are unaware of.
Hatem also urged Bangladesh Bank to provide industry owners with sufficient time to repay their loans. He echoed concerns about the gas crisis in industries, which threatens to reduce productivity and cause delays in shipments.
Policy failures
Dr M Masrur Reaz, chairman of Policy Exchange Bangladesh, remarked that the failure to implement the right policies at the right time has contributed to the recent macroeconomic crisis.
"The confidence level for investment is now shattered, and pressing issues such as law and order—particularly disorder in the ‘order’ aspect—labour unrest, and inflation are key challenges facing Bangladesh’s macroeconomic stability," he stated.
Reaz also 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 forex reserve stable through steady flow of remittance, export earning and FDI to restore confidence of the people,” he added.
Resolution through dialogue
Shams Mahmud, former president of DCCI and managing director of Shasha Denims Limited, highlighted the disruption caused by labour unrest in the Ashulia region.
He warned that if the law and order situation is not restored, buyer confidence could be affected, leading to orders shifting from Bangladesh to other competing countries.
"There may be issues related to wages and other matters, but all these should be resolved through dialogue, not vandalism," he said.
Bangladesh a global factory
Ahsan Khan Chowdhury, chairman and chief executive officer (CEO) of PRAN-RFL Group, described Bangladesh as a land of opportunity, stating that it could become the "factory of the world" due to its immense potential.
He emphasised that the business community’s primary role is to create employment, but this is sometimes hindered by labour unrest.
"We want to see the police as they should be," he said, adding, "We want to see all law enforcement agencies back again at their full capacity."
Ahsan also said that with the high rate of bank interest, it is difficult to sustain. “We should have a rewarding system for the good borrowers. There should not be any restriction on opening LCs to create employments and keep operational the wheels of industries.”
Syed Mohammad Kamal, country manager of Mastercard Bangladesh, mentioned that since July-August, digital spending has fallen significantly as consumption has been on a downward trend. He attributed this to recent political turmoil, floods, and unrest in the hilly areas, which have severely impacted the tourism sector.
"The supply chain in e-commerce and f-commerce has also been disrupted," he said.
Syed Mohammad Kamal suggested incentivising digital payment systems over cash payments. He noted that, at present, remitters receive a 2.5 per cent incentive on the remittances they send to Bangladesh. If this facility is withdrawn, they may resort to unofficial channels to send remittances home, which could negatively impact foreign currency reserves, he observed.
DCCI Senior Vice President Malik Talha Ismail Bari was also present at the event.
