Improving business, removing barriers

Pursuing business in an economy that has been affected by the Covid-19 pandemic for well over two years is a difficult task indeed. Industrialists both in the manufacturing and service sectors have encountered a string of obstacles in continuing their activities, arranging banks’ funds, and marketing their industrial products in the yet-to-revive consumer markets. Bangladesh Bank has offered generous stimulus funds for businesses to revitalise the ailing economy. However, access to such low-cost stimulus loans has not been that easy for all categories of business establishments, particularly for those belonging to small and micro sectors. Corruption and the apathy of bank officials towards lending capital in favour of small businesses are issues crippling the small and medium enterprises that employ the largest population of the local economy.

The partial picture of the state of doing business and business outlook was made public by a research organization called SANEM (South Asian Network on Economic Modelling) on Monday. The findings were based on a survey of 502 firms. The firms were chosen from the manufacturing and service sectors. The survey found that business gathered pace in the last quarter of 2021, but it apprehends a bleak future ahead due to the spread of Omicron, fuel price hike, and corruption. Besides, the micro and small enterprises are feeling the pinch because of scanty government support. The findings of the survey were unveiled in a report titled “New wave of Covid-19: State of business confidence in Bangladesh”. The survey’s Present Business Status Index (PBSI) shows that the situation gradually improved from the April-June quarter last year when it bagged 42.57 points, but increased to 52.31 points for the July-September quarter and stood at 54.15 points in the last quarter (October-December) of 2021. The improvement rate was not impressive. Despite a good status in the October-December period last year, the firms’ business confidence declined for January-March of 2022. Business Confidence Index (BCI) fell to 54.99 points for the current quarter, which was 60.67 points in the last quarter of 2021. In addition, rising fuel prices and lack of government support are shooting up business costs, so the businessmen feel that their businesses will go bad in the near future, observed the report. With the Business Confidence Index falling, more firms than ever before think that Bangladesh will see a weak economic recovery. According to the survey report, the weakest recovery will be in micro and small businesses. Till December 2021 overall business recovery was 60.6 per cent whereas micro and small firms’ recovery was 54 per cent, and medium and large firms witnessed 71 per cent recovery.

It is really disconcerting to know that only 10 per cent of SME sector got the stimulus package as the survey suggests. The complex procedure, banks’ lacklustre attitude, and corruption are some of the deterrents holding back the SME sector in this regard. It is the policymakers and certainly the Bangladesh Bank who can offset the plight of businesses, particularly the hardest-hit SME sector.

SMEs lie at the heart of the Bangladesh economy, contributing to over 31 per cent of the GDP. The sector engaging 7.8 million people is among the hardest hit by the pandemic. Rescuing these businesses through swift fiscal and policy measures is integral to preserving employment, supply chains, and overall productivity.

To recover fully, the government needs to address the challenge of containing Omicron, the latest super-spreading variant of the coronavirus. Vaccinating the population will reduce the incidence of the disease and mortality and enable the full resumption of economic activities. Making a turnaround in business, and instilling hope among the business community requires a holistic approach including undertaking a mass inoculation programme. Bangladesh also needs to address the challenge of creating employment opportunities through a competitive business environment, increased human capital and skilled labour force, efficient infrastructure, and a policy environment that attracts private investments. To improve the business environment and ensure a better outlook in the entire economic landscape, barriers to social and economic fundamentals must be removed altogether.