Home ›› 31 Dec 2021 ›› Front
Almost 24 months into the Covid-19 pandemic, the year of 2021 will remain in memory bank as to what living it was like in the bygone year that for the most part upended life and livelihood.
The highs and lows throughout 2021 will continue to be reminiscent till Covid loses its pandemic status and bring normalcy hopefully sometime in 2022.
The spike in Covid cases, ‘strict lockdown’, downturn in businesses, job cuts, fraudulent practice of e-traders and above all hike in fuel price affected life in its entirety.
As every other year, the 2021 touched upon every basic tool that fulfills one’s life – health, economy, education among them are notable.
The raging pandemic put out the light of life for many while hitting local economy and export-oriented sector hard.
During the countrywide shutdown, the mode of life came to a standstill. When restrictions were lifted, normalcy returned propelling the wheel of economy gradually.
Following an improvement in Covid-19 situation, the export sector turned around as huge work orders were being placed by the European buyers.
During the period, e-commerce, however, was over the moon, and making brisk business since the normal functioning of economy was going through a rough patch.
But some rogue e-business platforms like Evaly, Eorange, Dhamaka, and Sirajganjshop.com stained the glory of online business.
Cheating by e-commerce
The government took some initiatives to halt suspicious operations of e-commerce and essential commodity price hike, but to less avail virtually. Hundreds of crores of taka were embezzled by some so-called e-commerce companies. By the time the authorities woke up to the malpractice, some of the embezzlers had already fled the country.
In banking sector, the liabilities soared to Tk 543 crore in Fiscal Year 2020-21, up from Tk 141 crore over the previous fiscal. In FY18-19, the amount was only Tk 3 crore.
Evaly’s liabilities to its 2 lakh customers stood at Tk 311 crore in FY21 which was Tk 128 crore a year ago. On the other hand, its liabilities to suppliers were Tk 206 crore in FY21 which were Tk 10.46 crore in the previous fiscal.
Evaly’s chairman and managing director had been arrested while an administrator appointed to run the company. Followers of Evaly Founder Mohammad Rassel opened up new companies like Qcoom, Eorange and the like, and took on a same course as did Evaly.
More than two dozen e-commerce companies are now under surveillance. Around 20,000 such companies are in operation now.
Eorange emblazed Tk 1,100 crore, according to a case document filed against its owners.
Qcoom is another e-commerce whose head of sales Humayun Kabir, alias RJ Nirob, was nabbed by the lawmen in October last.
The company owes its customers at least Tk 250 crore. Besides, at least Tk 397 crore that Qcoom collected from its customers remains stuck in payment gateways, said the DB chief at a press briefing.
Aleasa Mart, another company, stopped refunding to its customers for five months. After keeping its shutter down for a period of time, the business enterprise, however, resumed operation with the help of lawmen.
In Bangladesh, digital commerce came into being in 2011. The Bangladesh Bank introduced the National Payment Switch Bangladesh (NSPB) in 2012 allowing online transactions through banks.
Diesel price hike
The government increased the price of diesel and kerosene that shot up transport fare and hit the marginalised community very hard. The diesel and kerosene price rose up to Tk 80 from Tk 65 per litre.
Earlier in 2016, the price went down to Tk 65 from Tk 68. Despite the price cut, the government had been making profit at Tk 15.75 for diesel and Tk 16.75 for kerosene per litre.
The 2021 price hike of diesel and kerosene has sparked off tensions in four sectors — power, transport, agriculture and industry — as diesel is the main fuel in transport, agriculture and industries while power sector largely depends on it. The irrigation system is completely reliant on diesel.
The fare for intercity and long-haul buses has increased by 26.5 per cent and 27 per cent respectively. The launch fare has also been readjusted by a 35.29 per cent hike.
Bangladesh Petroleum Corporation estimated the demand for fuel oil for agricultural machinery to be 19.39 lakh metric tons while industrial sector annually consumes 4.21 lakh metric tons of fuel, of which diesel accounts for 81 per cent or 3.41 lakh metric tons.
Highest turnover in Dhaka Stock Exchange
Despite the Covid-19 pandemic, the premier bourse Dhaka Stock Exchange (DSE) recorded a daily highest turnover of Tk 25.46 billion in over a decade on August 10, 2021.
It is the biggest single-day turnover since December 6, 2010 when a record amount of Tk 27.10 billion was exchanged.
The DSE trade volume also surged to an all-time high as a total of 940.90 million shares were traded, snapping the previous day’s record of 741.76 million.
GDP on right track
Bangladesh has seen a growth rate of over 7 since 2016 reaching 8.15 in 2019. However, the upscale growth came down to 3.51 in 2020 due to the Covid-19 impact.
However, the country dealt with the situation and achieved 5.47 per cent growth in 2021. The gross domestic product (GDP) was $ 355 billion -- $ 19 billion lower than the target of $ 374 billion for Fiscal Year 2020-21.
Countrywide strict lockdown
To rein in massive Covid-19 infection, the government declared a countrywide strict lockdown for the first time on July 23 that went on for 14 days. Everything came to a standstill excepting the operations of some shops that sold daily essentials and medicines. The transportation of raw jute was allowed during the two-week restriction.
However, the government succumbed to the pressure from business leaders, especially those from apparel sector, and relaxed lockdown from August 1, allowing the export-oriented sector to go into operation.
The export performance declined by 11.19 per cent to $ 3.47 billion in July 2021 compared to the same period a year ago.
From negative export growth to record export earnings
When the Covid-19 pandemic hit Bangladesh, the export sector especially apparel export faced a big crisis. The government issued ordinance to shut everything to curb pandemic while the buyers either postponed or cancelled orders.
In calendar year 2020, Bangladesh’s export earnings declined by 14.14 per cent to $ 33.5 billion compared to that in the previous year, but when the global pandemic situation came under control due to mass vaccination, the export sector turned around and performed well. In October 2021, the country earned $ 4.73 billion with 60.37 per cent growth which is a record ever.
From January to November, Bangladesh earned $ 39.3 billion which exceeded the pre-pandemic level. From January to November 2019, the export earnings were $ 35.77 billion.
Apparel sector lifeline to economic recovery
In the Covid-19 recovery period, the apparel sector was at the helm earning around $ 28 billion in the last eleven months of 2021 while $ 39.3 billion was earned from total export.
Industry insiders say as the Western countries relaxed lockdown and reopened their business; buyers faced a huge stock crisis and needed more apparel to meet their customer demand.
At the same time, the main apparel-sourcing region South-East Asia ran into trouble.
China faced energy shortage while Vietnam imposed a further lengthy lockdown to curb the Covid-19 transmission and Mayanmar military took over the government.
“For all these reasons, the buyers were looking for alternative sourcing hub and most of them turned to Bangladesh,” said Shahidullah Azim, vice-president, Bangladesh Garment Manufacturers and Exporters Association.
“The USA that didn’t practice fair price was also bound to do so during the crisis. Though some new buyers would not stick to us, still we expect that most of them will continue and increase orders,” Azim told The Business Post.
Negative export earnings in jute sector
Despite the pandemic, jute and jute goods were doing well but since April 2021 it keeps on recording negative performance.
From July to November 2021, the sector earned $ 457 million through export while $ 553 million was earned in the same period of 2020.
According to the Bangladesh Jute Mills Association, raw jute export increased by 33.09 per cent while yearn export decreased by 25.64 per cent and sack and bag export went down by 34.98 per cent in 2021.
Industry insiders claimed that due to high price of raw jute in domestic market, a number of factors brought the sector performance to its knees.
The hike in freight cost four to five times compared to that in normal period, political unrest in export destinations and deprecation of Iran and Turkey’s currency against the US dollar are some reasons that stained the sector performance.
The sector people also claimed that due to syndication in domestic raw jute market, per maund raw jute price went up to Tk 6,500 which was Tk 2,500 to Tk 3,500 in other time. For this reason, production cost went almost double and the export data showed high growth.
Esrat Jahan Chowdhury, director, Bangladesh Jute Goods Exporters Association told The Business Post that, “Deprecation of Lira against USD and syndication in raw jute market are currently bar to optimum performance.”
“The government should enforce law to protect jute sector from the clutch of syndicate.”
Record hike in yarn price
When the pandemic was raging globally, the main jute cultivating countries -- India, Brazil, US and Canada -- was heavily affected that brought down global cotton production, thereby raising its price.
Per pound cotton price was $ 0.59 to $ 0.7 before the Covid-19, but the price began to rise due to tight supply to the international market.
Prices have been up almost 80 per cent since December 2019, according to a recent report of The Economist.
Latest on November 17, per pound cotton sold at $ 1.2 which is also a record ever, according to the media report.
However, Bangladesh meets around 99 per cent cotton demand through imports and around 71 per cent of apparel manufacturers are cotton-based.
When cotton price surged in the international market, local spinning mills also followed suit hiking yarn price.
“Our production cost shot up around 40 per cent but buyers did not adjust the product price proportionally,” said Fazlee Shamim Ehsan, vice-president, Bangladesh Knitwear Manufacturers and Exporters Association.
“It is true that spinning millers are bound to increase yarn price due cotton price hike in international market, but the way they did it is totally illogical, and it happened without any prior notice,” he gave vent to his resentment.
Considering the current yarn price in the country, apparel exporters are now forced to import yarn from India where the price is low.
LNG crisis hits textile millers
Amid the global Liquefied Natural Gas (LNG) crisis, Bangladesh faced around 1 billion qft LNG shortage per day.
“The gas pressure fell in the national grid hampering our production. How should we continue production in such a situation?” Mohammad Ali Khokon, president, Bangladesh Textile Mills Association, posed a question.
He claimed that the government set up LNG terminal to meet demand but to no avail.
Rice production, import and price all set record
Of many a hot topic in 2021, rice is one that witnessed a record production, but still its import and price hike broke all previous records.
Bangladesh grew a record amount of rice in 2021 -- 2.8 crore metric tons in Boro season. Even Aush and Aman production was quite good. However, the country faced a record rice price hike in the local market.
In Dhaka, the finer variety was selling for Tk 60 – Tk 75 per kg while BRRI-28 Tk 50 – Tk 56. The price of coarse rice was Tk 48 – Tk 52, which was Tk 5 – Tk 10 higher compared to that in the corresponding period last year.
To rein in the price hike, the government imported around 22 lakh metric tons of rice in 2021, according to the food ministry, but the price did not come down.
Record edible oil price
At the same time, edible oil prices went through the roof in line with the rising price in the international market, making consumers dig deeper into their wallet in the pandemic season.
To meet domestic demand, Bangladesh imports edible oil from Malaysia, Indonesia, Brazil and Argentina.
Due to the pandemic, edible oil supply fell short in global market and per metric ton crude soybean oil price rose from $ 650 to $ 1,570.
In addition, the government imposed three-step import duty on edible oil. Currently, per litre bottled soybean sells at Tk 165 which is a record ever.
