A year of firefighting
FROM PAGE B1
The challenge in opening LCs in 2024 has caused businesses to face considerable losses, said Pran-RFL Group Chairman Ahsan Khan Chowdhury.
“If investors cannot open LCs properly, it has a huge impact on exports and production levels,” he added.
In such a situation, the attention of businessmen is impaired and production fails, which impacts exports and the economy, he said.
However, he said the government should not be blamed for this, rather businessmen also have a responsibility here as they can also supply the required US dollars using export earnings.
INCONSISTENT POWER, GAS SUPPLIES
Throughout 2024, production was severely affected by the gas and electricity crisis, said Muhammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
“We were only getting three to five PSI [pounds per square inch] of gas during the day whereas we needed 15 to 40 PSI,” he added.
Hatem further said that the government’s decision to increase gas prices from Tk 11.95 to Tk 31.50 per cubic metre led to higher production costs.
However, he noted that the recent political shift is encouraging and a significant conquest for the business community.
According to the business leader, the new chairman of the National Board of Revenue is showing positive approaches to improve the business climate.
LABOUR UNREST EXPOSED LAW AND ORDER VACUUM
Soon after the formation of the interim government, major industrial belts on Dhaka’s outskirts heated up with agitating labourers.
They abandoned the production lines, took to the streets and chanted slogans for pay hikes and other benefits.
This impacted apparel exports and the pharmaceutical industry in particular.
According to Pran-RFL Group Chairman Chowdhury, about 10 percent of business and trade were lost in 2024 due to political instability and labour agitation.
Meanwhile, FICCI President Akhtar said improving law and order and energy security remain the biggest concerns in the immediate term for existing investors.
“Unless we have a full grip on the situation, existing investors will be jittery,” Akhter said.
This issue needs to be addressed quickly as existing investors act as the country’s ambassadors and have a strong impact on the confidence of incoming investors, he added.
According to central bank data, during the January-June period of 2024, Bangladesh received just $712.44 million in foreign direct investment compared to $728.63 million during the corresponding months of 2023.
Akhter also said investors are taking a wait-and-see approach before making investment decisions.
The footfall of foreign guests, a proxy of foreign investment and exports, also speaks of a topsy-turvy business climate in 2024.
Md Shakawath Hossain, chief executive officer of Unique Hotel and Resorts PLC, said the hotel business was dull throughout the outgoing year.
After sluggish booking for months, he said the presence of foreigners at their two luxury hotels slightly improved in October but saw a fresh downturn in November.
“Business recovery totally depends on the current political and economic situation in the country,” Hossain said.
HIGH INTEREST RATES ELEVATED COST OF BUSINESS
Contractionary measures, like raising interest rates, were adopted to curb inflation, but the long-term project financing interest rate from banks rose to about 14 percent, which resulted in a slowdown in the growth of private sector credit, said former DCCI president Ibrahim.
According to him, the private sector credit growth rate had already dropped by 9.8 percent by mid-year.
Pran-RFL Group Chairman Chowdhury said that anyone wishing to invest in or conduct a business should bear in mind the high bank interest.
“I think we will get rid of the current difficult situation with time,” he commented.
Ferdous Ara Begum, chief executive officer of Business Initiative Leading Development (BUILD), said high loan interest rates, a lack of established law and order and unclear guidelines have made investors hesitant and foreign investors have chosen to wait-and-see.
She said the government is also giving projects under the Annual Development Programme higher priority than others, and that some projects have been shelved. This indicates that there might be a wait for fresh investment until the budget for fiscal year 2025-26 is placed.
However, she said Bangladesh has been able to send a signal to the international world that the country has fought against oligarchies, and transparency and accountability will be the main thrust of the government.
“Several reform commissions and committees have been formed, and they are currently turning in their reports that expose the real facts, which can be viewed as encouraging,” she added.