Frequent policy change that badly affects business

LEADERS of the Metropolitan Chamber of Commerce and Industry (MCCI) have asked the government to refrain from changing business policies frequently pointing at the bad impacts of such instability on business. They sought help of Finance Minister AMA Muhith and Commerce Minister Tofail Ahmed last Sunday demanding sensitive handling of business issues which are very important now to recover the sluggish business situation and bring spurt to ongoing economic activities.
They have called for their intervention to reduce interest on bank loan at single digit and further reduce the interest rate on saving certificates to shift the focus of saving of idle money to country’s banking system. They have also rightly asked the government to make available industrial land at lower cost; which is however possible only in case of government land. For private land, the government has nothing to do. Their plea however to involve private sector in implementation of mega projects is a good suggestion for a cash starving government to use the private sector fund to benefit the nation. Naturally these measures are very important to revive the economy.
There is no doubt the cost of doing business has manifold increased and the country actually needs to raise investment which requires enough liquidity in banks in one hand and bank loans at lower interest to make investment viable on the other. In fact the business leaders have reasons to blame the government for distorting the business environment and destroying it through prolonged political crisis and they are correct to believe that only the government can bring back some improvement in the situation. But the question is whether it will allow the economy the free environment to grow.
It was government’s soaring rise in interest rates on various saving instruments up to 13.5 percent in some cases last year, which induced many to move out their saving from banks to saving certificates. It partly used the money for repayment of bank loans and other for funding budgetary deficit. The government is not content alone with NBR revenue. Meanwhile, in absence of good business and demand for new investments banks were unable to give higher interest to depositors and lower it to industrial borrowers.
Earlier the government borrowed heavily from banks and offered higher interest on deposit. Now business leaders are calling for reducing such interest rates both on saving instruments and bank interest thus asking the government to reverse its earlier decisions. But many people have already moved their idle saving to buying land making it costlier to set up new industries.
It appears that the government has distorted the money market by not allowing it to operate independently. The business is the worst victims in the hands of its wrong policies stalling new investment and business expansion. Only the government can make the situation now easier for business to grow.