Country witnesses a slow pace in new investment

Al Amin :
The country has witnessed a slow pace in new investment and business expansion amid the changing economic reality caused by the electricity and gas price hike.
Moreover, the sustaining existing businesses have also become challenging due to the tightening import and global recession warnings, emerged by the ongoing war between Russia and Ukraine, the entrepreneurs said.
They said the government and the central bank have taken various steps to reduce import due to dollar shortage. The central bank is also scrutinizing all the letters of credit (LCs) to avoid trade based money laundering.
The initiatives have forced to reduce import of capital machineries, must needed for new investment and business expansion, they added.
The entrepreneurs said no one is being brave enough to make new investments during the current turbulent situation caused by power and energy price hike.
MD Sameer Sattar, President of the Dhaka Chamber of Commerce and Industry (DCCI), told The New Nation, “This year is not appropriate time for making new investment or expansion as cost of doing business has increased significantly.”
“Rather, it will be a great success to keep running the existing business considering the changing economic reality caused by Russia-Ukraine war,” he said.
According to the Bangladesh Bank data, the import of capital machineries has fallen down by 11 per cent to below $7.30 billion in first six months (July-December) of the current fiscal year (2022-23).
The data also showed that the overall import expenditure has decreased by 28.37 per cent only in last December.
Experts said that the decrease in import of capital machineries has no short-term effect, but in the long run, it affects Bangladesh’s export trading.
Khandkar Golam Moazzem, Research Director of the Centre for Policy Dialogue (CPD), said Bangladesh witnessed high growth in the import of capital machinery in last fiscal year as many entrepreneurs increased their production capacity due to the increased growth in garment exports.
“But, currently, the business expansion is decreasing as global economic uncertainty is looming. It is now difficult to predict the improvement of the situation,” he added.
“This will not cause any problems in the near future. But worryingly, future investments  
are suffering. If this trend continues, industrial production, export, and employment growth may stagnate in the long run,” Moazzem added.
Bank officials said that now Bangladesh Bank has to be informed 24 hours before the opening of LCs for more than $3 million in case of import.
In many cases, the central bank blocks the opening of large LCs due to the shortage of dollars. The impact of the tightening measures for opening LCs also causes decreasing capital machinery import, they pointed out.
Mohammad Ali Khakon, President of the Bangladesh Textile Mill Association (BTMA), said that some of the new mills had opened capital equipment import credit before the current crisis.
Those who did not open the LCs earlier now folded their hands. Due to this, all the new factories will not be able to come into production at the scheduled time, he said.