Businesses, buyers losing confidence

Al Amin :
Political uncertainty is lingering the country’s economic resilience as it affects not only the business landscape and investors but also consumers’ confidence, say entrepreneurs.

The investors and business owners are hesitating to making important financial decisions for the companies that may lead to growth and most of the industrialists tend to delay decision-making on new projects until they get greater clarity on what will follow in the political landscape, the entrepreneurs and chamber leaders told The New Nation on Monday.

The global economy continues to gradually recover from the shocks of the Covid-19 pandemic and Russia-Ukraine war. The pandemic health crisis is officially over, and supply-chain disruptions have returned to pre-pandemic levels globally.

But, Bangladesh is failing to take advantage of it due to plummeted foreign currency reserves, decline in production in industrial sectors and political uncertainty, they added.

As per the Bangladesh Bureau of Statistics (BBS) data, the production growth in the country slowed significantly in the July-March period of 2022-23 due to the global economic slowdown and gas and electricity shortages at home.

The average production of large and medium manufacturing units grew 9.02 per cent in the first nine months of the outgoing fiscal year, down from 16.5 per cent in FY22, the BBS data showed.

Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said their production levels have fallen due to slower export demand and some domestic issues.

“Currently, our export orders have declined and it may decline further in the coming days,” he told The New Nation.

Md Sameer Sattar, President of the Dhaka Chamber of Commerce & Industry (DCCI), said that business environment has already been challenged due to post pandemic effects and the Russia Ukraine war and the entrepreneurs are not being aggressive right now.

The country’s economic recovering is also delaying due to lower confidence of businesses disrupted supply chain and energy crisis at home caused by global geo-economic tension, he said.

The growing inflation, foreign exchange volatility and low import trend of capital machinery, industrial raw materials have been holding back the desired and new local private investment, the DCCI president said.

Rizwan Rahman, former president of Dhaka Chamber of Commerce & Industry (DCCI), said that the entrepreneurs are moving forward cautiously in the case of making new investment of expanding their business units as cost of doing business has increased by over 30 per cent in recent times due to higher inflation.

“Besides, the entrepreneurs are losing business confidence due to the current political uncertainty. As a result, the demand for bank borrowing to private sector has fallen down as well as economic resilience is prolonging,” he added.

Firms are worried that their cost of business might increase in the coming months which may hinder their growth, according to the Bangladesh Business Confidence Survey 2022-23.

The gross international reserve of Bangladesh, according to the International Monetary Fund guidelines, dropped further to $23.3 billion on July 26 from $24.17 billion on July 3 while as per the Bangladesh Bank’s conventional value, the foreign exchange reserve was $29.68 billion on the day, according to Bangladesh Bank data.