Decline in business confidence

REPORTS published in English national dailies show that the level of business confidence of the country’s investors slipped down by 0.39 percentage points (in a scale of 10 points) last year over a six-month period. Poor perception of the political situation was deemed as the main culprit. The findings were published in the 3rd Bangladesh Business Confidence Survey report which also included that the business confidence level was lower than investors’ expectation for the period for which they expected business confidence at 9.96 points.
The reports added that almost 40 percent investors did not make planned investment in the period due to low business confidence levels but now have expressed optimism that business confidence would be higher at 9.37 points in January-June period of 2015. The news report said that Business Initiative Leading Development (BUILD, a joint initiative of the Dhaka Chamber of Commerce and Industry, Metropolitan Chamber of Commerce and Industry and Small and Medium Enterprise Foundation) conducted the survey on 400 businessmen from 11 sectors including food, textile, garments, leather, pharmaceuticals, electronics, wholesale and retail trade, hotel and restaurant, transport and communications and real estate.
According to the report, the blame for the situation mostly was due to the political situation, transportation cost, electricity and petroleum oil prices, bribes and high bank interest rates, also leading to a decline in confidence about input and infrastructure, transportation cost, business environment, access to finance, legal environment and business regulation.
The scenario depicted in the report reflected the mood across most industries and business sectors last year, which caused the decline in business confidence. As the experts opined, many factors had an impact on the business confidence and it is unfortunate that the root cause of the issue (being political turmoil) has not been given a permanent solution. Economic weakness was a direct consequence of the decrease in business confidence and the continued political uncertainty has been playing a big role in such a situation. It is understandable as businesses were uncertain about the future which was reflected in their plans for the year ahead. While it is a positive note that businesses are hopeful for better conditions and less uncertainty, they have not been provided with any concrete assurance by the ruling government (or even opposition party) regarding the safe running of businesses and income.
The risks involved for the economy facing a backlash due to low business confidence still remain as no genuine steps have been taken to maintain the peace between the warring political parties. We believe that the economy has suffered enough and that political issues must be multilaterally resolved so as to give way to a conducive climate so that businesses can work safely without the fear of rising costs or damage to goods and lives.