The world is still struggling with the Covid-19, but having these challenges, Bangladesh’s economic progress is quite satisfactory during the first half of FY2021-22 despite there are many challenges like inflation, lack of export diversification, policy support, skill shortages, poor logistic infrastructure, supply chain constraints etc. These remarks were made by the President of Dhaka Chamber of Commerce & Industry (DCCI) Rizwan Rahman at a webinar in “Bi-annual Economic State and Future outlook of Bangladesh Economy: Private Sector Perspective” held on 19 February 2022. Governor of Bangladesh Bank Fazle Kabir joined the webinar as the chief guest while FBCCI President Md. Jashim Uddin joined as special guest. DCCI President Rizwan Rahman presented the keynote paper.
Rizwan Rahman in his presentation outlined the bi-annual economic state of the country started from July 2021 up to December of the same year. Rizwan Rahman said the country still could not come out of the shackle of Covid 19. Inflation rate rose to 6.05% in December in view of the rise in fuel cost in the international market. He suggested to give loan facilities to the importers of daily essentials and to cut duty on commodities import to tackle the inflation. He also suggested to compensate the agro-businesses with lower transportation and fuel cost.
However, despite having notable global supply chain disruptions, Bangladesh’s goods export have increased by 28.41% in last six months which is a good sign, he said. In terms of revenue growth and effective development expenditure, he suggested for full automation of tax, VAT, customs assessment, return and credit. He also urged for widening tax net. He said continuation of SUKUK bond and other securitized assets in the local market and sovereign bonds for international borrowing would reduce dependence on banking sector led borrowing.
For increasing local and foreign sector investment he suggested for lowering cost of doing business, removing discriminatory policies between local and foreign investors, framing a national roadmap for foreign investment, rationalizing corporate tax structure, equipping economic zones, readiness and diversifying FDI sectors. For the overall development of agro and agro-processing sector he recommended for central bonded warehouse facility and a separate food industrial zone.
About 7.8 million CMSMEs in Bangladesh constitute over 97% of the total industrial units. CMSMEs contribute to 45% of manufacturing value addition and the contribution of SMEs is only around 25% of the GDP. For this sector, collateral-free, cash flow based loans are needed, he said. He also recommended for establishing a dedicated SME bank. He said that 59% loans under stimulus packages were disbursed, but the disbursement process should be expedited. Banks should enhance monitoring so that CMSMEs get adequate loans.
He underscored the need of developing an inclusive and long-term logistic strategy including a National Logistic Policy. According to BIDS survey 66% of the graduates of National University are unemployed, 47% Unemployment rate among the educated population. He then urged upon skill development and industry-academia collaboration.
Governor of Bangladesh Bank and chief guest Fazle Kabir said that due to Covid our economy fell into a challenge but with the power of resilient private sector of Bangladesh the economy is performing relatively well in recent past. Our GDP and total size of economy have been increased which is a good sign and reflects that we are on board, he said. Regarding financial sector, he said that government has declared stimulus package at the right time and there is no liquidity shortages in banks right at this moment. He also informed that Bangladesh Bank is closely monitoring the inflationary pressure on the economy. In terms of export diversification, he also reiterated that our light engineering, jute, leather, ICT and pharmaceutical sectors are doing better beside the RMG sector. We need to nurture these sectors for better diversification, he told. Considering the export competitiveness, the EDF facility has been extended, he said. He also hoped that our stable economy would help attract more FDI. Moreover few of the mega projects will be accomplished soon and that will help expedite FDI inflow, he mentioned. Later he urged upon for enhancing soft and hard skills development of our manpower considering the challenge of LDC upgradation.
Md. Jashim Uddin, President, FBCCI said that prices of commodities in the international market increased. In that case cost of import and duty also increased. But the economy is yet to be recovered, he said. He said due to disrupted global supply chain system the international market becomes little bit volatile. For controlling inflation he recommended to redesign duty structure for the time being. He also urged upon sectoral skill development and innovation targeting the LDC graduation. Moreover, we need to be competitive on negotiation skills, he added. He termed agro based sector as a potential sector and suggested to incentivize the producers and for their skill development by modern equipment and technology. For export diversification value added jute products can be a mainstream product beside the RMG in the long run, he said. He also said that energy price hike will affect the inflation at this moment as we are still in the pandemic situation. He also said that CMSMEs are the lifeline of economy and NPL by CMSMEs are relatively low than the large and medium. He said next budget should get priority on private sector, issues related to LDC graduation, revenue collection, ADP expenditure, increasing tax net etc.
Naser Ezaz Bijoy, President, FICCI said real estate sector is a large sector which has a positive multifarious implications to other related sectors. If we can securitize the portfolio issuing bonds then we will be able reduce the rate of defaults, he added. He however urged to improve the ease of doing business not only for the foreign investors but also for the domestic investors. He also stressed on predictability of regulations and ASEAN integration of Bangladesh that could play a vital role for attracting foreign investors. He also suggested to arrange sector-specific road show to know our gap and . SME, will help develop an ecosystem for the growth of the country, he mentioned. Later he again stressed on creating a strong bond market in the country.
Md. Saiful Islam, President, MCCI said Bangladesh is a success story in the South Asia due to having its economic strength. We are trying to recover the economy. Stimulus package announced by the government was the game changer, he said. Our export increased by 28% and if this trend continues then by the end of this year it will be hovering around $50 billion, he mentioned. He said due to lack of enriched research and development work, we are deprived of proper diversification of products. He also said that CETP in Savar tannery estate is of no international standard that may fall the investors into non-compliance. This is a national problem so it should be solved soon to make it workable. Light engineering and agro based industry have a good prospect, he said. He also said that Bangladesh should conduct its international credit rating which he believes good and that will increase our negotiating power. $80 billion export target by the year 2024 is achievable, he quoted if we can maintain peace and harmony and unrest. He said that we are still in recovery stage and now gas and energy price hike would hamper live and livelihood. To reduce government’s subsidy he suggested to utilize “gas development fund” and “energy security fund”.
Dr. Zaidi Sattar, Chairman, PRI said Bangladesh is a highly integrated market. Bangladesh’s economy is growing and the size of GDP is quite big. He stressed on the development of domestic market. He also stressed upon export of services, effective exchange rate and diversification of products. He however said that Bangladesh in recent days is doing much better in diversification. He said in last 20-30 years Bangladesh economy is more integrated with the global economy.
DCCI Senior Vice President Arman Haque gave the introductory remarks.