When this government came into power, the country’s economy was already grappling with significant challenges. Although the previous government claimed the economy was thriving, the reality painted a different picture. Since assuming office, the current administration has encountered numerous obstacles. However, the business and economic sectors have not been given the attention they critically require, nor do they appear to hold a prominent position on the government’s priority list.
The country’s economic situation is deteriorating. To overcome this, stakeholders must be engaged in discussions, and proactive steps need to be taken to resolve the issues. Unfortunately, this area has seen a considerable lack of initiative. While it was initially believed that the economic crisis in business and trade could be resolved quickly, it now seems likely to drag on.
Inflation is a major concern for everyone. I believe that in a country like Bangladesh, inflation cannot be controlled simply by raising interest rates. Unlike more developed nations, Bangladesh’s economy is not well-structured. Many things here operate in an unstructured manner, often outside the rules.
I disagree with the theoretical approach that increasing interest rates will control inflation. Interest rates have risen significantly—by 6-7%—over the past six months, but this has had no noticeable impact on the market.
Domestic investors feel that the government is not focused enough on business and trade. During the previous government’s tenure, gas prices were hiked by a staggering 172% based on false promises of uninterrupted gas supply, but that issue remains unresolved. Gas supply is still irregular, and yet there is another announcement of a price increase. Although the current winter season masks the problem, the summer months will likely reveal the worsening electricity situation. Even now, power outages occur once or twice a day.
Amidst such conditions, the banking sector is also in turmoil, while political tensions are high. Foreign investors, in particular, are concerned about this. A decline in investment during such times was expected. We believe investment will improve gradually if political stability is achieved. However, it is unlikely to see a significant increase in investment in the next quarter.
Bangladesh has a pool of skilled individuals in the economic sector. Yet, there is a significant gap in effectiveness and dialogue. Building trust and engaging people remains a challenge. Policymakers need to sit down with those who are actively involved in the field. They should guide them, identify issues, and address them, but this is not happening.
The unprecedented VAT increases, for example, are being implemented without proper consultation. One rate is increased today, and another is reduced tomorrow. Such decisions should have been made after extensive discussions and with sufficient preparation. The government could have consulted with reputable business leaders—because not everyone is corrupt, and not everyone is aligned with the previous government.
The writer is a former President of BKMEA and MD of Plummy Fashions Ltd
