The country’s overall business confidence index declined by 0.39 in July-December 2014 compared to January-June of the same year, according to a survey report revealed yesterday.
The decline is attributed to poor perception on input and infrastructure, business environment, international business access to finance and business regulation.
“The overall business confidence index for July-December of 2014 came down to 9.35, which was 9.74 in January-June period of the same year,” said the Business Confidence survey conducted by the Business Initiative Leading Development (BUILD) and Associates for Development Services Limited (ADSL).
Syful Haque, research coordinator of ADSL, presented the survey report at Dhaka Chamber of Commerce and Industry conference room yesterday.
Business confidence index for January-June period of 2015 is, however, expected to rise to 9.37 in the second half of this fiscal year.
The decline in business confidence is due to decline in confidence in input and infrastructure, business environment, access to finance, legal environment and business regulation, said the report.
The key sub-indicators contributing to low-business confidence include political situation, transportation cost and situation, electricity price, petroleum oil price, unofficial payment and bank interest rate, it added.
The survey covers a board range of business environment including access to finance, corruption, infrastructure, crime, competition and performance with a view to understanding the pulse of businesses and investment, said BUILD Chairman Asif Ibrahim.
According to the survey, increased business opportunity, profit margin, demand for firms’ products, growing market demand for products and availability of internal funds have driven investment in July-December 2014.
In response to the survey, businesses expressed hopes that labour relations, employment scenario, trade facilitation, telecommunication, electricity supply, internet connections and availability of skilled labour indicators will improve in January-June 2015.
They also expressed deep concern over political situation, electricity prices, transportation cost and situation, corruption, interest rates, petroleum prices and profit tax rates.
The continued efforts on business climate reforms are critical to boost up confidence and sustain the growth momentum and investment decisions can be significantly influenced by changes to business confidence, the report said.
An uncertainty about the future can reduce confidence, meaning that firms may postpone their investment decisions until confidence returns, it said.
The report added that understanding business confidence is important for a country that requires large-scale investment to grow.
The third Bangladesh Business Confidence Survey (BCS) was conducted between February 6 and March 6 of 2015, covering 400 businesses in Dhaka and Chittagong.
The survey has been conducted on 400 manufacturing and service enterprises including food, textiles, garments, leather, chemicals, pharmaceuticals and electronics and light engineering.