• Sunday, May 09, 2021
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Chittagong’s economy at a standstill

  • Published at 02:07 pm June 1st, 2020
Chittagong’s economy at a standstill

The furniture industry of Chittagong has already lost Tk1.5 crore due to the lockdown

Life in the port city of Chittagong for the past two months has been vastly different from the one people are most familiar with. The hubbub of the city has largely been absent as almost all of the businesses at the commercial capital of Bangladesh were temporarily off until recently. Now, Chittagong city is slowly coming back to life again, but with the dread of the novel coronavirus hanging over its head. The virus continues to have an enormous effect on both the psyche of the residents and the economy of the city.

The port itself, around which the economy of Chittagong is based on, has recently been going through difficult times. Logistical and capital issues have forced many organizations to slow down the retrieval of their containers from the port, resulting in congestion and over-encumbrance while many new ships have been unable to unload their cargo. The Chittagong Port Authority (CPA) has tried their best to untangle the traffic and shift the containers to their intended destinations or to a warehouse off-site. While the congestion reduced greatly for a time being, it returned to the same situation after two weeks.

Furthermore, while the store rent charge has been waived in light of the current situation, the container detention charge is still in effect. The congestion at the port has prevented the smooth functioning of the seaports and delayed evacuation of containers — forcing some vessels to stay at the Chittagong port for weeks. During this time, the shipping liners and agents were charged and will incur huge financial losses if not waivered soon.

Off-port, the situation is even direr, particularly for small business owners. The furniture industry of Chittagong has already lost Tk1.5 crore due to the lockdown. According to the Bangladesh Furniture Industry Owners Association,Chittagong.While the amount of loss may be less than what major businesses have incurred, many furniture-making businesses are generational and are small in nature. The sector employs around 300,000 people who work in 4,000 furniture companies — many of whom had taken up loans to make furniture for the expected demand during the Eid. But the lockdown has crippled the sector during its most profitable time.

Another sector of Chittagong that has been hit hard is the restaurant industry. The always popular Mezbani dishes have seen a decline in consumption as restaurants continue to stay closed. While some eateries are capable of delivering, dining in is still prohibited.The traditional dish is found throughout the restaurants of the port city and has also become a staple of iftar during the Ramadan in the last few years.

But now, even after the relaxation of some restrictions on outside movement and businesses, consumption of Mezbani, as well as other dishes, has been greatly reduced.Nonetheless, these businesses still have to provide salaries and rent for spaces as many of them are dependent on rental commercial real estate. Depending on the location and the building, the rent can be quite high which they have to continue to bear unless they take a drastic decision which may derail their entire venture.

Many shop owners of Chittagong are also on the same proverbial boat and most of the shopping malls of the city have opted out of opening their doors. Places such as Lucky Plaza, New Market, Sanmar Ocean City, Finlay Square and others will remain shut until May 31. These places have been shutdown for over two months now, but have not waived off rent for the shops they host.

On the positive side, many of the readymade garment factories in Chittagong have started resuming operation since the tail-end of April. After much debate and contemplation on the effect on economy and health, 255 RMG factories, and more since then, resumed their operations. Although, many of the factories are located outside the city itself and on Specialized Export Processing Zones (SEPZ). This has boosted the economic morale of the city to some extent even though the concern of the virus has not subsided yet.

But unlike the RMG sector, the ongoing development projects of the Chittagong Development Authority (CDA) are still at a standstill. Construction of the Bayezid-Faujdarhat Bypass Road was scheduled to finish before Eid, which has now been delayed. Similarly, work on several other projects is now stalled and delayed as project expenditure keeps rising. Going safely back to construction projects will be a difficult task.

The same can be said about the real estate developers of Chittagong as well. The property market of the port city was in full-swing before the pandemic. Developers such as AirBell were in the middle of constructing several luxury and budget-friendly projects in the port city. But now the work is on hold as projections for completions have been pushed back further and further.

The recent situation will also put a dent on future project plans as some people within the industry are expecting a decreased demand in real estate and/or changing demand of property types.

However, even though many of the offices at the city centre are still closed — though some are opening little by little — most of them are on the verge of reopening soon as more and more regulations are relaxed by the authorities. The economic toll for the businesses in Chittagong, both small and large, will have a multi-year effect on them. But when the recovery process begins, it is expected to quickly take off. And if the situation does not deteriorate too much in the near future, the recovery will be, hopefully, better than expected.

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