Economic recovery has been moderate at best, insists business community
Tribune ReportBusiness
About 16 per cent of Bangladesh's business community believes that the economic path to recovery is strong, while 41 per cent said that path was moderate, according to a survey.
The South Asian Network on Economic Modelling (SANEM), in association with the Asia Foundation, conducted the survey, styled “Covid-19 and Business Confidence in Bangladesh”.
Selim Raihan, executive director of SANEM, presented the third round report of the survey through a virtual launching.
As per its findings, 71 per cent of those interviewed also thought Bangladesh was on the correct path to economic recovery.
The improvement in doing business in the October-December period last year, compared to July-September, was minimal.
Compared with the status in the same quarter in 2019, the situation is still grave. It shows that the firms have not returned to the pre-pandemic level, and recovery might take a while, said Raihan during his presentation.
However, sectors are experiencing recovery at varying paces. Faster recovery is taking place in pharmaceuticals, textile, and financial sectors.
Some of the indicators, such as profitability, employment and wage indicators have improved slightly compared to the past quarter, he said.
The business confidence for January-March 2021 shows some improvement over the October-December 2020 period.
The improvement is visible in most of the sub-components. Still, the overall average is low, said the economist.
The tax system is a major bottleneck for Bangladesh, said Abul Kasem Khan, director of AK Khan Company.
The tax at-source does not allow for any adjustment and refund causing the SMEs to suffer.
Along with a tax-framing regime, improved access to finance, incorporation of trade licences in the banking system will help to create an enabling business environment.
Also, the crisis mandates consumption to be incentivised to create demand, Khan added.
Export volume has increased at the cost of profitability caused by lower unit prices and higher cost of sales, said Md. Saiful Islam, president of the Leathergoods & Footwear Manufacturers and Exporters Association of Bangladesh.
This has further led to sustainability, access to finance and bank-client relationships being at risk.
The government should already consider the design of policy support through innovation and enhanced productivity for the 10 per cent tax that will be implemented after graduation, he added.
The pandemic has largely affected business profitability and costs, said Asif Ibrahim, a director of the Bangladesh Garment Manufacturers and Exporters Association.
Moreover, the second wave is still a concern for survival and cash flow management amid the order cancellations and repayments related to the government stimulus package.
Large firms have performed better than the smaller ones since they have better access to finance and easier bank-client relationships.
Private sector consultations should be focused in case of new policy adoptions, monetary and fiscal policies to target more investment with the aim of job creation and the channelling of stimulus packages to small and medium firms, he added.
SMEs should be a priority in channelling the loans and stimulus packages, Raihan said.
“Effective implementation of the stimulus package is critically important. An assessment is urgently required on the stimulus package implemented so far,” he added.
As per other survey findings, 69 per cent of the surveyed firms are yet to receive any stimulus package.
Like in the earlier two rounds of the survey, major areas of challenges include lack of package for the industry, lengthy procedure, difficulty in bank-related services and in getting information. No improvements were observed in these indicators.