100 days of govt: Businesses seek high security, low interest

Weak law and order, high interest rates on bank loans, and slow bureaucracy remain big concerns for entrepreneurs despite many steps taken by the government in its first 100 days, business leaders said yesterday.
With the supreme sacrifice of hundreds of youths in the July-August mass uprising that toppled the previous regime, the people have huge expectations from this government, for reforms to ensure transparency and accountability, and to restore macroeconomic stability, they observed.
They made the comments at a discussion titled “100 Days of the Interim Government: Economic Review”, organised by The Daily Star at its office in Dhaka.
Mir Nasir Hossain, a former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said the law and order situation improved gradually after sudden deterioration following the ouster of the Awami League government, but it is still not up to the mark.
 Several factories were attacked while the police were inactive and they are not confident yet, he said.
Meanwhile, the central bank kept tightening its monetary policy to contain inflationary pressure as the Consumer Price Index remained above 9 percent for more than two years, according to the Bangladesh Bureau of Statistics.
Contractionary monetary policy is a significant tool to control inflation, but this is not the only way, said Mir Nasir, also managing director of construction company Mir Akhter Hossain Ltd.
The government needs to remove problems in the supply chain. As products change hands several times, and extortion persists, prices go up, the business leader pointed out.
For instance, agricultural produce sold by farmers at Tk 10 costs Tk 80 in Dhaka. Extortion at different stages of the supply chain is one of the main reasons for this price rise, Mir Nasir said.
“If extortion continues in different places under different names, the prices of commodities will not come down.”
The contractionary monetary policy has also sent the interest rates on bank loans to the roof, making debt servicing difficult for entrepreneurs, he said, adding that this may cause non-performing loans to rise.
Mostafa Kamal, chairman and managing director of Meghna Group of Industries (MGI), a commodity importer and processor, also raised the issue of law and order.
The cost of transporting goods rose, although the leaders of the system changed, he said, indicating extortion is still in play.
“We’re feeling it. They [extortionists] come in the name of a new party. Their demand has also increased and they are citing  price rises for this increase.”
Mostafa Kamal alleged police at stations ask businesses to negotiate with the extortionists instead of taking action.
He also claimed people wrongly blame syndicates of businessmen for high inflation, but in reality, the depreciation of the taka against the dollar – 35 percent in three years – led to a rise in the prices of imported goods and raw materials. “Price rises in the international market also contribute to domestic price hikes.”
Mostafa Kamal said representatives of businesses asked the government to consider the rise in dollar price, duties, and production costs in a meeting to fix prices.
 He said the government should not use the term “fair price” whole selling daily necessities through the Trading Corporation of Bangladesh. “This is not the fair price. This is the subsidised price. Everybody should mention it. Otherwise, many will think that we are operating unfair businesses.”
“We have been criminalised through this,” he said.
Energy is another big concern for businesses, as many factories are operating 60-70 percent of their capacity for the dearth of energy.
Mostafa Kamal alleged he is still struggling to get facilities like power and gas after investing $700 million in the Cumilla Economic Zone.
“We are facing bureaucratic red tape. Around 10,000 people will be employed in this zone, but the availability of utilities is still uncertain,” he said.
 “How will FDI [Foreign Direct Investment] come to Bangladesh where domestic investors are struggling to get utilities,” he remarked. “Foreign investors will definitely come with big investments when they see the domestic investors doing well.”
He said there should be a rule that an official has to clear a file in three months. The entrepreneur should also be informed within three months about their next step to launch a business.
Kamran T Rahman, president of the Metropolitan Chamber of Commerce and Industry (MCCI), suggested re-energising the police by recruiting officers through short-term courses to restore confidence and efficiency.
While the central bank is raising interest to curb inflation, it is straining businesses. He asked whether alternative economic measures could be considered to tame inflation.
The MCCI president commended the government for forming reform commissions but urged to expedite all the processes.
Although the foreign exchange reserves dropped, LC opening has improved, he added.
Monzur Hossain, research director at Bangladesh Institute of Development Studies, said that easing the inflationary pressure and bringing discipline to the financial sector are the major challenges now.
He remarked that the current economic situation is a legacy of the previous government after years of mismanagement, faulty policy measures, and fixed interest rate policy.
Investment has not increased because of this interest rate policy, but defaulted loans mounted, he pointed out.
He agreed with the business leaders that it would not be wise to use a super-contractionary monetary policy as the only tool to control inflation. The central bank will have to take up a balanced monetary policy with a supportive fiscal policy.
Monzur suggested reducing dependency on the readymade garments sector by diversifying the economy.
Mahfuz Anam, editor and publisher of The Daily Star, said automation in every sector can ensure transparency and accountability, and ease activities of the private sector.
So, the newspaper will continue pushing the government to ensure automation, he added.
Tanvir Ahmed, managing director of Envoy Textiles and director of MCCI, said a Tk 585 crore project named the National Single Window was taken for the automation of the revenue system, but it was not completed.
Referring to the recent labour unrest along the industrial belts, he said the presence of the army on the streets should be reduced so that no one can tarnish their image.
 Abrar Hossain Sayem, president of the Bangladesh Apparel Youth Leaders Association (BAYLA), said the government can establish a national data platform and go for using big data analytics with the help of artificial intelligence.
 It will ease all the processes and help the authorities make informed decisions for capacity expansion or investment in any sector, he said.
Recovery under Nobel laureate Professor Muhammad Yunus’s leadership after the mass uprising brightened Bangladesh’s image internationally, Abrar said.
 “If we miss the momentum, we might lose in a big way.”
 Some policies are needed to increase investment in the small and medium enterprises sector, said the BAYLA president. “In reality, we do not see the benefit of special economic zones yet. A re-evaluation is needed in this area.”
It should be explored how SMEs can invest based on shared resources such as shared solar power and effluent treatment plants, he said.
He suggested forming separate national platforms to address businesses’s complaints and to record their suggestions.
 Arun Devnath, deputy editor of The Daily Star, also spoke at the discussion.