Discomfort among businesspersons, uncertainty over investments

Volume of investment did not increase as much as expected during the successive tenures of the ousted Awami League government from 2009 to 2024. Employment generation was also lower than required.

However, a sense of growing unease among businesspersons and uncertainty over investments have become a new crisis now.

Usually, investments drop during political instability. The national election years witness such a downtrend.

A one-sided national election was held on 7 January and the country also witnessed political instability during the movement of Students Against Discrimination and the mass uprising in July-August.

A little over 100 days of the interim government have passed since the ouster of the AL government. In that time labour unrest has become a regular phenomena in Dhaka and elsewhere, disrupting production. Neither the law and order situation has returned to normal, nor the political instability has dissipated.

Businesspersons said investments see low figures in such an uncertain situation. Less investment means less employment and more unemployment.

Economic downtrends also result in a drop in people’s income growth, thus, mounting miseries amid an inflation that topped 10 per cent.

Businesspersons and economists emphasised keeping trade and commerce functioning, but they said there was a lack of necessary talks between the interim government and the business community, as well as the initiatives to resolve the problems.

In the meantime, the government appointed tycoon Sk Bashir Uddin as the adviser to the commerce ministry, now the businesspersons expect communion between the government and their communities would increase.

Regarding this, Abul Kasem Khan, former president of the Dhaka Chamber of Commerce & Industry (DCCI), told Prothom Alo each business sector has been affected because of changes in political situations. Businesses cannot be said to have no confidence but they are in discomfort because none will be interested in investing in an unpredictable future.

He further said, “Every day new groups and communities demonstrate for their demands. We do not know what will happen in the next week. We want assurance on what the situation would be after three or six months.”

The government must increasingly engage with businesspersons to create a business-friendly environment. Opportunities must be created to hold talks often.

“We heard of reform in all sectors except for the business sector. Each step of starting and operating a business must be made easier,” he added.

No updated data and information on investment has been published yet, but several indicators give an overview of investment situations. One such indicator is credit flow to the private sector.

According to the latest data from Bangladesh Bank, credit to the private sector fell to 9.69 per cent, the worst situation in the last 23 months.

Investment scenarios can also be understood based on the proposals received by the Bangladesh Investment Development Authority (BIDA).

The state-run agency received investment proposals of Tk 196.18 billion from 186 local and foreign companies in July-September, which is one-fourth of the previous quarters.

The BIDA received investment proposals of Tk 773.64 billion from 254 firms in April-June. Investment proposals, however, do not necessarily indicate actual investment.

Speaking about the overall situation, BIDA executive chairman Chowdhury Ashik Mahmud Bin Harun told Prothom Alo, “We are trying to regain confidence among businesses by overcoming uncertainty. Macroeconomic indicators saw a downtrend until August, now the government is trying to raise those indicators. Domestic and foreign investments will continue to rise once economic stability returns.”

According to data from the Bangladesh Bureau of Statistics (BBS), the ratio of investment to gross domestic product (GDP) fluctuated over 22-23 per cent over the last decade, but GDP growth crossed 7 per cent.

Debapriya Bhattacharya, head of the Committee on the preparation for “White Paper on the State of Bangladesh Economy”, said the projection of GDP growth was false. Encomiasts also termed the growth during the Awami League rule as “jobless”.

According to government statistics, 2 to 2.2 million youths enter job markets every year. Of them, 1.2 to 1.3 million find jobs in the country and 800,000-900,000 go abroad.

Data currently available on unemployment is old since the BBS released no data over the last three months. According to the Labour Force Survey, 2022, there were 2.58 million unemployed people in the country and 799,000 of those completed graduation and post-graduation degrees. That means 31 per cent of the unemployed are educated.

Eighty-three per cent of the total unemployed are aged between 15 and 29. Besides, 7.5 million youths could not get the jobs of their liking.

A crisis of unemployment was also behind the student movement for the reform to the quota system in government jobs. When law enforcement agencies opened fire on the protesting students, the movement quickly turned into a movement for the ouster of the government.

According to the government data, as many as 222,812 workers went abroad and 1,215 factories, shops and firms received trade licences over the past three months.

The government has a plan for the next three months. Sixty startups will receive funds from the Information and Communication Technology (ICT) Division in the next three months. A target was also set to fund 500 small and medium women entrepreneurs. Besides, the government also announced plans to build a national job portal to ease the government job process.

Adviser Asif Mahmud Shojib Bhuayin said at a press conference on the progress and activities of 100 days of the youth and sports and the labour and employment ministries that employment was generated for 86,277 people under various ministries during the last 100 days of the interim government.

Businesspersons and analysts said the nature of the current situation is different. Most of the leaders of the ousted Awami League and businesspersons close to them are either in hiding or in jail. As a result, their businesses face pressure. Probe also opened against several conglomerates on allegations of corruption and irregularities.

They said the interim government must ensure the trial of killings took place during the student-people mass uprising, as well as take action against corruption and irregularities. Trade and commerce somewhat would be hampered in this phase, but would return to normal gradually.

Selim Raihan, a professor of economics at Dhaka University and executive director of the South Asian Network on Economic Modeling (SANEM), told Prothom Alo that trade-commerce and investments take place in developing countries based on a kind of mutual understanding. Old understanding has shattered and a new one will arise. If uncertainty looms over the democratic transition, there will be not much improvement in investment situations.

The interim government should announce a roadmap for democratic transition, as well as take the initiative to remove uncertainty, he stressed.

According to Selim Raihan, initiatives can be taken to fill the government posts that remain vacant to create additional employment during the transformation. Special projects like an increase in government investment and employment generation for 100 days can be undertaken. In addition to ensuring the punishment of criminals, the government also should have a strategy to keep business establishments operating and ensure workers get their wages.

* This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna