Dhaka Chamber of Commerce and Industry (DCCI) plays an important role in identifying and resolving problems in the country’s business and economy sector. The chamber’s new president Shams Mahmud, in a recent interview with Prothom Alo, talked about the state of the country’s trade and commerce as well as his own plans
Prothom Alo: You have taken over Dhaka Chamber of Commerce and Industry (DCCI) at a time when most of the economic indicators are negative. What do you see as the challenges for the economy?
Shams Mahmud: This is the age of globalisation. The US-Iran conflict, the economic slowdown in Europe, coronavirus in China – all these matters concern us. We are connected to the rest of the world through trade and commerce. But there will always be such challenges and we just have to take them in our stride. Broadly speaking, Bangladesh is advancing economically. There are bound to be issues like the government taking measures on short-term considerations, such as high loan rates.
Prothom Alo: The government’s borrowing is going up, while loan growth in the private sector is at an 11-year low. Why is this so?
Shams Mahmud: There are various explanations. If you ask me personally, economic recession is the best time for investment. If you invest then and keep a balance in profit and loss, the situation won’t deteriorate, it can only be expected to get better.
There are indicators of recession globally and this will invariably have an impact on exports. The domestic sector is going through a transformation. In the past we would only make an effort to improve production capacity and scope of business. Now we are focussing more on sustainability and increased profits. Everyone wants to improve efficiency and productivity. Gas was a problem when it came to investment, but that has been resolved.
Prothom Alo: Are the entrepreneurs also having to keep the Fourth Industrial Revolution in mind?
Shams Mahmud: It is certainly time to do so. We now use 20 people to do a task that previously required 100. There are robots. The government is aware of this and so has created the skills development authority.
Prothom Alo: The Small and Medium Enterprises (SME) face problems with value added tax (VAT). Do you have any suggestions?
Shams Mahmud: DCCI has relaxed certain compliances when it comes to companies with turnovers less than Tk 50 million. This will benefit the SME sector. The stockists from where the small companies buy their raw materials, cannot issue VAT bills and so these small companies do not get tax exemption. And if the VAT rate is below 15 per cent, there there is no provision for tax exemption. We want there to be tax exemption facilities at all levels, if the transaction is conducted through banks.
Prothom Alo: Dhaka Chamber also represents the wholesalers of Old Dhaka. Do you all take note of their problems?
Shams Mahmud: The Old Dhaka businessmen are facing problems. The customers do not want to pay prices which are increased due to VAT. There is an overall slowdown in business. It is going through a transition period while the VAT law is being implemented. We want the National Board of Revenue (NBR) to conduct awareness programmes at the wholesale markets including in Old Dhaka. The VAT form also should be easier to understand.
Prothom Alo: Export revenue is decreasing. Your own family business is in the readymade garment sector. What do you think is required to take the export sector ahead?
Shams Mahmud: Vietnam’s readymade garment industry is overtaking that of Bangladesh, though they have less than half of number of workers. We should seriously study how Vietnam is doing so well. I am in favour of gas and electricity subsidies rather than cash incentives. Attention must be turned to new markets. Economic diplomacy can play a vital role. We have a specific proposal for initiative to be taken so that Bangladesh can become an observer at ASEAN.
Prothom Alo: Will this negative trend in economy continue in the months to come?
Shams Mahmud: That is difficult to say. During the 2008 recession we saw purchase orders had increased. The buyers had bought more low-cost garments. The recession this time is not that serious, though the buyers are buying less. I think that outside of the readymade garments sector, we should now focus on the textile industry. We will propose back-to-back L/C and other facilities for all promising sectors as in the case of the readymade garment sector.
Prothom Alo: New presidents of DCCI generally try to come up with something new. What are the objectives of your board?
Shams Mahmud: We will work on a proposal to establish a National Infrastructure Development and Monitoring Advisory Authority (NIDMAA) and then float NIDMAA bonds. As you know, debts are escalating in the government sector. If the government can create an effective bond market, it can generate funds to meet its requirements. There will be foreign investment in bonds. If the NIDMAA bonds are floated, the government can generate funds for infrastructure. The government can offer tax cuts to companies registered with the share market if they invest in NIDMAA bonds.
Prothom Alo: What could the possible interest rate of NIDMAA bonds be?
Shams Mahmud: It can be 2 to 3 per cent. Abroad, there is even 1 per cent interest rate on investments. We will have a road-show aboard to highlight NIDMAA bonds. We want to take NIDMAA bonds ahead with the Bhola Bridge and High Speed Railway plans in mind.