Biz leaders need disaster administration, power safety for survival

Bangladesh remains to be doing higher in comparison with many different economies however the subsequent few months will likely be very essential as deepening power insecurity and rising instability within the monetary sector amid the continued liquidity crunch might erode the success companies achieved through the years, outstanding entrepreneurs have mentioned.

At a dialogue organised by The Enterprise Customary marking its third anniversary at its workplace on Saturday, the enterprise luminaries urged the federal government to formulate a long-term disaster administration framework for power safety and depart the alternate charges and rates of interest to the markets, and interact personal sector stakeholders in policy-making to avert shocks of a looming international recession and maintain financial development.

Additionally they requested the authorities involved to make sure exemplary punishment for the recurring mortgage defaulters to determine self-discipline within the banking sector.

TBS Editor Inam Ahmed moderated the dialogue.

The TBS roundtable dialogue, TBS Talks, was attended by enterprise individuals representing sectors like attire, metal, cement, ceramics, power, vehicles, electronics and healthcare who mentioned at size how the shortages of {dollars} and power have reduce their outputs and the way companies had been struggling to remain afloat.

Azam J Chowdhury, managing director of MJL Bangladesh, informed the occasion that the power drawback is just not distinctive in Bangladesh and that international locations the world over are affected by the disaster.

“However we weren’t in the precise route concerning the coverage. The issue is costs solely rise right here, they by no means fall,” mentioned Azam, additionally the Chairperson of East Coast Group which has publicity within the energy, petroleum merchandise, delivery, LPG, financial institution, and insurance coverage sectors.

The federal government ought to have an automated pricing system for power according to the worldwide markets in order that entrepreneurs know what is going to occur sooner or later, he noticed.

“Additionally, we have to formulate a long-term plan to make sure power safety,” he mentioned, including that the personal sector needs to be engaged in framing this plan.

Talking on the cash market, Azam mentioned rates of interest can’t be managed and they need to be left to the market.

“We’re getting unhealthy information from completely different banks about misappropriation of cash and a scarcity of fine governance. We’d like a robust restoration system and stringent actions towards swindlers,” he mentioned.

Kutubuddin Ahmed, chairman, and founding father of Envoy Group, mentioned in his 39 years of enterprise expertise, he had by no means defaulted on or delayed in paying financial institution loans, however he’s paying a value for defaulters.

He additionally batted for a floating alternate price as individuals will be taught to foresee and accordingly, they will plan their disaster administration technique. Citing India’s case, he mentioned the nation had additionally confronted such turbulence within the Nineteen Nineties once they went for a float alternate price.

Beforehand, the alternate price of the US greenback was secure at Tk85-86, which was very comfy for actual property companies in fixing the worth. However the excessive devaluation of the taka towards the greenback in a short while brought about big losses for the sector as uncooked supplies prices surged unusually excessive.

Ahmed additionally make clear the deteriorating banking sector and mentioned nothing will enhance except self-discipline was dropped at the sector.

SK Bashir Uddin, managing director of Akij Group, expressed frustration over the unavailability of credible knowledge.

He mentioned companies take dangers on assumptions based mostly on regulators’ knowledge however such an enormous change within the alternate price and power value in a short while can’t be accepted.

“It’s critically necessary [for businesses] to have knowledgeable and credible knowledge,” he added.

If the Bangladesh Bureau of Statistics’ calculation of per capita earnings is true, then there’s a fairly vibrant future forward of the Bangladesh financial system however it isn’t mirrored in actuality.

He additionally expressed frustration over the “illogical” imposition of taxes and mentioned the regulator ought to guarantee a stage taking part in discipline for all in VAT compliance.

Syed Mahbubur Rahman, managing director of Mutual Belief Financial institution, mentioned month-to-month imports went as much as $9.8 billion after the pandemic on account of hovering demand, placing strain on the alternate price and the present account stability.

“Our financial system is rising and now we have to evaluate how sustainable the import restrictions will likely be. Greenback value gained round 20%, additional fuelling inflation,” he mentioned.

Many purchasers couldn’t open LCs and importers are determined to get overseas forex it doesn’t matter what the fee is, he mentioned.

The banker mentioned greenback costs shot up massively as a result of Bangladesh by no means adopted an actual market price. “Now it’s excessive time we made the alternate price market-based,” he added.

Mahbubur Rahman additionally identified the mismatch between deposit and mortgage development.

He mentioned deposits grew by 5% final yr and loans by practically 14%, which led to a liquidity disaster within the banking system.

Lending is now loss-making for banks as a result of the unfold between the lending price and deposit price got here right down to 2.6% from 4% beforehand. So, the 9% lending price cap needs to be lifted, he famous.

Echoing different audio system, he mentioned default loans saved rising as willful defaulters remained unpunished.

Imran Karim, vice chairman of Confidence Group, mentioned there’s a insecurity within the financial system.

On the alternate price, he mentioned no person is aware of what the greenback value will likely be within the days to return. “Had the devaluation began within the yr 2021, the shock wouldn’t have been so harsh for companies,” he noticed.

He additionally referred to as for reforms within the monetary sector and punishment of willful defaulters.

Md Shahidullah, managing director of Metrocem Group, mentioned the cement and metal trade grew quickly, driving on huge financial actions together with mega tasks.

The cement and metal sectors expanded greater than the demand after the reassurance that the nation had the capability to produce them with ample gasoline, he famous, including, “However the present scenario is simply the alternative and lots of mills might be sick as they’re going through a scarcity of working capital.”

Shahidullah requested for coverage consistency, similar to with the alternate price, in order that they will resolve whether or not or not they need to open LCs for the time being.

Normally, an LC for the metal trade values above $1 million however banks couldn’t open LC on account of import restrictions, he added. 

Mohammed Humayun Kabir, chief govt officer of Shinepukur Ceramics, mentioned foreign exchange reserves wouldn’t be underneath strain if there was a long-term plan for power provide. Now, companies are in an unsustainable scenario due to uncommon hikes within the costs of gasoline and electrical energy.

The Bangladesh Vitality Regulatory Fee is there to regulate power costs however this time that framework was ignored, which displays a scarcity of governance, he mentioned.

The personal sector is paying for power however is just not getting provide accordingly. He questioned whether or not the provision will likely be uninterrupted even after the hike in value.

It’s critically necessary (for companies) to have knowledgeable and credible knowledge —- SK Bashir Uddin, Managing director of Akij Group

If industries don’t get ample provide even after paying larger costs, they are going to face a catastrophe, Humayun noticed.

There isn’t any coverage consistency and long-term imaginative and prescient for power safety, he famous, including that the financial system is not going to maintain with out a long-term coverage framework.

Golam Murshed, CEO of Walton Hello-Tech Industries, mentioned excessive finance prices brought on by the devaluation of the taka and excessive inflation ate into their income.

Walton earned over Tk37 crore in revenue within the first six months of the present fiscal yr in comparison with the earlier yr however revenue stood at Tk14 crore after monetary adjustment. Consequently, the general revenue of the corporate declined.

He mentioned policymakers usually are not considering of the native trade.

“Fruits and biscuits are being imported, however these merchandise could be produced domestically. So, who will maintain this?”

Sharif Zahir, managing director of Ananta Group, mentioned garment exporters are going through order shortages and this development will proceed within the coming days as giant consumers similar to Walmart couldn’t clear their inventory but amid the worldwide recession.

Nonetheless, there are alternatives in the long term as a result of orders are shifting from China to Bangladesh on account of political points. He emphasised enhancing the capability to seize these orders.

AM Shamim, founder and managing director of Labaid Group, mentioned banks have to scale back their revenue margin and swindlers need to be punished, and the well being sector needs to be given precedence.

He mentioned that when banks are unwilling to open LCs for pharmaceutical merchandise due to the greenback disaster, import LCs for SUVs might be opened relatively simply. However that shouldn’t be the case, he mentioned, stressing prioritising medical tools and uncooked supplies imports over imports of luxurious merchandise together with SUVs.

Shams Mahmud, former president of the Dhaka Chambers of Commerce and Industries, mentioned the outlook for the financial system seems a lot much less rosy for this yr as a result of export orders will decline as America and Europe are headed for an financial recession.

He urged the federal government to make a long-term plan to take care of the upcoming financial challenges successfully.

MA Jabbar, managing director of DBL Group, mentioned the federal government ought to put together itself as a substitute of ready for what comes from the worldwide disaster.

The world has modified within the post-pandemic period, so the federal government ought to reform and reshape enterprise insurance policies, he mentioned, including that confidence needs to be restored within the banking sector to draw overseas traders.