The country's economy showed a promising trend in the first six months of the current fiscal year despite the global supply chain disruption and slow demand, but inflationary pressure remains a major worry for future recovery, business leaders said at a webinar in Dhaka on Saturday.
They recommended effective measures to attract private investment and foreign direct investment (FDI) by improving the business environment to ensure economic growth while maintaining export earnings as well as controlling inflation.
"Export earnings grew by more than 28% during the period. Imports and revenue collection also increased by 54% and 17% respectively," Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry (DCCI) said, presenting an overall assessment of Bangladesh's economy in the first half of the current fiscal.
However, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Jashim Uddin expressed doubts about the sustainability of this trend of increased export earnings, saying that buyers bought more garments this year compared to the year before and the volume of orders may drop in the future.
On the other hand, he identified the rise in daily commodity prices to be the reason for the increase of the government's revenue collection.
"Effective measures should be taken to control inflation," Jashim Uddin stressed.
Presenting the keynote address at the event, DCCI President Rizwan said, "Despite the positive trend in import, export and revenue collection, the amount of remittances from expatriates has been declining."
Quoting surveys, he said the coronavirus pandemic caused 3.24 crore people to fall into poverty, while about 50 lakh people lost their jobs. "In this situation, low earners are becoming helpless due to increase in prices of food and daily commodities."
The keynote address pointed out that FDI accounts for only 0.61% of the country's gross domestic product (GDP), while in Vietnam it is 6.2%. The rate is also below that of India and Indonesia where the rate is respectively 2.2% and 1.76%.
It further said that domestic and foreign investment is not increasing due to inadequate infrastructure, high cost of doing business, high inflation, lack of effective one-stop service and bureaucratic complexities.
The DCCI recommended reducing the cost of doing business to improve the investment climate, ending discrimination against domestic and foreign investors, restructuring the tax structure and expediting the launching of economic zones.
The DCCI President also called for diversification of export products, policy support, enhancement of human resources, development of logistical infrastructure and above all effective measures to overcome existing barriers in the supply chain.
He said inflation in the local market was on the rise as prices of essential commodities and raw materials were increasing in the country due to increasing pressure on the global supply chain after the pandemic.
Rizwan Rahman also recommended loan assistance to importers of essential commodities and reduction of tariffs on imported goods to control inflation.
Speaking as the chief guest, Bangladesh Bank Governor Fazle Kabir said that to address the pandemic-induced challenges, the central Bank has announced a number of policy assistance as well as stimulus packages.
"Our exports are heavily dependent on readymade garments, but we need to come forward to provide necessary policy support to potential sectors like agriculture, medicine, jute, ceramics, light engineering, etc., as well as work on human resource development," he remarked.
The governor also said that the Export Diversification Fund has been expanded that will enhance Bangladesh's capacity in global trade.
The DCCI article added that although the overall unemployment rate in the country is 5.3%, the unemployment rate among the educated is 47%.
Addressing the matter, the FBCCI President said that the situation has arisen due to the lack of coordination between the industrial and the education sectors.
The DCCI chief urged the government to formulate a budget for the next financial year considering Bangladesh's graduation from the Least Developed Countries (LDC).
Md Saiful Islam, president of Metropolitan Chamber of Commerce and Industry, emphasised on research and innovation for the diversification of export products.
Naser Ezaz Bijoy, president of Foreign Investors' Chamber Of Commerce & Industry that more emphasis should be placed on Ease of Doing Business to attract domestic and foreign investment. Besides, the existing tax rate needs to be reduced rationally.
"Bangladesh needs to be integrated into the ASEAN ecosystem and the scope of the Credit Guarantee Scheme should be expanded in order to broaden its export market," he said.
Dr Zaidi Sattar, chairman of the Policy Research Institute said the country's ready-made garment sector has set an example that other potential entrepreneurs can follow.
"We should focus on exporting skilled human resources," he recommended.