Bangladesh business

Bangladesh business confidence shattered by outbreak of Covid (survey)


| Update:
03 May 2021 15:25:11

Industries are worried again about their future as business activities slowed in the second quarter of 2021 following a strong resurgence of Covid-19, according to a survey.

According to the Business Confidence Index (BCI), calculated in the survey, the number of confident business entities fell to 41.39% in the second quarter (April-June) 2021 from 57.90% in the previous quarter ( January March) .

The survey results, released on Sunday, also showed that sectors like RMGs, textiles, pharmaceuticals, agribusiness and financial institutions have experienced a faster recovery in the previous two quarters. The leather, light engineering, catering, transport and real estate sectors, on the other hand, experienced a slower recovery.

The results of the survey, conducted in April 2021, were released during a webinar titled “Covid-19 and Business Confidence in Bangladesh: Results of the 4th Round of a National Enterprise-Level Survey”.

The South Asian Economic Modeling Network (SANEM) in collaboration with the Asia Foundation conducted the survey and organized the webinar to disseminate the results.

Chaired by SANEM Executive Director Dr Selim Raihan, Country Representative of the Asia Foundation in Bangladesh Kazi Faisal Bin Seraj, Former Senior Economist at the Bangladesh Office of the World Bank (WB) Dr Zahid Hussain and Chairman of the Chamber of Commerce and Dhaka Industry Council (DCCI) Rizwan Rahman spoke at the program.

In his presentation, Dr Raihan said the level of trust varied between three groups of businesses — large, medium and small. The erosion of trust among micro and small enterprises is greater than that of medium and large enterprises.

About 39.02 percent of micro and small businesses are now confident about their business in the coming months. Almost 57% of them were confident in the previous quarter.

Among medium-sized enterprises, the confidence level is positive for 40.83 percent. It was 56.79% during the January-March period of this year.

In contrast, 46.61% of large companies still have enough confidence in their business. It was 60.88% in the previous quarter, said SANEM’s executive director.

BCI is calculated by analyzing six components of the business – sales / exports, profitability, investment, employment, salary and cost of the business.

The investigation showed that with the exception of trade costs, companies are recovering somewhat from the disruption caused by the pandemic in five other components.

To understand the dissatisfaction of business entities with the cost of doing business, Dr Raihan said, SANEM constructed the Business Environment Index (EBI) which found that the cost of running business in times of pandemic has not yet reached the previous level.

The majority of companies cited complex taxation, higher property registration fees, corruption, lack of skilled workers, poor trade logistics, access to finance and handling of Covid as the main reasons for the loss. rising business costs, he said.

The survey also showed that before the new wave of Covid-19 transmission or the second wave of the pandemic, 34% of companies experienced a strong recovery while 52% a moderate recovery and 14% were at a stage of weak recovery.

Over the past month, perceptions of the recovery have changed dramatically, as evidenced by business response. At present, 67 percent of companies anticipate a weak recovery while 31 percent a moderate recovery. Only 2.0 percent hope for a strong recovery.

Speaking at the program, Dr Zahid Hussain said that since the middle of last year, the country’s economy has been in the midst of a recovery phase. But the trend is not the same for all sectors.

It is evident that large companies are at an advantageous stage compared to micro and small companies, he said, adding that the size of a company, its location, its history of performance and its status as a export are the reasons that influenced their performance during the pandemic.

The former WB economist said companies that have greater capacity at the corporate level to comply with Covid-19 protocols, including wearing masks, maintaining hygiene, working at home, should perform better than other businesses.

He mentioned that this offers a possible explanation why companies in the financial sector, clothing, ICT, pharmaceuticals performed better than companies in other sectors.

He also pointed out that large companies often have more influence and power, which leads to better bargaining power and, therefore, gives them better access to stimulus packages.

The DCCI President stressed the importance of the upcoming national budget and said it should play a critical role in reshaping business confidence.

Mentioning slower economic growth and private sector investment in the country, he said revenue collection in the current fiscal year is far from target, which will end up putting increasing pressure on taxpayers. existing.

“Corruption needs to be controlled and the tax system needs to be fully automated to speed up revenue collection,” he said.

Mr. Rizwan further suggested that the central bank and monetary institutions formulate strict guidelines for the banking sector to ensure that loans go to small and micro enterprises.

The integration of digital technologies in SMEs is also necessary for rehabilitation and recovery after the pandemic, he said.

It is essential to strengthen the confidence of local businesses to increase the flow of foreign direct investment (FDI), he added.

The 4th round of the survey was conducted among 500 business entities – 253 in the manufacturing sector and 250 in the service sector – during the period between April 6 and April 18 of this year.

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