Companies are becoming more optimistic of a turnaround earlier than later
Businesses are progressively becoming confident of a comeback from the brutal blow dealt by the global coronavirus pandemic, found a recent survey.
Conducted by the South Asian Network on Economic Modelling (SANEM) in collaboration with The Asia Foundation among 303 organizations representing manufacturing and services sectors, the survey found that the entire confidence score risen to 51 this quarter from 29.48 the prior quarter.
The survey responses are measured on a scale of 0-100.
A score in the range of 0-50 means a deterioration of business confidence and a value above 50 indicates a noticable difference, said the survey report that was unveiled yesterday.
The survey was completed to evaluate the state of confidence of the business enterprise community of Bangladesh in the context of the socio-economic crises engendered by the Covid-19 pandemic, SANEM said.
Despite the improvement, businesses complained about increasing cost of doing businesses plus they put corruption, problems of trade and logistics and weak management of the coronavirus crisis as three major challenges to do business.
"Management of medical crisis is extremely important to enhance business confidence," said SANEM Executive Director Selim Raihan while presenting the findings of the analysis at a webinar.
Corruption has emerged as the largest challenge for conducting business, he said citing that 88 % of the businesses put corruption as the number one challenge.
"It ought to be handled firmly," he said.
The SANEM developed three separate indices predicated on the survey among 153 manufacturing and 150 service sector organizations from all divisions to comprehend the level of business confidence among entrepreneurs in Bangladesh.
The indexes compared business confidence in three scenarios: the response in the April-June quarter with a year earlier and with the previous quarter; and the July-September quarter with the recent past quarter.
Researchers considered six indicators -- profitability, investment, employment, wage, business and sales/export -- for developing the Business Confidence Index (BCI).
The entire business status in the next quarter of the year was extremely poor as reflected in the index score of 26.44 weighed against the same amount of 2019.
"All sectors suffered. The worst performers were garment, leather, light engineering, wholesale and restaurant. The better performers were pharma and financial sector," said Raihan, also a professor of the Department of Economics at the University of Dhaka.
This quarter, businesses seem to be more confident compared to the last quarter, he said.
"The improvement is obvious in every sub-components of BCI, but nonetheless, the overall BCI is poor," he said adding that business confidence continued to be low in the garment, leather, light engineering and other manufacturing sectors as the BCI showed a score of less than 50 for these sectors.
Overall profitability of garment, leather and tannery and light engineering continued to deteriorate. However, there have been improvements in employment prospects, according to the survey.
The major improvement sometimes appears for textile, pharma, wholesale, restaurant, ICT and financial sectors as their BCIs are above 50, he said.
SANEM also investigated the efficacy of the government's stimulus packages amounting to Tk 103,117 crore to aid the businesses in recovering from the economical fallout of the pandemic.
While 87 % of organizations termed the stimulus effective for them, 55 % of the organizations said they didn't avail the low-cost fund.
"Effective implementation of the stimulus package is critically important. Major challenges include lengthy procedure, difficulty in bank-related services, and difficulty in information. All these have to be sorted out effectively," Raihan added.
Abul Kasem Khan, managing director of AK Khan Telecom, suggested policymakers consider giving stimulus to small and medium enterprises which were still unbanked.
"Corruption is very alarming. It isn't acceptable as of this situation," he added.
Commerce Minister Tipu Munshi expected a noticable difference in business activities this quarter compared with the previous one.
He said the export target for the existing fiscal year could possibly be achieved if the pandemic can be snuffed out around the globe next four months.
"Everything will depend on the situation of the export destination countries and their supply chains."
The commerce ministry is working to generate investments that are shifting out of China to other countries.
"We've huge manpower to utilise in the industries. We must know what kind of facilities we have to provide them to bring investment in Bangladesh."
Munshi continued to stress the necessity for a comprehensive study on how to attract the firms and investment which were shifting from China abroad.
There is no cause to be happy with the recovery in export receipts first month, said Asif Ibrahim, chairman of Chattogram Stock Exchange.
Exports fetched $3.9 billion in July, up 44.4 % from the prior month and 0.60 per cent from a year earlier, according to data released by the Export Promotion Bureau. This is the first month because the pandemic took hold globally that Bangladesh's export receipts posted a rise.
"It is an important time for us as fresh export orders usually come at this time of the year. We have to see whether orders are coming," he said, adding that some businesses which used to get from Bangladesh have grown to be bankrupt.
There were huge amounts of unsold stocks of goods in america and Japan and organizations there are getting rid of their stocks at discounted prices, said Syed Nasim Manzur, managing director of Apex Footwear.
"It isn't time yet to say exports are recovering."
Manzur continued to urge the policymakers for proper management of the COVID-19 health crisis for regular life and the economy to come back to normal.
"The management of the pandemic ought to be done in one place. It ought to be done centrally," he added.
Mixed messages and signals about the pandemic have created a negative effect among businesses, said Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry (MCCI).
"The announcement of stimulus packages gave comfort to businesses. But we did not see that comfort with regards to implementation," she said.
Various countries tangled up stimulus packages with employment protection to provide livelihood support, said M Masrur Reaz, chairman of the Policy Exchange of Bangladesh.
"This may be done here too," he said.
Mashiur Rahman, economic affairs adviser to the prime minister, and Kazi Faisal Seraj, country representative of The Asia Foundation also spoke.
