Tough for small factories to survive without layoffs: DCCI

The recent gas and electricity price hikes will push up the production cost of small businesses, said Sameer Sattar, president of the Dhaka Chamber of Commerce and Industry (DCCI), at an event yesterday.

The hikes understandably resulted from the global economic crisis and energy shortages and the biggest challenge this year is keeping inflation under control, he said.

It is a big challenge for the businesses to survive without retrenching workers amidst the ongoing crisis, he said.

Industry owners will have to decide whether to adjust with layoffs or reduce profit margins as even the latter can be considered a big success in terms of survival this year, he said.

"We are also a part of this global volatility. But, for the year 2023, both the employers and employees should be happy if they can keep the businesses afloat by retaining the existing manpower," said Sattar.

Those giving in to higher power rates will demand uninterrupted supplies to keep production running, he said.

"But we urge the government that it should not be a 'one way street' and when the prices of energy come down in the international market, then it should be adjusted in our country as well, without any delay," he said.

In an attempt to reduce its unsustainable subsidy burden amid a narrow fiscal space, the government on January 18 raised the retail price of gas by 14.5 per cent to 178.9 per cent for industries, power plants and commercial establishments.

Together they account for 78 per cent of gas use in Bangladesh.

On January 13, the government raised the electricity price for consumers, on an average, by 5 per cent, skirting around procedures of Bangladesh Energy Regulatory Commission.

Sattar was presenting a keynote paper on the contemporary economy at the event organised by the DCCI on its premises in Dhaka to talk on the present economic situation and its plans for this year.

On another note, the DCCI president said 2 million graduates were added to the job market every year but it was difficult to accommodate them all with suitable jobs.

"Many will get jobs but a big portion of the rest may be more inclined towards becoming entrepreneurs. Nowadays, young entrepreneurs are very innovative in terms of technological know-how," he said.

Regarding supporting the startups and sustaining the cottage, micro, small and medium enterprise sector in this global volatile market, he said access to finance was very important.

They should have easy access to finance with minimum onerous conditions, he said.

He sought cottage, micro and small enterprises to be classified separately from the medium ones so that the former gain a more competitive edge in accessing finance.

A "Credit Guarantee Fund" of Bangladesh Bank should have relaxed conditions for such small-scale enterprises, especially those pertaining to business plans, financial statement etc, he said.

Moreover, changes should be brought to laws such as the arbitration, bankruptcy and companies act to improve the ease of doing business climate to increase both private and foreign investment, he added.

Sattar also urged Bangladesh Bank to consider increasing letter of credit margins, especially during upcoming Ramadan, for essential commodities so that importers can import the same and keep supply stable.

There is no overnight solution to increase foreign exchange reserves, he added. "We have to incentivize more remittance inflow from abroad and enhance export earnings to enhance reserves," he said.