Shamunnay study points to signs of economic slowdown | The Daily Star
12:00 AM, April 13, 2010 / LAST MODIFIED: 12:00 AM, April 13, 2010

Shamunnay study points to signs of economic slowdown

A low growth in investment combined with decline in exports and imports shows the indications of slowdown in Bangladesh economy--- a situation created mainly because of the ongoing power crisis and delayed effects of global recession.
This observation was made at a press briefing by private research organisation Shamunnay at its office in Dhaka yesterday.
“Our exports are falling. It's really very worrying. Decline in imports also does not give positive indications,” said Selim Raihan, the visiting fellow of Shamunnay, while sharing the findings of the organisation's quarterly publication, Bangladesh Economic Outlook.
Bangladesh Krishi Bank Chairman and Emeritus Fellow of Shamunnay Khondkar Ibrahim Khaled also spoke on the occasion.
Selim said proportion of opening of letters of credit (LC) for consumer goods and capital machinery increased in the first six months of the current fiscal year, compared to it a year ago.
But the proportion of industrial raw materials has decreased, which, the outlook observes, might have significant negative implications on the future industrial output.
Along with fall in export-imports, sluggishness is also observed in investment growth due mainly to power shortage that has not only hit the existing industrial units and businesses but also households.
“It gives an indication of economic stagnancy,” said Selim, also associate professor of the Department of Economics at Dhaka University.
He said there is no problem in business confidence. “But investment sentiment may not pick up unless electricity problem is solved,” said Selim. “The government should come up with innovative ideas to mitigate power scarcity.”
To recover from the power crunch, Khondkar Ibrahim Khaled suggested the government allow establishment of furnace oil-based captive power plants to minimise negative impact of power shortage.
He said some such plants might come in the next few months if the government permits. “The government should also allow owners of large power plants to sell their excess electricity to the private sector,” Khaled said.
In the outlook, Shamunnay also focused on removal of non-tariff barriers in exporting Bangladeshi products to South Asian markets, relaxation in value addition requirement for LDCs under Rules of Origin (RoO) and reduction in the number of products in the sensitive lists of non-LDCs --India, Pakistan and Sri Lanka.
Sensitive list refers to the list of products where no preferential tariffs would be offered and excluded from the schedule of tariff cut.
“The government should go for strong negotiation in the upcoming Saarc summit to raise exports to South Asian region,” said Selim.
Shamunnay also recommended that the government take measures to encourage investment of the remitted money in productive sectors.
Citing a study on internal road freight services by trucks, Shamunnay said the sector is uncompetitive compared with other countries in South Asia, as service receivers have to pay Tk 2.76-6.76 for per tonne per kilometre in Bangladesh whereas the freight rates in India and in Pakistan stand at Tk 1.12-1.58 and Tk 1.43-2.03.
Illegal toll accounts for as high as about 15 percent of the fare per trip, it observed.
“Such illegal toll collection hurts competitiveness of our export items, and also contributes to domestic inflation,” said Selim.

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