Confidence perks up in businesses

Confidence among businesses is on the rise, with industrial production, investment and employment increasing in the first half of the current fiscal year, said a new survey.
Some 57 percent of the respondents in the survey, conducted by Metropolitan Chamber of Commerce and Industry among its member firms, said their output increased in the first half of 2012-13, while 24.2 percent reported a decline.
Of the 33 respondents, 21 were from the manufacturing sector and 12 from the services sector.
About 84.8 percent of the participants said they faced problems in running businesses, with gas and power shortage being the biggest impediment.
“Power and energy crises, poor infrastructure, a lack of accountability in administration, regulatory inefficiency, stagnant investment and political uncertainty are serious challenges.”
“The challenges for the government will be to properly address these problems,” the survey said.
About 57.6 percent of the respondents said they have made new investment in their businesses; of them, 58.8 percent raised funds from banks and 41.2 percent used their own funds.
Around 48.5 percent of the respondent firms have recruited additional labour and only 6 reported to have retrenched some labours.
Of the 33 firms, 14 are export-oriented and 64.3 percent said they have experienced an increase in exports.
The chamber also published its review of the economy for October-December 2012.
It said Bangladesh has performed better than many other countries at comparative levels of development in coping with the adverse effects of the global economic crisis.
A recent UN report (World Economic Situation and Prospects 2013) on global economic conditions and outlook mentioned that Bangladesh's growth performance was the second best in South Asia, just behind Sri Lanka, the MCCI said.
Considering all the turmoil, chaos on the streets, instability in the garment sector, corruption, instability generated by confrontational politics, the UN report is encouraging.
This means that as a nation Bangladesh could be much better off if only politics was a little more stable and governance a trifle more responsive to public needs, said the chamber. However, the macroeconomy is still undergoing some strains such as inflation, large government subsidy and budget deficit.
One would expect that the past year's 9.47 percent growth of the industrial sector has been sustained in the second quarter of fiscal 2013, particularly because of the substantial improvement in the power supply situation.
However, low disbursements of industrial term loans, decline in private sector credit growth, fall in the import of capital machinery and infrastructural bottlenecks may prevent the industrial sector to perform up to its potential.
The growth of the services sector seems to have been picking up after the relatively slow growth witnessed in fiscal 2012.
A much faster growth of the overall services sector is possible in the present fiscal year if production in real sectors increases at a greater pace.
Total tax revenue collection increased by 16.1 percent in November 2012, compared to the collection in November 2011, buoyed mainly by VAT and income tax receipts.
Tax collection efforts should be intensified to achieve the annual revenue target.
The chamber said the implementation of the annual development programme improved slightly in the second quarter of the current fiscal year, but yet only 30 percent of the ADP was implemented in the first half of the fiscal year.
The country's exports recovered from the low 2.1 percent growth witnessed in the first quarter and grew by 12.4 percent during the second quarter of the current fiscal year.
The growth of exports may remain weak in the coming months if the financial crisis persists in the European Union and slow economic growth in the US continues, the chamber said.
It also said the recent fuel price increase may push up the inflation rate further in the coming months.
Because of the importance of agriculture in the economy, the government must seriously address all problems faced by the sector.
It said the shortage of power now poses the biggest threat to Bangladesh's economic growth as many newly-built industrial units, homes and other establishments have long been deprived of power connections.
The chamber said Bangladesh's capital market passed another depressing year. The government and the market regulator took numerous steps, but the market has continued to remain depressed.