Bangladeshi firms are perceived to have poor business confidence in the July-September 2020 period though the level of confidence is projected to have increased for the period compared with that in the initial months of the coronavirus outbreak in the country, according to a survey report released on Saturday.
The survey titled ‘COVID-19 and Business Confidence in Bangladesh’ showed that the business confidence index (BCI) scored 51.06 out of 100 points for the period of the July-September quarter of the year compared with that of the present business status index (PBSI) in the previous quarter (April-June) when the score was 29.48.
The South Asian Network on Economic Modeling and the Asia Foundation jointly conducted the survey among 303 firms representing micro, small, medium and large sectors across the country in July 15-23.
The findings were released on the day at a virtual programme.
Survey respondents also identified corruption, lack of trade logistics, and management of the COVID-19 crisis as the top three challenges of doing business or unfavourable in the current situation, according to the survey results.
More than half or 55 per cent of the respondents said that they did not avail the funds from the government-announced stimulus packages while 11 per cent said that they even did not know about the stimulus.
Only 34 per cent managed to avail the fund from the packages, it showed.
‘Although the business confidence for the July-September quarter shows some improvements over business status in April-June, still the overall BCI is poor,’ SANEM executive director Selim Raihan said.
The overall PBSI in the April-June period was extremely poor as all sectors suffered due to COVID-19 and consequent slowdown and restrictions in economic activities, he said.
Survey responses were scored on a sale of 0 to 100 where 0 indicates much worse, 50 indicates no change and 100 indicates much better in terms of business confidence.
The indices were prepared based on responses of top executives of the firms on six indicators — profitability, investment, employment, wage, business cost and sales/exports.
Selim said that despite improvements, the BCI remained closed to the middle point or no-change status.
Of the indicators, business cost with only 44.80 points still remains the major concern for firms, he said.
The scores of other indicators stay around the overall BCI point.
The worst performers were the readymade garment, leather, light engineering, wholesale and restaurant sectors while the pharmaceuticals and financial sectors were the better performers in the April-June period, the survey found.
Despite improvements, at sectoral level RMG, leather, light engineering and other manufacturing sectors demonstrated BCI less than 50.
Some 88 per cent of the respondents said that corruption was the major challenge and 71 per cent identified trade logistics (port and customs) and 70 per cent the management of the COVID-19 crisis as major challenge of doing business.
‘The findings show that the management of COVID-19 health crisis is extremely important for boosting business confidence,’ Selim said, adding that an effective implementation of the stimulus packages was also critically important.
Some 87 per cent of the respondents who received stimulus funds termed the stimulus package effective, the findings showed.
At the programme, commerce minister Tipu Munshi said that the business confidence on export would improve by the end of the year though it would depend on economic situation in the export destinations.
He requested SANEM to conduct a research on diversion of investment from China and the prospects and challenges in bringing those to Bangladesh.
Prime minister’s economic affairs adviser Mashiur Rahman suggested that the Bangladesh Bank and other relevant government agencies cautiously monitor the disbursement of the stimulus.
He reiterated the urgency of dissolving unnecessary regulatory frameworks and reforms in the tax system for facilitating doing business in the country.
Metropolitan Chamber of Commerce and Industry president Nihad Kabir said that the announcement of the stimulus gave the business community relief but later the confidence disappeared due to mixed messages and mismanagement regarding the implementation of the stimulus and COVID-19 management.
Apex Footwear Ltd managing director Syed Nasim Manzur said that the businesses were highly concerned over profitability as the profitability almost disappeared in the period.
Cost of business is also a big concern, he said.
Asia Foundation Bangladesh country representative Kazi Faisal Seraj, Policy Exchange of Bangladesh chairman M Masrur Reaz, Chittagong Stock Exchange chairman Asif Ibrahim and AK Khan Telecom Ltd managing director Abul Kasem Khan, among others, spoke at the programme.
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