The country’s import payments for capital machinery and industrial raw materials, two major components of the private sector dynamism, dropped by 8.51 per cent and by 9.42 per cent respectively in the last fiscal year of 2019-2020.
As per the Bangladesh Bank data on letter of credit settlement, payments against imports of capital machinery, a major component of economic expansion and a reflection of businesses enthusiasm of investments, dropped by $402.81 million year-on-year in FY20.
In FY20, the country’s payments for capital machinery imports dropped to $4.33 billion from $4.74 billion in FY19.
The import of industrial raw materials dropped by $1.84 billion year-on-year in the last fiscal year.
Mentioning the outbreak of coronavirus as a major reason for the situation, Policy Research Institute executive director Ahsan H Mansur told New Age on Wednesday, ‘The businesses would try to use their existing capacities instead of going for making fresh investments as the situation is yet to be normal.’
‘The fall in the imports of capital machinery and industrial raw materials was not unexpected,’ he said, adding, ‘It’s tough to predict how long it would take to turn around the situation.’
Investors would not dare to make fresh investments unless the situation becomes normal, he said, adding, ‘Even some investors were trying to phase out their existing business expansions and investments plans.’
Besides, a very few of them would go for business expansion as most of them already have excess capacity considering the present demand situation, said Ahsan, also the chairman of BRAC Bank.
About the slowdown in industrial raw material imports, he said that most of the businesses had excess stock of inventories and that was why it would also take time to get pace.
The improvement of business and investment situation would also depend on the coronavirus situation in western counties, said Ahsan.
Considering the situation in the country’s export competitors, Bangladesh has been recovering gradually but it would not be possible for the country to get rid of the pandemic situation completely by this year, he predicted.
SANEM executive director Selim Raihan told New Age on Wednesday, ‘The dismal situation was not completely for the coronavirus outbreak as it was observed even before the outbreak.’
Mentioning it a reflection of depressed investment situation in the country, he said that the government should emphasise seriously an effective implementation of the stimulus packages, otherwise the economic recovery would be slower.
Regarding the implementation of the stimulus packages, the government should ensure equal treatment for the cottage, micro, small and medium entrepreneurs and should not emphasise only the appeal sector, he said.
Apart from the dullness in industrial raw material and capital machinery imports, many other economic indicators reflected sluggishness of the country’s business and economic activities even before the outbreak of coronavirus and the situation deteriorated after the pandemic hit the country in March this year.
The government’s revenue collection, private sector credit growth, exports and foreign direct investments were also gloomy in FY20.
The only relief for FY20 was the inflow of remittance.
Remittance in FY20 posted record $18.33 billion against $16.42 billion in the previous fiscal year.
The lethargic state in the private sector was also seen in the loan disbursements by the banks to the private sector.
In FY20, the private sector credit growth tumbled to 8.61 per cent, much lower than the BB’s projection of 14.8 per cent credit growth in the fiscal year.
The sluggishness in the private sector in FY20 was continuation of the slowness observed in FY19 when the private sector credit growth dropped to 11.29 per cent, lower than the BB’s projection, and the import payments for industrial raw materials and capital machinery were also dismal.
Revenue collection by the National Board of Revenue stood at Tk 2,18,406 crore in the recently concluded fiscal year 2019-2020, falling Tk 82,094 crore short of the revised target for the year.
The collected amount in FY20 was 2.26 per cent lower than the collection in FY19.
The country’s export earnings in FY20 dropped to a five-year low of $33.67 billion. Export earnings in FY20 declined by 16.93 per cent, or $6.86 billion, from $40.53 billion in FY19.