Staff Correspondent
Business in Bangladesh is rebounding thoroughly though production-cost escalation remains a pain in the neck of businesses, says a joint survey sponsored by a US agency in a rather positive economic outlook.
The ‘Bangladesh Business Confidence Survey Report 2022-23’ revealed Sunday that the overall Business Confidence Index (BCI) for 2022 stands at 74.4, on a scale of 0-100, indicating a positive outlook for business conditions over the next six months.”Business entities across Bangladesh are confident that the volume of orders for the manufacturing sector, demand for services in the service sector, selling prices, and business activity will increase in the next six months,” says the survey, conducted during last year’s September-November period.As a result, businesses are willing to expand employment and investment over the same period.However, business entities expressed their concern over increasing cost of production and demanded immediate action to address the cost burden on businesses-like the cost of electricity, water, gas, rent, and materials.
The index for the overall cost of business was 35.8 for the previous six months, as found in the survey, predicting that the figure could go down to 22.4 in the next six months.Besides, manufacturers are slightly more optimistic about market demand, order flow and selling price, compared to the service providers. In terms of expenses, manufacturing firms were found more worried in the survey than businesses related to the service sector.Around 72 per cent of business entities in this survey reported that the overall business cost would increase over the next six months-in the wake of hike in tariffs of utilities and raw-material prices.Business Initiative Leading Development (BUILD) and USAID-funded Feed the Future Bangladesh Trade Activity jointly launched the ‘5th Business Confidence Survey Report 2022’ on the day in Dhaka.
The survey, covering 567 business entities across Bangladesh, aimed to analyse the existing business conditions in the last six months (March 2022-August 2022) and anticipated turning points in the economic activities for the next six months (December 2022-June 2023) to enable businesses to prepare and plan accordingly to mitigate risks.
Speaking as chief guest at the report-launching function, Industries Minister Nurul Majid Mahmud Humayun said the 5th BCS is significant as it has applied the methodology of harmonized business-confidence survey recommended by the Organization for Economic Cooperation and Development (OECD) Statistics Directorate.
He appreciates that the survey has provided valuable information to economic policymakers and analysts-incidentally, at this hour of economic volatility globally.”The government must take the matter of increasing cost of production into serious consideration in fiscal and monetary measures,” the minister told the meet.He informed the audience that Bangladesh had shown resilience in any crisis and would overcome this crisis as well.He advised that economic and business experts, academics, think- tanks, international organizations, private investors, traders, consumers and the government must move hand in hand to tackle these sudden crises and come up with prudent policies and economic measures so that the country can be prepared to handle and overcome any future economic shocks.In her welcome speech, Nihad Kabir, Chairperson of BUILD, emphasized that Bangladesh has experienced a structural transformation from an agrarian economy to the growing dominance of industrial and service sectors.
With an average GDP growth of over seven percent for more than a decade, the country has experienced the Fourth Industrial Revolution (4IR), accompanied by a rapid increase in digitization, technological up-gradation, a flourishing IT sector, a wider range of products, domestic consumption expenditure, government spending, remittances, and export revenue.
She expressed BUILD’s commitment to continuing to convene, align and advance the interests of the private sector through principled policy work, value-added business services, and broad engagement to drive competitiveness and economic growth in Bangladesh. She noted that such surveys are used globally by governments and policymakers.
In her keynote presentation, Ferdaus Ara Begum, CEO of BUILD, noted that the upward movement in the BCI was driven by improvement in the sentiments for six components out of seven the BCI, namely, employment, volume of order or demand for service, business activity, selling price and investment.
Out of the seven components, only the overall business-cost index is negative giving a pessimistic perception. The diffusion index in this study ranges from 0 to 100 with a midpoint of 50 where less than 50 means contraction or less optimistic and more than 50 means expansion or optimistic.
The overall business-cost index stands at 35.8 over the last six months (March 2022-August 2022) and expects to reach 22.4 over the next six months (December 2022 – June 2023).
Marc Shiman, COP, USAID FtFBTA, expects the Bangladesh Business Confidence Survey would facilitate the government to take decision to ensure positive confidence of the entrepreneurs to the domestic business environment.
He thinks the joint advocacy would make the business eco-system more simplified like improvement of capacity of RJSC&F, logistics and customs process simplification and the like.
Abul Kasem Khan, Co-Chair, LIDWC, mentioned that economic trajectory of Bangladesh till 2041 is well defined and the BBCS pointed out the rooms to address to reach set goals.
Policy enablers should focus on SMART policy initiative to make SMART Bangladesh, replicating RMG success stories for potential export basket, successful utilization of SEZs and development of logistics infrastructure, skill development, investment incentives, customs automation etc for better confidence on business environment.
Martin Holtmann, Country Manager, Bangladesh, Bhutan, and Nepal, the International Finance Corporation, said the survey is the summary indicator of how the businesses feel. He sees BCS as basically a couple of early morning signs.
“We hope that these signs will help the businesses take decisions,” the IFC official told the function.
“We need to be careful about the status-quo bias, rather need to look at the trends.
“We need to give voice to voiceless, in this case, they are CMSMEs, especially the women entrepreneurs,” the global funding agency’s representative said in his suggestion.
A.H.M Ahsan, Vice Chairman, Export Promotion Bureau, informed that the Ministry of Commerce and the EPB jointly have taken initiatives to attain the export targets set in the 8th FYP, Export Roadmaps, Perspective Plan 2041 etc.
“To ensure export diversification as well as to mitigate over- dependency on RMG sector, several policy initiatives have been taken, but we have miles to go to ensure comprehensive export-basket diversification,” he said.
He also mentioned that the government is facilitating the export sector to ensure both the horizontal and vertical export diversification by addressing higher value addition and expansion of export destinations.
“Initiative needs to be taken to remove the anti-export-bias philosophy of the domestic-sector champions.”
Mohsina Yasmin, Executive Member, BIDA, said, “We hope that business confidence survey will be very useful tool for the policymakers.”
Engineer Sheikh Faezul Amin, Additional Secretary at the Ministry of Industries, said this survey would help governments and policymakers understand how businesses feel about the overall operating environment, and determine what needs to be done further for improving the investment scenario.
Sameer Sattar, President of DCCI, said the survey found that the business community is showing confidence and resilience. One of the major recommendations government needs to consider is that cost of doing business is needed to be minimized.
He said CMSMEs are suffering from multiple issues, including access to finance. “We would recommend removing medium from the CMSME category.”
Zaki Uz Zaman, Country Representative, UNIDO, focused on making a responsive relationship between the resource efficiency and cleaner production to cope up with the adverse impact of the ongoing global crisis.
“Software, food processing, recycling industry should be incentivized with policy and fiscal assistance to ensure export diversification as well as to cope with LDC-graduation era,” he said.
He sought reduction in customs duty to facilitate renewable energy- establishment mechanism, skill development of workforce, automation and digitization, establishment of common facility, reduction of product certification hassle to boost business confidence of our nation.
Munawar Misbah Moin, President, Accumulators Battery Manufacturers & Exporters Association of Bangladesh, said it is good that overall business-confidence survey has found optimistic results.
He said battery-manufacturing sector needs to shift from an informal-led sector to formal-led sector.
“For this, we would request NBR to rethink the tax regime.”
Mohammad Naquib Uddin Khan, President, BSCMS, pointed reliability, speed and cost as three success factors of logistics eco-system mechanism.
He requested ensuring end-to-end integration, fast-tracking the logistics-infrastructure megaprojects and simplification of public policies to ensure harmonized and comprehensive development of the logistics subsectors and components.

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