Private container depot owners' leader Nurul Qayyum Khan has said the volatile exchange rate is affecting exports of the country.
Due to the low foreign exchange reserve and volatile exchange rate, the imports of the country are becoming costlier which is also affecting the exports to some extent, said the President of Bangladesh Inland Container Depot Association (BICDA) and also President of Bangladesh Marine Fisheries Association (BMFA).
"War between Russia and Ukraine has jolted the global trade and business that was restored after almost two years of the coronavirus outbreak," he told The Financial Express.
Full excerpts of the interview are given below:
FE: Please describe the situation of the business sector in the country now?
Nurul Qayyum: There is no denying the fact that overall business of the country has been going through a quite dismal phase that tends to evoke deep frustration among the business community at present. The depleting foreign exchange reserve and power short supplies are the two principal crises facing the business community. It is leaving its impact on the whole nation as well as the entire economy. Production in the manufacturing sector has gone down considerably because of the frequent and prolonged power shortages all over the country. Due to low foreign exchange reserve and sharp depreciation of Bangladesh Taka against the US dollar, the imports have been impacted which is also affecting exports of the country to some extent. The demand has sagged for ready-made garments in the US and European markets, although it may be temporary. The volume of exports from the country has decreased substantially which has also been taking a toll on the overall economy. The Russia-Ukraine war has not only disrupted the global supply chain but also has a negative impact on the global economy and Bangladesh also is not immune to this global gloom.
FE: How is the Russia-Ukraine war hampering the trade and business as well as economy?
Nurul Qayyum: The war between Russia and Ukraine has jolted the global trade and business that was recovering after almost two years of the Covid-19 pandemic. Unfortunately, that long-cherished recovery of the global business as well as ours in Bangladesh is now reeling under the Russia-Ukraine war as the rate of US dollar against Bangladesh Taka skyrocketed, coupled with a sharp fall in electricity generation resulting from the shortage of gas and petroleum supplies from abroad. Prices of commodities have soared following the raise in prices of fuel oils. We are only keeping our fingers crossed for some kind of settlement in the Russia-Ukraine war so that things may start getting better for economies like ours. A large quantity of our essential commodities like wheat, grain, fertilizer comes from Ukraine. It has become difficult now due to the war affecting our economy as a whole. Russia is a major source of global petroleum product, the supply of which is disrupted very badly due to different sanctions. Resultantly we are suffering. The economic embargo will bring no good for the world as well as the humanity. The big powers must stop this trade restriction to put an end to this global economic gloom.
FE: After the coronavirus outbreak, how far have the trade and business recovered from the shock right now?
Nurul Qayyum: After the pandemic, when the whole world was going back to the pre-Covid normalcy level, Bangladesh too was at par with the rest of the world and the recovery was faster than other Southeast Asian nations, thanks largely to the astronomical success of the government in vaccinating the general people free of cost against the Covid infection. The present government also launched a good number of financial packages for the business community so as to enable them to get back on their previous vibrant path. After the end of the corona outbreak, it was all very encouraging for Bangladesh as far as trade and business were concerned, but the world then witnessed something it was not at all prepared for -- the Russian invasion of Ukraine which gradually led to a full-scale war. The war is now wreaking havoc on the world economy. Bangladesh is not immune to it. We as a nation had been recovering from the losses that we had incurred during the prolonged corona-induced lockdown. But that process of recovery has now been stalled by the present crises which we do hope to overcome with prudent policymaking by the government and its strict implementation. We must face the reality instead of impractical propaganda.
FE: Is the high rate of dollars hampering the business here in Bangladesh? If yes, how can we control it?
Nurul Qayyum: It is needless to say that the high rate of US dollars has been hampering the business because we are living in a country where the import volume has been predominantly higher than the exports. With the dollar rate getting so high against Taka in such a short period of time the foreign exchange reserve has been strained considerably. But it should also be mentioned here that Bangladesh Taka still stands stronger against the US dollar than the currencies of our neighbouring countries. It is very difficult to control the rate of US dollar when it is a global phenomenon and most of the countries have been struggling very hard to contain it. The government has quite justifiably focused on import of raw materials for export-oriented and other industries and at the same time put some restrictions on import of luxury items in order to reduce the stress on forex reserve. We should look for ways to increase export as well as flow of remittance through official banking channels so that our forex reserve goes back to its previous robust level. We should continue only priority development projects and cut the import of non-essential products like food items, fruits, furniture, cars and several other luxury items. I also wish the government could arrange funding from IMF (International Monitory Fund) on soft terms which is under process.
FE: How will the economic zones help in industrialization here in Bangladesh?
Nurul Qayyum: The economic zones undoubtedly will help industries flourish in Bangladesh and this government has already set up quite a good number of economic zones all over the country. The result is quite evident: the economy of the country has been reaping the benefits since these zones have boosted the export substantially by way of offering good and viable opportunities to local and foreign entrepreneurs to make investments. It is in turn creating huge employment opportunities for general people. The biggest economic zone in Mirsarai will play a big role in enhancement of exports and it will definitely contribute to the economic growth as well. We should liberalise policies to attract more FDI (Foreign Direct Investment).
FE: Presently do you face any problem with your trade and business?
Nurul Qayyum: The shortage of power generation and short supplies are now the grimmest crisis facing our trade and business. Manufacturing industries are getting hit very badly. Production has gone down sharply. But I am confident the government is doing everything it needs to get over this crisis. No stone is being left unturned as far as government initiatives are concerned. It is the shortage of gas supply that is impacting the power generation. We are aware that most of our demand for gas is met from internal resources. Only 24% of our gas requirement comes from abroad in the form of import. Of late, new sources of gas have been identified and preparations have been made to get gas from these sources which are located in Bhola, Cumilla and Sylhet. By the beginning of the next year, i.e. 2023, power situation may improve when we will be able to extract gas from our new internal sources. I emphasize the power generation from renewable energy. The nation should follow austerity in using power and the affluent people may show restraint in their lifestyle in the greater common interest of mass people.
FE: How much does the power and gas crisis affect the industries and trade?
Nurul Qayyum: The power and gas crisis has been affecting the industries acutely and it really needs no elaboration as to how it is impacting the large, medium and small industries and agriculture, all at the same time. Because, the recurring power outages have been halting production and the workforces have no other option but to remain idle for a long time - both factors are pushing the cost of business beyond sustainability.
FE: Is political crisis hampering the business now?
Nurul Qayyum: I do not see any political crisis right at this moment. Yes, there are some issues that we are facing as far as the economy is concerned. But I am sincerely hopeful that like in the past we as a nation will stand united in the face of all the crises and eventually, we will be able to overcome them with prudent policymaking and its impeccable implementation. We have healthy growth in export which might have halted for the time being but in the long run it is bound to bounce back when this lull will be over. Politics will always be there in the political arena. Nevertheless, the economy will take its course back to its vibrant phase. The government is on the right path in its bid to bring back the economy to normalcy. The political parties should not use the global crisis as a weapon against the government.
FE: Any suggestion for future generation and policymakers as to how they can fare well in trade and business?
Nurul Qayyum: I have a very simple suggestion for the future generation: be steadfast and sincere in your effort to make progress in life, success will follow. Your personal accomplishments should not only be aimed at your personal gain. It should also be associated with the development of your country, your motherland. As far as policymakers are concerned, I have no doubt that they are doing everything necessary to get out of the present crises. Nonetheless, the focus should not only be on export sector and its diversification and remittance inflow, but the enhancement of agriculture and fisheries yields, exploitation of our vast sea territory, development of road and rail communication, uplift of port and logistic sector should also be included in the primary consideration of the government. We should also as a member of global village take support from the developed nations wherever it is necessary since we are not yet self-sufficient in technology, investment and many other sectors.
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