An elite trade promotion organisation of the country said on Thursday the services sector was more affected by the January-March political turmoil than any of the two other key sectors-agriculture and manufacturing.
The Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka (MCCI) noted it in its latest review of the economy of Bangladesh for the period of January-March, the third quarter (Q3) of the fiscal year (FY) 2014-15.
The services sector accounts for more than 50 per cent of the country's economy of US$ 185 billion (18,500 crore) in nominal terms.
The MCCI in its review of the economic situation in Bangladesh during the quarter said there were indications that activities in most of the nine sub-sectors under the broad services sector were adversely affected in terms of poor sales amid the fast falling demand during the period.
The chamber body noted that the scenario of overall investment was yet to improve. It argued that all-out efforts would therefore be needed to encourage private investment, enhance public investment and attract foreign direct investment (FDI).
"Bangladesh has no alternative to raising the level of investment, if its wants to attain the status of a middle income country by 2021," it noted.
It said the country would require the aggregate investments to grow from the present 26-27 per cent of GDP (gross domestic product) to 32.5 per cent by the fiscal 2015.
It said the present level of investment was not sufficient for the country's development.
"The foreign investors have adopted a 'go-slow' policy in making fresh investments because of their lack of confidence in the business environment, which they attribute to the country's underdeveloped infrastructure, shortage of power and energy, procedural bottlenecks, lack of proper regulatory framework, scarcity of industrial land, and political uncertainty," the MCCI review reads.
It said the government needed to overcome the obstacles to attract more FDI.
The MCCI said most importers were now maintaining a 'go-slow' policy to avoid financial risks due to the political tensions.
Import payments fell by 3.95 per cent in February month-on-month and also registered a negative growth of 0.06 per cent year on year (y-o-y) mainly due to lower prices of petroleum products in the global market and the prolonged political unrest in the country.
Analysing data of money market, the chamber organisation said broad money (M2) recorded a lower growth of 12.80 per cent (y-o-y at the end of February in the current fiscal against 15.85 per cent in the corresponding period of the previous FY.
The National Board of Revenue (NBR) witnessed a revenue shortfall of Tk 29.68 billion in the first eight months of the current FY, with the highest shortfall being in the value added tax (VAT), it noted.
It, however, said domestic credit, on the other hand, recorded a growth of 10.64 per cent (y-o-y) at the end of February 2015, slightly higher than that of the corresponding period.
The MCCI review said many industrial units were found operating much below their capacity because of irregular supply of energy, both power and gas.
It said infrastructural bottlenecks, shortage of power and gas, lack of investment and shortage of industrial land in export processing zones (EPZs) were affecting the performance of the sector.
The political unrest during the quarter under review badly affected construction activities in both public and private sectors.
Quoting a report prepared by the REHAB, an association of realtors, the review said the sector counted a loss of Tk 360 million (36 crore) every day during the blockade and around Tk 110 billion worth of investment by builders remained virtually stuck up.
"Sales of flats and plots by developers have declined by 60 per cent and adoption of new projects dropped by 75 per cent," it reads.
The report said the total liquid assets of the scheduled banks increased by 5.44 per cent and stood at Tk 2263.53 billion at the end of February.
Also, the required liquidity stood higher at Tk 1,225.20 billion as of end-February, resulting in excess liquidity of Tk 1,038.33 billion.
But as of end-June 2014 the excess liquidity was Tk 1,433.97 billion.
The disbursement of foreign aid during the first eight months of the current fiscal increased slightly by 1.04 per cent to US$ 1.853 billion from US$ 1.834 billion in the corresponding period of the previous fiscal.
On the other hand, the commitments of foreign aid hovered at US$ 2.47 billion in July-February of the FY15.
The net receipts of foreign aid in February last stood lower at US$ 54.84 million compared to the net receipts of US$ 113.58 million in February 2014. Aid disbursement of the corresponding month of the preceding fiscal was comparatively much higher.
jasmharoon@yahoo.com
Services sector bears brunt of turmoil
FE Report | Published: May 15, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
Share if you like