Beyond the Sops
Sunday, 13 September 2009
Mahmudur Rahman
In line with most countries the government has announced stimulus packages, fiscal measures and policy support to sectors of the economy that have been affected by the global meltdown. That is as it should be. However, the question beggars as to how closely or separately the country's economic indicators and such should be aligned with global ones to prevent such occurrences in the future.
The US governments multi-million dollar stimulus and bailout packages had a feature that was designed both as a caution and a safety valve, that of asking the sector concerned to present plans on how this bailout would be used and how the businesses planned to come out of the stagnation.
While much has been aired about the amounts required by businesses in Bangladesh, not much has been made public as to how the businesses and industries planned to climb out of the hole they are in. The world economy is unlikely to change significantly in the short term and the earliest predictions of a recovery stretch into quarter two of 2010. Of concern is the fact that another Eid will be with us in roughly two months time when the issue of wages and bonuses will once again emerge.
The government taskforce set up to examine the impact of the economic fall-out has not gone public yet with its findings or recommendations beyond the stimulus packages announced by the government. These packages are merely the insulin -- so to say, the longer term sustainability of business has not been publicly focused on yet.
There is now, probably more than ever a need for a concerted action plan required to be drawn up together by businesses, banks and the government to look at the issue. Banks have huge liquidity that they are hoping will be utilised once when the government presses ahead with its development activity (meaning borrowing from them) and an upturn in the economy (meaning post quarter two 2010). The impressive remittances from wage-earners abroad is both a boon and a bane in that while money is being pumped into the economy people are still somewhat averse to spending. A look at the Eid shopping figures isn't exciting stuff to write home about. The influx also further bolsters foreign exchange reserves that are useless lying idle. Banks just do not have the same flow of borrowing from the private sector as before. The private sector isn't amused by the consumption patterns as consumers worry about the rising prices and keep a tight fist of their money.
It therefore requires a confidence-building campaign by the government and private sector to encourage consumer spending as well as forays by local businesses and industries to look for newer markets to invest in abroad. One thing is clear, there is demand across the world though it has become somewhat lop-sided and non-traditional in geography. (The writer is a former head of corporate and regulatory affairs of British-American Tobacco Bangladesh and former CEO of Bangladesh Cricket Board. He can be reached at mahmudrahman@gmail.com)
In line with most countries the government has announced stimulus packages, fiscal measures and policy support to sectors of the economy that have been affected by the global meltdown. That is as it should be. However, the question beggars as to how closely or separately the country's economic indicators and such should be aligned with global ones to prevent such occurrences in the future.
The US governments multi-million dollar stimulus and bailout packages had a feature that was designed both as a caution and a safety valve, that of asking the sector concerned to present plans on how this bailout would be used and how the businesses planned to come out of the stagnation.
While much has been aired about the amounts required by businesses in Bangladesh, not much has been made public as to how the businesses and industries planned to climb out of the hole they are in. The world economy is unlikely to change significantly in the short term and the earliest predictions of a recovery stretch into quarter two of 2010. Of concern is the fact that another Eid will be with us in roughly two months time when the issue of wages and bonuses will once again emerge.
The government taskforce set up to examine the impact of the economic fall-out has not gone public yet with its findings or recommendations beyond the stimulus packages announced by the government. These packages are merely the insulin -- so to say, the longer term sustainability of business has not been publicly focused on yet.
There is now, probably more than ever a need for a concerted action plan required to be drawn up together by businesses, banks and the government to look at the issue. Banks have huge liquidity that they are hoping will be utilised once when the government presses ahead with its development activity (meaning borrowing from them) and an upturn in the economy (meaning post quarter two 2010). The impressive remittances from wage-earners abroad is both a boon and a bane in that while money is being pumped into the economy people are still somewhat averse to spending. A look at the Eid shopping figures isn't exciting stuff to write home about. The influx also further bolsters foreign exchange reserves that are useless lying idle. Banks just do not have the same flow of borrowing from the private sector as before. The private sector isn't amused by the consumption patterns as consumers worry about the rising prices and keep a tight fist of their money.
It therefore requires a confidence-building campaign by the government and private sector to encourage consumer spending as well as forays by local businesses and industries to look for newer markets to invest in abroad. One thing is clear, there is demand across the world though it has become somewhat lop-sided and non-traditional in geography. (The writer is a former head of corporate and regulatory affairs of British-American Tobacco Bangladesh and former CEO of Bangladesh Cricket Board. He can be reached at mahmudrahman@gmail.com)