Bridging confidence gap in business
Wednesday, 31 October 2007
Syed Fattahul Alim
THE government has taken steps to create a more business-friendly climate in the economy. To this end, the incumbent administration has come up with a framework for 'better business forum' and sought suggestions from the business community in order to formulate the principles and policies for developing a better business environment. President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said, the business leaders in their suggestion have recommended that the government should devise a long-term, but achievable policy to encourage trade and industry in the country.
The rationale for the move is obvious. The incumbent caretaker government after assuming office has taken a number of moves to clean up the mess that had accumulated over the years in politics, administration and the business. The focus of the clean-up drive, however, has been corruption. Corruption, as everyone is aware of, is not concentrated in any particular segment of society whether it is politics, administration or business. In fact, it has penetrated every conceivable nook and cranny of society. That is why, any move to address this social vice is also liable to cut across the various segments of society. Business cannot be conceived of something that is located within a watertight compartment. On the contrary, it is inextricably linked to the administration and politics in general.
Small wonder along with politics and the administration, the business has also received a jolt as a result of the anti-corruption campaign launched by the present government. This has been manifested through a general loss of confidence among the business community of the country. As a consequence, operators of trade, commerce as well as industry have adopted a policy of wait and see rather than committing themselves to any fresh venture. The upshot of the whole development is that fewer goods, services and jobs are being created now than before. To add to the woes of an import-dependent economy like ours, oil price and, as if in collusion with it, price of every other commodity including that of essential ones have gone up in the international market inexorably. All these factors have also left their negative impact on the general commodities price index in Bangladesh. Soaring price of essentials, slowdown in economic transactions through banks, inflationary trend in the economy suppressed by a tighter monetary policy by the central bank, shyness of the investors and other business operators to go for new ventures and last but not the least, double visitations by the flood have given rise to a very complicated situation in the economy. Though the contribution of the inflationary trend coupled with the policy of contractionary monetary policy to the economy predates the confidence crisis in business in the wake of anti-corruption drive, all the syndromes have together given rise to a special situation in the business landscape of the country. Lack of business confidence is just one aspect of that general syndrome.
The fall in domestic as well foreign investment is one indicator of the deteriorating business confidence. The latest World Investment Report says, compared to FY 2006, when the total volume of Foreign Direct Investment (FDI) in the economy was US$ 845 million, the volume of the same has come down to US$ 792 million in FY 2007, which is a drop of about 6.0 per cent in a year. The reason for this fall, however, has been attributed to political unrest in the country during the period in question.
The banking sector at the moment is awash with idle money amounting to some Tk. 140 billion as of the end of July, 2007. The bulging liquidity surplus in the banks is also a telltale sign of dwindling business activity, since few entrepreneurs are approaching the banks for credit.
Against this backdrop, the move to rebuild the lost business confidence is definitely a commendable one. While appreciating the step, it needs to be made clear that present attempt aims mainly to reduce the gap between the business community and the government. Understandably, the better business forum so proposed would be chaired by the Chief Adviser, Dr. Fakhruddin Ahmed while Finance Adviser Mirza Azizul Islam will operate act as its executive chairman. Advisers of different ministries accordingly will chair different subcommittees of the body where business leaders and other government officials will act as members. So, by design the forum will seek to build rapport between government and business and solve problems at policy level as well as those arising on day to day basis. The business community therefore should make the most of this forum and work towards turning the administration into a more business-friendly one.
The role of government in facilitating business is crucial as it provides the basic infrastructure on which business activities are carried out in an economy. Government by its policies and various incentives can also help business to grow and flourish. Again, the government may also come in the way of business and stifle its growth. The successful economies are so because the governments that preside over them have better rapport with their business communities and have sound policies under which businesses operate. On this score, the members of the business community, too, have a stake in informing and guiding the government towards introducing the best business practices in any country.
The past experience shows that leaders in any trade due to their sheer proximity to the powers that be are often wont to grind their own axe. Such attitude is also a big stumbling block before the overall growth of business, for that goes against the basic spirit of fair play among all the actors in the field of trade, commerce and industry. Such practice not only encourages monopoly thereby affecting healthy growth of business, it also begets corruption, the scourge the incumbent government is trying to grapple with.
In fact, the core task of the better business forum should be more than just to bridge the gap between government and business. What is more, it should also meet the long-felt need of a think-tank in the arena of trade and industry. So, to enable this forum to play that bigger role would also be necessary to broaden its base by including other stakeholders of the economy in its body.
The main challenge before the economy, however, does not constitute simply in the shyness of the businesspeople invest. Unrestrained upward surge in the cost of living caused by hike in food price, on the one hand, and continuous fall in the value of common people's real income, on the other, has created a suffocating condition in society. Granted prices of oil and other commodities that we import from the international market have gone up irreversibly. But is that fact any consolation for the common people whose income level has remained unchanged over the years? This has created a general sense of insecurity in the lives of the people.
It is not that business has no business about what happens in the life of the man in the street. The government cannot be expected either to shoulder the entire responsibility alone So, one should not be surprised when the entire ensemble of these issues will turn up for scrutiny before any forum where business and governance meet for sharing their concerns.
THE government has taken steps to create a more business-friendly climate in the economy. To this end, the incumbent administration has come up with a framework for 'better business forum' and sought suggestions from the business community in order to formulate the principles and policies for developing a better business environment. President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said, the business leaders in their suggestion have recommended that the government should devise a long-term, but achievable policy to encourage trade and industry in the country.
The rationale for the move is obvious. The incumbent caretaker government after assuming office has taken a number of moves to clean up the mess that had accumulated over the years in politics, administration and the business. The focus of the clean-up drive, however, has been corruption. Corruption, as everyone is aware of, is not concentrated in any particular segment of society whether it is politics, administration or business. In fact, it has penetrated every conceivable nook and cranny of society. That is why, any move to address this social vice is also liable to cut across the various segments of society. Business cannot be conceived of something that is located within a watertight compartment. On the contrary, it is inextricably linked to the administration and politics in general.
Small wonder along with politics and the administration, the business has also received a jolt as a result of the anti-corruption campaign launched by the present government. This has been manifested through a general loss of confidence among the business community of the country. As a consequence, operators of trade, commerce as well as industry have adopted a policy of wait and see rather than committing themselves to any fresh venture. The upshot of the whole development is that fewer goods, services and jobs are being created now than before. To add to the woes of an import-dependent economy like ours, oil price and, as if in collusion with it, price of every other commodity including that of essential ones have gone up in the international market inexorably. All these factors have also left their negative impact on the general commodities price index in Bangladesh. Soaring price of essentials, slowdown in economic transactions through banks, inflationary trend in the economy suppressed by a tighter monetary policy by the central bank, shyness of the investors and other business operators to go for new ventures and last but not the least, double visitations by the flood have given rise to a very complicated situation in the economy. Though the contribution of the inflationary trend coupled with the policy of contractionary monetary policy to the economy predates the confidence crisis in business in the wake of anti-corruption drive, all the syndromes have together given rise to a special situation in the business landscape of the country. Lack of business confidence is just one aspect of that general syndrome.
The fall in domestic as well foreign investment is one indicator of the deteriorating business confidence. The latest World Investment Report says, compared to FY 2006, when the total volume of Foreign Direct Investment (FDI) in the economy was US$ 845 million, the volume of the same has come down to US$ 792 million in FY 2007, which is a drop of about 6.0 per cent in a year. The reason for this fall, however, has been attributed to political unrest in the country during the period in question.
The banking sector at the moment is awash with idle money amounting to some Tk. 140 billion as of the end of July, 2007. The bulging liquidity surplus in the banks is also a telltale sign of dwindling business activity, since few entrepreneurs are approaching the banks for credit.
Against this backdrop, the move to rebuild the lost business confidence is definitely a commendable one. While appreciating the step, it needs to be made clear that present attempt aims mainly to reduce the gap between the business community and the government. Understandably, the better business forum so proposed would be chaired by the Chief Adviser, Dr. Fakhruddin Ahmed while Finance Adviser Mirza Azizul Islam will operate act as its executive chairman. Advisers of different ministries accordingly will chair different subcommittees of the body where business leaders and other government officials will act as members. So, by design the forum will seek to build rapport between government and business and solve problems at policy level as well as those arising on day to day basis. The business community therefore should make the most of this forum and work towards turning the administration into a more business-friendly one.
The role of government in facilitating business is crucial as it provides the basic infrastructure on which business activities are carried out in an economy. Government by its policies and various incentives can also help business to grow and flourish. Again, the government may also come in the way of business and stifle its growth. The successful economies are so because the governments that preside over them have better rapport with their business communities and have sound policies under which businesses operate. On this score, the members of the business community, too, have a stake in informing and guiding the government towards introducing the best business practices in any country.
The past experience shows that leaders in any trade due to their sheer proximity to the powers that be are often wont to grind their own axe. Such attitude is also a big stumbling block before the overall growth of business, for that goes against the basic spirit of fair play among all the actors in the field of trade, commerce and industry. Such practice not only encourages monopoly thereby affecting healthy growth of business, it also begets corruption, the scourge the incumbent government is trying to grapple with.
In fact, the core task of the better business forum should be more than just to bridge the gap between government and business. What is more, it should also meet the long-felt need of a think-tank in the arena of trade and industry. So, to enable this forum to play that bigger role would also be necessary to broaden its base by including other stakeholders of the economy in its body.
The main challenge before the economy, however, does not constitute simply in the shyness of the businesspeople invest. Unrestrained upward surge in the cost of living caused by hike in food price, on the one hand, and continuous fall in the value of common people's real income, on the other, has created a suffocating condition in society. Granted prices of oil and other commodities that we import from the international market have gone up irreversibly. But is that fact any consolation for the common people whose income level has remained unchanged over the years? This has created a general sense of insecurity in the lives of the people.
It is not that business has no business about what happens in the life of the man in the street. The government cannot be expected either to shoulder the entire responsibility alone So, one should not be surprised when the entire ensemble of these issues will turn up for scrutiny before any forum where business and governance meet for sharing their concerns.