Business confidence rising despite stagnant investment: IFC survey
Friday, 6 November 2009
FE Report
Business confidence is growing in the country as companies see increased profits and more employment in the fourth quarter although overall investment remains stagnant, a survey said Thursday.
The IFC-BICF Business Confidence Survey reveals that out of the 778 firms it polled 84 per cent manufacturing and 93 per cent service companies believe that they would perform better or the same between October and December than the third quarter.
Majority of the companies -- 74 per cent of which are small, seven per cent medium and 19 per cent large firms -- are confident that they would enjoy higher profit and create more jobs in the year's last quarter.
However, the survey shows that the country's private investment is still in a state of stagnation, as companies are taking time on new projects or expanding the existing ones.
The International Chamber of Commerce, Bangladesh (ICC,B) organised a discussion on the report titled IFC-BICF Business Confidence Survey Highlights 2009: A Reflection on Business Survey in the city.
"It's a good news for the economy," economist Dr Wahiduddin Mahmud said on the findings of the survey.
"In the process, it will lead to more employment opportunities and investment would increase at the last phase of this process," he added.
But he cautioned that investment still remained far off expectations. "In terms of performance, investment is stagnant in the present quarter and in the last quarter," he said.
"The businessmen know when to invest and their confidence depends on spirit along with economic factors," he added, noting that shortage of gas and power and the global
recession were the main reasons behind this stagnation.
Commerce minister M Faruk Khan said that the people of Bangladesh are very resilient and optimistic and as the global economy is rebounding, it is expected that the country would perform well in the fourth quarter.
"The government has taken a number of infrastructure projects and 20 million cubic feet gas will be added to the pipeline very soon," he said.
"The government is politically committed that it will not patronise any illegal practices," he said referring to rent-seeking problem.
"Law and order situation is discussed in every cabinet meeting and the home minister has to answer if there is any deterioration," Mr Faruk said.
ICC,B president Mahbubur Rahman said the business community strongly feels that qualitative public spending and investment are needed to boost local economy
"Power generation and gas exploration should now be the top most priorities of the government," he said.
The business leader said although Bangladesh has survived the first phase of the global recession, there are now signs that the economy could face full brunt of the meltdown.
"A slight decline in non-RMG exports and return of Bangladeshi workers from some countries should be taken as a cautionary signal for the future and addressed properly," he pointed out.
Mr Mahbub urged the government to strengthen the 'Bangladesh Better Business Forum' and Regulatory Reform Commission (RRC) for creating investment-friendly environment to attract both local and foreign investment.
Chairman of SME Foundation Aftab-ul Islam said the private sector should play their due role in reinvigorating the dying RRC.
"Commerce minister is giving one information and the finance minister another in the same meeting," he said while speaking about the confusing data and information divulged by different government offices.
Chairman of Newage Garments Limited ASM Quasem said that the IFC-BICF survey should be backed by facts.
He said the RRC was performing well but has been totally abandoned.
Former DCCI president Hossain Khaled said business constraints should be reflected in the survey as it is important to know what harnesses the prospects of new investment.
Chairman of ICC Bangladesh Standing Committee on Banking Technique Mamun Rashid said the country needs to change business model but it is not happening.
Chairman of Policy Research Institute of Bangladesh Dr Zaidi Sattar said such survey should be home-grown.
BIDS director general Mustafa K Mujeri said without policy support, there would be a gap between the expectation and emerging realities.
Head of BICF James Crittle said if Bangladesh wants to achieve 8.0 per cent growth rate, it must ensure better business environment.
Business confidence is growing in the country as companies see increased profits and more employment in the fourth quarter although overall investment remains stagnant, a survey said Thursday.
The IFC-BICF Business Confidence Survey reveals that out of the 778 firms it polled 84 per cent manufacturing and 93 per cent service companies believe that they would perform better or the same between October and December than the third quarter.
Majority of the companies -- 74 per cent of which are small, seven per cent medium and 19 per cent large firms -- are confident that they would enjoy higher profit and create more jobs in the year's last quarter.
However, the survey shows that the country's private investment is still in a state of stagnation, as companies are taking time on new projects or expanding the existing ones.
The International Chamber of Commerce, Bangladesh (ICC,B) organised a discussion on the report titled IFC-BICF Business Confidence Survey Highlights 2009: A Reflection on Business Survey in the city.
"It's a good news for the economy," economist Dr Wahiduddin Mahmud said on the findings of the survey.
"In the process, it will lead to more employment opportunities and investment would increase at the last phase of this process," he added.
But he cautioned that investment still remained far off expectations. "In terms of performance, investment is stagnant in the present quarter and in the last quarter," he said.
"The businessmen know when to invest and their confidence depends on spirit along with economic factors," he added, noting that shortage of gas and power and the global
recession were the main reasons behind this stagnation.
Commerce minister M Faruk Khan said that the people of Bangladesh are very resilient and optimistic and as the global economy is rebounding, it is expected that the country would perform well in the fourth quarter.
"The government has taken a number of infrastructure projects and 20 million cubic feet gas will be added to the pipeline very soon," he said.
"The government is politically committed that it will not patronise any illegal practices," he said referring to rent-seeking problem.
"Law and order situation is discussed in every cabinet meeting and the home minister has to answer if there is any deterioration," Mr Faruk said.
ICC,B president Mahbubur Rahman said the business community strongly feels that qualitative public spending and investment are needed to boost local economy
"Power generation and gas exploration should now be the top most priorities of the government," he said.
The business leader said although Bangladesh has survived the first phase of the global recession, there are now signs that the economy could face full brunt of the meltdown.
"A slight decline in non-RMG exports and return of Bangladeshi workers from some countries should be taken as a cautionary signal for the future and addressed properly," he pointed out.
Mr Mahbub urged the government to strengthen the 'Bangladesh Better Business Forum' and Regulatory Reform Commission (RRC) for creating investment-friendly environment to attract both local and foreign investment.
Chairman of SME Foundation Aftab-ul Islam said the private sector should play their due role in reinvigorating the dying RRC.
"Commerce minister is giving one information and the finance minister another in the same meeting," he said while speaking about the confusing data and information divulged by different government offices.
Chairman of Newage Garments Limited ASM Quasem said that the IFC-BICF survey should be backed by facts.
He said the RRC was performing well but has been totally abandoned.
Former DCCI president Hossain Khaled said business constraints should be reflected in the survey as it is important to know what harnesses the prospects of new investment.
Chairman of ICC Bangladesh Standing Committee on Banking Technique Mamun Rashid said the country needs to change business model but it is not happening.
Chairman of Policy Research Institute of Bangladesh Dr Zaidi Sattar said such survey should be home-grown.
BIDS director general Mustafa K Mujeri said without policy support, there would be a gap between the expectation and emerging realities.
Head of BICF James Crittle said if Bangladesh wants to achieve 8.0 per cent growth rate, it must ensure better business environment.