Perilous politics and the economic doom

The ongoing fierce political tussle centring on the January 5 parliamentary election is seriously affecting the economy. Dhaka's road link with the entire country has been hit hard. Interregional communications have also come to a halt. Trade, commerce and industrial production have also been affected. The current year has witnessed 60 days of shutdowns and blockades and about 96 days of usual weekly closure on Fridays and Saturdays. From that point of view the economy has lost more than five months of active working days. Although there were some economic activities on Fridays and Saturdays, the banks, other financial institutions and government and semi-government offices were closed. Though the private sector entrepreneurs kept their mills and factories running on Fridays and Saturdays, they could not send their products to the desired destinations because of shutdowns and blockades. On the other hand, because of the same reason most of them had to stop production, as it was not possible to get the supply of raw materials. The story about the forward march of Bangladesh's economy over the past few years has become a matter of the past now.
Almost all the sectors of the economy are in a recession now because of shutdowns and blockades. The growth in export-import trade, investment, insurance, internal sector of the economy, import of capital goods, service sector etcetera are now showing a downward trend. The entrepreneurs who have set up industrial units by borrowing bank loans or tried to keep the production of factories running by borrowing running capital from banks are altogether in deep trouble. Most of them are at a loss because of the pressure from banks about repayment of loan installments whether the factory runs or not. Those who have taken bank loans at high interest rates are now about to be bankrupt. The wheel of the bank interest is moving, even though the wheel of the factory has come to a halt.  Many of the big industrial establishments are unable to pay their officers and employees. The central bank or the policy makers have not yet taken any initiative in this connection. The organisations of business communities have appealed to the central bank to take initiatives to that end. The tourism industry is also facing problems as there is no rush of tourists and foreign buyers in the peak season of the year. Owners of hotels and motels have become alarmed in apprehension of incurring losses as their establishments are lying vacant.    
An account shows the import of industrial capital machinery and raw materials have significantly fallen in recent times. The Bangladesh Bank data shows the import of capital machinery was worth $ 2.33 billion in the fiscal year 2010-2011. The figure fell to $ 2 billion in the fiscal year 2011-2012 and in the fiscal year 2012-2013 it dropped to $ 1.83 billion. It has also been reported that the import of one of the most important industrial raw materials, cotton, has also declined by this time. Cotton import in the fiscal year 2010-2011 amounted to $ 2.69 billion and in the financial year 2011-2012 it dropped to $ 2.08 billion. In the fiscal year 2012-2013 the figure further dropped to $2 billion. The growth in export of readymade garments (RMG), the principal export-oriented sector of Bangladesh, used to be more that 20 per cent every year. But the export target has not been met this year. The Export Promotion Bureau (EPB) reports the export target of the RMG sector was $ 2.26 billion in last October, but against the target the exports were worth $ 2.11 billion.
It is not only the export-import trade, the shutdowns and blockades coupled political unrests have also a serious negative impact on the country's investment process. In the financial year 2012-2013 the Board of Investment (BoI) had registered 1,457 investment proposals in total, but in the first three months (July-September) of the current fiscal year there were only 57 investment proposals for registration. Moreover, the absence of establishing new industrial units and the decline in export-import trade put a damper on the insurance industry also. There is no new business in this sector while the old installments of premium are getting stuck up in many cases. It has been reported that about 20 per cent of the businesses have seen default on premiums. The country's 45 insurance companies are in recession while the rate of compensation payments is on the increase because of torching cars and loaded lorries, covered vans and trucks during repeated prolonged shutdowns and blockades. The continued political turmoil has not only harmed production, many of the producers cannot transport their products to desired destinations. The transport fare of commodities on Dhaka-Chittagong route has risen from Tk 15,000 to Tk 95,000 because of traffic jams and uncertainties resulting from shutdowns and blockades. The enhanced commodity transport fare is added to the production costs of commodities giving rise to commodity prices resulting in a decline in the demand for commodities causing losses to the industrial units concerned.
The business community of the country, especially the RMG sector, is passing a critical time because of the present political deadlock and other reasons. The RMG entrepreneurs say this sector has not faced such a tough time in the past 30 years. They also allege that it is the politicians who are responsible for the present crisis but not the business community. They say the entire supply line has broken down; during the last few months they had to export apparels worth Tk 40 billion by air at transport costs several times higher. Another Tk 20 billion worth of commodities will have to be exported by air. The foreign buyers are diverting orders elsewhere outside the country because of their erosion of confidence in the apparel manufacturers in Bangladesh under the present circumstances. The backbone of the financial sector is also breaking down because of the prolonged political crisis. The International Monetary Fund has predicted a fall in the GDP (Gross Domestic Product) growth rate to 5 per cent in the present fiscal year because of the ongoing political crisis.  
The internal market and business in the country are also at stake. The peasants are suffering losses. Their perishable commodities are rotting in the fields because of shutdowns and blockades. A section of the corrupt businessmen are taking the advantage of the present political unrest by raising prices of fertilisers and diesel to destabilise the agricultural sector in the Rabi crop season to the dismay of the peasant community. The prices of daily necessities are skyrocketing because of hindrances to their supply. In addition to that, a section of unscrupulous business quarter is creating an artificial crisis of consumer goods to enhance profits. The dairy industry in West Potia of Chittagong is incurring a loss of Tk 3.0 million per day. The dairy farm owners are protesting the ongoing political crisis by pouring milk in ditches because of their failure to carry the product to consumers or preserve those in the absence of adequate storage facilities. The fishing business in Cox's Bazar is suffering losses to the tune of tens of millions of Taka. Employment opportunities in the informal sector of the economy where tens of millions of workers engaged themselves during the peace time to earn their day-to-day income for survival have been jeopardised. More than 50 thousand transport workers have become unemployed in the south-western region of the country alone.
In a word, the total economy of the country is at peril because of the ongoing political turmoil which needs to be stopped as early as possible for the benefit and welfare of the people who earnestly desire a peaceful living. The politicians of Bangladesh have to realise that they cannot afford to play the role of the Aesop's 'boys' 'stoning' the people of the country to death treating them as Aesop's 'frogs' in their political tricks aimed at ascending or clinging to power ignoring the safety of the people and their properties.                                             
The writer is a retired Professor
of Economics, BCS General Education Cadre.
 [email protected]