Newly-elected President of the Dhaka Chamber of Commerce and Industry (DCCI), Md Shahjahan Khan, has vowed to work for promoting the grooming of knowledge-based entrepreneurship in Bangladesh so as to cope with the fast-changing dynamics of globalisation.
Talking Saturday to the FE, the DCCI President said it is pertinent for the business community to produce knowledge-based entrepreneurs, taking care of environment and society for increasing and ensuring competitiveness both at home and abroad.
Md Shahjahan Khan said the private sector has been in the main driving seat where the government should act as a facilitator by providing appropriate policies and its implementation.
"The private sector is willing to contribute further to increasing productivity, ensuring better business and ethical practices and for this the situation about governance should be improved," he said.
The leader of the country's largest trade promotion organisation (TPO), who did his Master's degree in economics from Dhaka University in 1973, said the cost of doing business in Bangladesh is exorbitantly high because of many unofficial costs. The public sector should perform effectively to support private sector to do business in a legitimate manner, he added.
"Corporate Social Responsibility (CSR) is one of the areas which need attraction and also because of overproduction, resource depletion is another issue. We need to learn how to protect environment in parallel with increasing production," Md Shahjahan Khan said.
The following are excerpts of the interview:
Question (Q): Congratulations for being elected President of the DCCI. It has given both challenges and opportunities to you as the DCCI has an aggregate membership of over 5,000 small and medium enterprises (SMEs). What do you consider your challenges?
Answer (A): You are absolutely right that providing services to over 5000 SMEs is really a big challenge. But probably you also know that the DCCI is one of the prime and oldest chambers in the country and it has got a reasonably large Secretariat and a high-profile management Board to support me who have both practical, academic and business knowledge. I understand appropriate blending of these issues will help us to take new and supporting activities for the members of the DCCI and face the challenges.
You are perhaps aware, there are some set regular activities for which SME members are encouraged to be members of this chamber. They get information, documentation, training, consultancy and many other support services from the chamber.
But there are some professional services for which the DCCI has got some projects through which they are getting specialised services.
There are some challenges, too, definitely, as because you will agree that business is now getting more and more complex. Compliance issues are one thrust point with which SMEs mostly are not always well-conversant. This year we would try our best to take steps for facilitating the much-needed education to our budding entrepreneurs so that Compliant Business Practice can be exercised for better sustainability.
Q: As a well-known businessman as well as a leader of the business community, what do you think about the problems now facing the country's businesses?
A: You all know about the present problems of our country. While it is poised to take off towards becoming a middle income country, some man-made disasters, in the name of political crisis, hampered the growth. Different projections have already estimated a lower growth rate for Bangladesh which would be much below the earlier targeted rate of growth at 7.2 per cent. Last year growth rate was about 6.2 per cent, but this year the rate could come down a lot. We have seen the revision of some targets announced by the Finance Minister.
It is, of course, true that export is still showing a positive growth. We would now need to build confidence among both foreign and local business entrepreneurs so that businesses and investments do remain secured.
At this age of intense competition, nobody will wait. There is every chance that destination of business will shift very quickly.
We need to have extensive dialogue with the government to decide our short-, medium- and long-term planning, addressing both local and foreign investment and trade-related issues.
Our strong footing in the Global Value Chain must be ensured through branding our own business strengths.
Q: The government has been stating that it has become a facilitator in doing business. What can it do more for better a business environment?
A: The facilitator has got a vast meaning. We have good policies but when it is to be translated into a reality; people start getting pains; all the machineries and bureaucracy should be in favour of business. As a facilitator, only policy formulation should not be the task. All business-related regulatory barriers should be addressed appropriately.
Q: In recent months, it has been seen our country's foreign exchange (forex) reserve has hit a new record. Does it mean that imports of industrial raw materials and capital machinery, essential for industrial growth, gone down to leave the reserve at record level? If so, what do you suggest for ensuring better use of forex?
A: We have a very comfortable level of foreign exchange reserve. This is, no doubt, a positive sign, but we should at the same time know how to maximise the best possible utilisation of foreign exchange to get more business out of it in order to ensure better jobs to more people.
Q: Prices of essentials have gone up abruptly. It is true that recent strikes and blockades have affected the supply-chain, leading to the price-hike. But such programmes are quite temporary as relative peace and stability were witnessed during the last five years. Where did the private sector and the government fail then in holding price rise in check?
A: Yes, there was price-hike because of disruption of supply-chain specially for agricultural products. Statistics said that food inflation in December 2013 was about 9.0 per cent, the corresponding figure of last year being about 5.28 per cent.
It is true that present price-hike is for temporary reasons. Prevalence of price-hike is a notorious problem throughout the whole year.
I would like to add that price-hike is an issue for which a number of reasons may matter. There may be both cost-push and demand-pull factors, triggering inflation at the same time. Prices of industrial goods depend mostly on the imported raw materials and transportation cost. During transportation, there may be hoodlums and attacks, tariff etc., which add costs to the final products. Information dissemination is another issue to address the problem of price-hike.
In all sectors, both government and private sector should work hand in hand.
The DCCI, the MCCI and the CCCI established a Public Private Dialogue Platform, working in the DCCI building. We would like to draw your attention to this organisation. The public sector should extend all supports to this platform to help ease business and reduce cost of doing the same, for unlocking the country's investment potential.
Q: The highways are vital life-lines for exports and imports as these have to be used to reach ports. What do you suggest for making these highways smooth? Do you suggest a second highway only for reaching the ports for the businesses?
A: Communication and road transport is one of the vital elements for business; the present government has taken several steps for addressing the issue.
The Dhaka-Chittagong Corridor (DCC) is one of the priority issues for carrying goods to the port areas.
The 2010 Logistics Performance Index (LPI), published by the World Bank, suggests that although Bangladesh performs above regional average for South Asia logistics, it is generally below India as well as other countries. A large proportion of trade traffic, handled at Chittagong Port, moves on the Dhaka Chittagong Corridor (DCC), which is the country's most important trade link. It serves almost half of the national population, accounts for 57 per cent of the gross domestic product (GDP) and contributes to more than two-thirds of the country's import and export business flows. The DCC sees multimodal transport possibilities like those of road, rail, inland waterways links.
Proposed plans on dual-track to address the capacity constraints require that improved procedures are addressed soon to expedite movements to the main port.
Q: Do you suggest gradual relocation of export-oriented industries near the port, for example in Chittagong or in Khulna?
A: Regional dispersion of industries is one of the needs, no doubt. The government should establish infrastructure accordingly so that the existing tremendous burden on Dhaka city can be reduced gradually.
Under the existing fiscal regime, there is a decision on tax holiday for establishing industries at the regional and relatively less developed areas, but policies are inconsistent and taking benefits out of them is very difficult. Such policies should be simplified at the soonest possible time.
Q: We hear about over-invoicing leading to capital flight. What are your suggestions to stop it?
A: Yes, there are different types of over-invoicing and reasons behind such over-invoicing are also different.
Industrial enterprises setting up a new factory or expanding and renovating an old one with term loans from financial institutions (FIs), may like to over-invoice in case of import of capital machinery to generate their part of equity to qualify for a loan.
Some multinational companies overvalue the cost of machineries to inflate their capital contribution to joint venture companies, set up in the country. They may overvalue the inputs supplied by their parent companies to transfer money which they are supposed to repatriate only as post-tax profits.
Some fake imports may also be done, in collaboration with a section of the overseas banks to import rubbish and collect money.
Import of luxury goods to avoid tax and duties is another way for over-invoicing.
All such issues should be under the close vigilance of the tax authority. The National Board of Revenue (NBR) is going through a phase of modernisation. We may expect that such types of problems would be avoided in future through effective monitoring and surveillance.
More automation would be required so that the number of manpower in handling of information, pricing and documents can be reduced.
Q: Of late, the country's exports have been facing growing international demands for better working conditions, labour standards and environmental safety for workers and also better wages for them. Some efforts are also there for their enforcement in the RMG sector but what's about other areas of industrial production?
A: We think we should not elaborate the case of RMG further. You all know about the sector.
In reply to your point, we would only like to mention that the government has reviewed its labour law and it has been updated further. Other sectors will be able to get benefits out of it, definitely.
Q: The DCCI has hit the headlines of the press by taking up innovative programmes every year. Last year, it was all about grooming 2000 entrepreneurs. Would you follow it up? The year before last it was Branding Bangladesh. What's the progress about all such efforts? What do you plan as the new President of DCCI this year?
A: I am fully aware about the annual mega programme the DCCI organises every year. I am also planning continuation of this in 2014.
You are aware that Bangladesh has been gradually become more and more integrated with the global economy. Statistics says that 60% of the Bangladesh economy, in terms of its exports and imports, is now globally integrated.
You are also aware that there is a sophisticated way of running business now-a-days, and in this context, as product value-chain is a bit cumbersome now, an entrepreneur has to take care of both in-bound and out-bound mobility of a product and investment.
Keeping such issues in mind, we are planning for an innovative activity for this year. We would like to bring business-to-business (B2B), government-to-government (G2G) and government-to-business (G2B) collaboration more pronounced so that both public and private sectors can become more close to chalk out the national priorities. We are planning a programme to make the country's entrepreneurs to be more educated so that we may integrate our businesses more closely with the globalised economy.
A man of Barisal, Md Shahjahan Khan is involved in shipping and real estate sector.
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