Bangladesh business

The recovery of business in Bangladesh penalized by the containment of the 2nd wave



| Update:
September 20, 2021 11:20:43


The lockdown imposed to control the second wave of coronavirus transmission has slowed the process of business resumption in Bangladesh as 64% of businesses recorded a weak rebound from pandemic disruptions during the April-June period this year, according to a survey that also points the way to an economic recovery.

The fifth quarter since the virus hit the economy was too bad for business when just 9.0% of 501 companies surveyed reported a strong recovery while 27% maintained a moderate recovery.

During this period of headwinds blowing inside and outside the country, the magnitude of the economic recovery from the covid-induced losses fell to 35% from 57% in the previous quarter (January- March).

When it comes to the recovery by company size, micro and small industries were the worst performers while large units were the worst performers, survey results show while listing the triggers driving trade away. and business depressions.

Foreign remittances, export of goods and services, bank credit to the private sector and vaccination programs are among the main factors contributing to the overall economic recovery, the research organization said.

Poor business health emerged from the fifth round of the quarterly Business Confidence Index (BCI) released by the South Asian Network on Economic Modeling (Sanem) on Saturday.

The Sanem, in collaboration with Asia Foundation, launched the quarterly survey of 501 manufacturing and service companies in the wake of the world and Bangladesh reeling from the worst health emergency in a century posed by the coronavirus pandemic and its delta variants in particular.

In terms of upcoming stimulus in the form of government bailouts, the survey indicates that 79% of businesses did not get the benefits until July 2021. Of these, 65% did not get such financial protection while only 14% were unaware of the special offer. financing arrangement.

During the survey period, only 20 of the 348 companies approached succeeded in receiving a stimulus package for the first time, but small and medium-sized companies accounted for only 4.0%.

In terms of sectors with access to stimulus packages, ready-to-wear with 52% tops the list, followed by textiles (36%) and leather (30%), while wholesale, ICT , catering, real estate and transport are the least profitable.

SANEM Executive Director and Professor at the University of Dhaka, Dr. Selim Raihan, virtually shared the survey results based on interviews with owners as well as representatives of 309 micro and small, 142 large and 50 medium industries.

He said the trend of business recovery slowed further in the fifth quarter, while the disbursement of stimulus funds to pandemic-hit industries progressed at a lackluster pace.

He said those who have received handouts from government incentive programs are in better condition than those who have not.

“A total of 29% of respondents complained about being faced with bribe requests and a further 47 preferred not to answer this question, while 24% said they were not told asked for a bribe,” he added.

He further mentioned that 42% of those who reported corruption allegations belonged to small and medium enterprises.

Dr. Raihan mentioned some factors that contribute to the overall economic recovery, such as foreign remittances, export status, vaccinations, bank credit to the private sector, stimulus package and its disbursement.

Another important finding emerged during the survey when companies were asked about the extent of business recovery since March 2020 when the global pandemic also swept through Bangladesh.

On average, 57% of their business recovered in March 2021 compared to March 2020, which unfortunately fell to 35% in June 2021.

“Thus, the recovery has deteriorated on average and a significant variation is seen on this when we look at firm size: micro and small firms have suffered the most with a drastic reduction from the previous 46.9% to 28, 3%,” he said. .

Speaking about companies’ coping strategies over the three months, he said 65.6% of respondents depended on their own savings, with the majority of businesses not having benefited from stimulus packages.

Some 28.1% relied on borrowing or lending, employee layoffs helped 19% while stimulus helped 17.8% of respondents, he said.

He said the pandemic appears to be continuing for a longer period and businessmen realized they had to move forward alongside the virus.

He suggested adopting area- and sector-specific protocols in consultation with stakeholders instead of protocols developed by the administration for better results in the rebound process.

“We have learned a lot over the last year and a half in the fight against the virus. We have to design such protocols from our lessons,” he said.

The most encouraging part of the latest round of surveys has been the recovery in business confidence following the easing of lockdown measures.

Measured on a scale of 0 to 100, Sanem said the Business Confidence Index (BCI) improved to 49.74 during the July-September period this year from 41.39 during April-June period.

A confidence level below 50 reflects a deterioration in the outlook, while a level above 50 indicates an improvement.

“The improvement is visible for all the sub-components. This improvement in business confidence testifies to a hope for a revival of the private sector”, concluded Mr. Raihan.

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