Businessmen urge govt to cut interest rates, remove hurdles to exports

Top businessmen of the country have called on the interim government to take necessary steps to reduce interest rates, create demand for local goods in the domestic market, and remove obstacles to exports.

In a seminar organised by the Dhaka Chamber of Commerce and Industry (DCCI) today (5 October), they also said businesses will not return to normal if the country's law and order situation does not improve.

The businessmen made the calls at the seminar, titled "Current State of the Economy and Outlook of Bangladesh", at the DCCI office in the capital's Motijheel.

DCCI President Ashraf Ahmed, who presided over the event, said the overall ongoing tensions, including those regarding the law and order situation, administrative activities, bank loan interest rates and foreign exchange crisis, will cause the economy to shrink. "Jobs will not be created and inflation will not decrease.

"That's why a business-friendly environment is needed where investments can be made and businesses can operate. The government will primarily have to make this happen. At the same time, the responsibilities that businesses have must be fulfilled by the businessmen as well."

Former FBCCI president Mir Nasir Hossain said the current interest rate is effectively 17%. "The Bangladesh Bank says that from next March, if an institution fails to pay a single instalment, it will be declared a defaulter. What is the purpose of this? Do they want to destroy businesses?

"It would be better to say so. Businesses will sell their businesses to pay off bank loans and become day labourers."

Nasir called for immediate measures to improve the law and order situation, reform the National Board of Revenue and cut the interest rates.

Addressing the seminar, Bangladesh Knitwear Manufacturers and Exporters Association President Mohammad Hatem said, "No worker unrest happens without instigation. The government fixes wages in 40 sectors. But only the readymade garment workers are causing unrest. It is being said workers are taking to the streets due to inflation. But is there no impact of inflation in other sectors?"

He said many things have become unaffordable due to high bank loan interest rates. "At least 90% of businessmen will become defaulters because of the new rule, starting next March, that will declare a business as a defaulter if it fails to pay a single instalment. We cannot understand why BB has taken up this policy. This will strangle businesses."

Hatem, also the managing director of MB Knit Fashion Ltd, said that the biggest crisis now is the gas crisis. "Because of this, productions are failing to meet deadlines and exports are suffering. Most factories are facing difficulties in paying wages."

He also emphasised improving the law and order situation to bring the labour unrest under control and restore businesses' confidence.

Former Metropolitan Chamber of Commerce and Industry president Syed Nasim Manzur said, "We businessmen are feeling very insecure. Businessmen are worried about what will happen tomorrow, and what type of phone calls they will get. Only worker discontent did not take place in Ashulia and Gazipur. There were other issues as well. The government now needs to gain the trust of businessmen to ensure that it is safe to do business in Bangladesh."

He said the demand for local products is decreasing in the domestic market and if this continues, the number of loan defaulters will only increase.

Nasim, also the managing director of Apex Footwear Limited, continued, "The current interest rate for the manufacturing sector is 14-15%. No one can survive in business anywhere in the world with such high interest rates."

"Despite finalising everything, FDI from two companies is not coming through; they have adopted a 'wait and see' approach," he added.

To improve the situation, he recommended improving the law and order situation, making the local administration more effective, showing zero tolerance towards those behind the violence, and implementing separate arrangements for the rescue of those in distress.

"A country cannot survive solely on remittances and money from donor groups. Export earnings and the domestic market must be kept active. Just because a handful of businessmen are bad, the entire business community should not suffer. Businessmen also love their country. We are here, in our country, and we are not going anywhere," said Nasim.

The stabilisation of the exchange rate has shown that the appointment of the right person as the BB governor has proven to be beneficial, he added.

Speaking at the seminar, Pran-RFL Group Chairman Ahsan Khan Chowdhury said, "There are 1.5 lakh people who currently work in various entities of the Pran Group. Now, I feel concerned about entering my own factory thinking about whether I will be able to leave alive.

"The law and order situation will have to be improved at any cost. The industrial police must be made effective. If the law and order situation improves, everything will be fine. Additionally, those taking advantage of the situation should be taught a lesson."

He added that the interest rate has gone up to 16%. "If this is not reduced, default loans will increase, and creating jobs will not be possible. Due to the foreign exchange crisis, it is not possible to open LCs in banks.

Ahsan called for a special allocation from the central bank's foreign exchange reserves to ensure the opening of LCs.

Former DCCI president Shams Mahmud echoed the same concerns and demands. "Whenever we try to discuss any problem, people say, 'Why didn't you speak up about this problem before?' The government has changed because we couldn't say it before. We don't want those times to return."

The demand for jobs is increasing in the country, he said. Referring to a recent job fair organised by Pran Group in Kurigram, he said this year 2,500 people attended the fair while usually only 200 people used to come."

Syed Mohammad Kamal, the country manager of Mastercard in Bangladesh, attributed the decline in shopping mall sales to the deteriorating law and order situation and traffic congestion. "The internet shutdown caused a significant drop in digital transactions, with a 40% decrease in July and a 35% in August. Although there was a slight recovery in September, supply chain disruptions have prevented prices from falling."

Ambareen Reza, the managing director and co-founder of foodpanda Bangladesh, also highlighted the significant impact of the recent events on the digital sector and emphasised the urgent need for low-interest loans to support small businesses.

Addressing the seminar, Policy Exchange Bangladesh Chairman M Masrur Reaz expressed concern over the lack of improvement in the disciplinary aspects of law and order, despite progress in the legal framework. "That is very much needed right now."

He also highlighted the need for policy attention to sectors beyond banking, such as trade and investment. "The low confidence in both domestic and foreign investment requires the government to take immediate action to restore business confidence."