Imports of essentials, industry materials must not be hindered: Stakeholders

Imports of essentials and raw materials for industries must not be hampered while the country is tackling the current economic downturns including inflation, energy crisis and the shocks dealt by the Russia-Ukraine war, said stakeholders.

"Businesses are not being able to open LCs to import industry materials and capital machinery. As a result, their production is hampered. They fear bank loans may end up as classified in December," Anwar-ul-Alam Chowdhury Parvez, president of Bangladesh Chamber of Industries, said Saturday at the annual conference of Bangladesh Institute of Development Studies (BIDS). 

"This might turn out to be a new headache for the government," he cautioned.

Dr Atiur Rahman, former central bank governor, weighed in favour of the observation, saying, "Import of essentials cannot be hindered in any way. For the sake of export, these imports need to increase."

He also said, "Let the austerity measures be in place, but at the same time, the productive sectors, which create employment, should be able to continue production."

Dr Mustafizur Rahman, distinguished fellow, Centre for Policy Dialogue (CPD) said, "It is high time the fiscal policies are revisited. Many policies taken in the budget have now become redundant. Fiscal and monetary coordination is essential and we should chalk out some policies for the next two-three years."

Debapriya Bhattacharya, distinguished CPD fellow, said, "We were recovering from the pandemic. Then it was interrupted. It does not appear that the situation will go away soon."

He also said, "We are revolving around three-month prediction. Saying after every three months that the situation will improve in the next three is not the right approach."

The narrative of the Ukraine war situation alone triggered the inflation is not the case, he pointed out.

"The war played a part, sure, but our domestic circumstances are different," he said, adding, "The legacy issues made it difficult to handle the current issues. At the end of the day, we are facing a fiscal crisis. It would have been different if we had sufficient domestic finance to deal with external issues."

Economist Zaidi Sattar said, "Unless a level playing field is ensured, export diversification will not be possible. We need to go beyond our export bias. The success model of the RMG sector needs to be replicated in other sectors."

Bangladesh Chambers of Commerce and Industries President Jashim Uddin said, "Electricity and gas supply crisis is still there. We asked to ensure supply by increasing the price if necessary. It will be problematic if we cannot properly continue production.

"Buyers cannot get the sense that ordering here comes with risks on supply," he added.

Citing the current positive trend in orders and export, he hoped the situation will improve further following January. 

Sharifa Khan, Secretary of Economic Relations Division said, "We have not restricted imports. Imports of 32 luxury goods have been controlled."

She also said that 40,000 acres of land have been brought under new agricultural production, which will increase food supply.

"We are doing serious work for tariff rationalisation," she added.

Salman F Rahman, adviser to the prime minister on private industry and investment, said the opening of the Padma Bridge was a major achievement after the Covid-19 pandemic, but the Ukraine war started before the country could realise its benefits.

"The global situation triggered an energy crisis and food grains price hike. The dollar prices also increased.  However, the ongoing inflation is coming down thanks to the steps taken by the government and the situation will improve by the first quarter of the upcoming year," he added.

"We will not face any problem considering loan repayment. Our debt to GDP ratio is 35% while the IMF guideline is 55%," he further said.

Tapan Kanti Ghosh, senior secretary of the ministry of commerce, said yarn, cotton and fabric imports totalled $20 billion, which was $12 billion in the previous year. Meanwhile, although the price of sugar has come down in the international market, it has not been possible to reduce it in the domestic market as the exchange rate has decreased by 25%.

On achieving self-reliance on food production in the country, he said that although the prime minister has directed to increase food production, import dependence on food will remain as we do not have enough land.

"We are negotiating with the European Union on the Generalised Scheme of Preferences Plus (GSP+) to keep it activated after 2026," he said.

"We need to reform many policies for export diversification. Equal benefits should be given to other sectors beside the RMG," said Tapan Kanti Ghosh.

Dr Ahmad Kaikaus, principal secretary to the prime minister, said that some people are spreading propaganda against the economic situation of the country.

"There are different opinions on the tax-to-GDP ratio. Afghanistan, Pakistan and Sri Lanka are ahead of us in this ratio, but we are ahead in economic development. It is also not true that the government is stepping back from large scale investments," he said.

Dr Tawfiq E Elahi Chowdhury, energy advisor to the prime minister, said, "We are told to shut down coal based power plants, whereas today countries like Germany and the USA are going back to coal based electricity."

Mashiur Rahman, economic affairs advisor to the prime minister, said, "Some industries have been developed under certain protections. However, we need to increase productivity otherwise it will be hard to survive by providing subsidies."

Branko Milanovic, senior scholar of City University, New York, in his keynote speech, said Covid shock, US-China trade war and Russia war are the main reasons behind global inequality.

Director General of BIDS Dr Binayak Sen moderated the closing session titled "Economic Policy: Addressing Post-Covid Challenges".