Take opposition parties into confidence to heal economy
MCCI tells govt, warns political calm may be short-livedStaff Correspondent
The present calm after the January 5 elections may be short-lived and economic activities could be affected again if the government fails to take the opposition political parties into confidence, said the Metropolitan Chamber of Commerce and Industry on Wednesday.
In the second quarter economic review of financial year 2013-14, the trade body said the achievements of past five years including improvements in per capita income, export earnings and remittances came under threat because of the recent political unrest.
‘The new government, which took office after the January 5 elections, has an uphill task to heal the economy from the destruction caused by the political unrest, restore the growth momentum, and rebuild the confidence of local industrialists and businessman as well as foreign buyers and investors,’ said MCCI.
‘It is anticipated that the present calm after the January 5 elections may be short-lived because the unrest may flare up again if the opposition political parties cannot be brought into confidence, ’it added.
The main task for the government is to ensure political stability without compromising with security and law and order situation, observed the chamber body.
The MCCI said the export growth rate and remittance inflow declined in Q2 while the banks are having excess liquidity for lack of investments fuelled by power shortage and political unrest.
It said that as the National Board of Revenue was on the course of missing the revenue collection target and aid inflows were on slow lane, the government should organise its expenditure priorities by concentrating on urgent projects and leaving aside the entirely new and costly ones of long gestation periods.
The ADP implementation rate came down to 27 per cent in the first half of current fiscal compared to 30 per cent of the same period of the previous year.
In the Q2’14, the country’s manufacturing industries had experienced significant setbacks because of the political unrest.
The production and supply chain in most of the country’s manufacturing industries broke down due to frequent countrywide shutdowns and blockades, the MCCI said.
It said the general point-to-point inflation rose to a 4-month high to 7.35 per cent in December 2013 as food prices soared due to supply chain disruption caused by the prolonged blockades and shutdowns.
The continuous increase in excess liquidity reflects weak private sector demand for bank credit because of the
high cost of bank loans, shortage of energy supplies and weak infrastructure, said the MCCI.
‘Policy supports recently announced by government should be extended to all important sectors, e.g., agro-based industries, transport and small businesses and entrepreneurs that were equally affected by the political unrest,’ it said.
Strong efforts should be made to get the US GSP facility restored and avert the threat of GSP cancellation by the EU by duly addressing the compliance issues.
The MCCI observed that governance in the banking sector and capital markets must be improved.
‘Strong measures will be needed to prevent recurrence of banking sector frauds and improve loan recovery,’ it said.
The inflow of remittances declined by 8.72 per cent to US$ 3.508 billion compared to US$ 3.843 billion in the same period of the previous year, said the review.
Remittances in December 2013 were 5.5 per cent lower than in the same month a year ago, it said.
‘In order to enhance remittances, government should explore diplomatic efforts to persuade friendly countries to recruit more workers from Bangladesh. It would also be necessary to take steps to send more skilled workers abroad to enhance of the flow of remittances,’ it said.
It said the agriculture sector faced huge difficulty in the Q2 because of the political unrest as the farmers could not market their goods.
For the same reason, farmers could not procure fertilizers and other essential inputs ahead of the boro season. Huge quantities of fertilizer were stockpiled at different distribution centers but those could not reach the farmers, it said.
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