Doing business in Bangladesh may not be all smooth sailing this year as the global economy will continue struggling with sanctions centring the Russia-Ukraine war and ripple effects of Covid-19, according to businesspeople.
However, some businesses expect to do better in 2023 than they did last year as certain issues, such as inflated fuel prices, could be resolved.
Still, a full economic recovery will not take place overnight and with the country set to hold general elections in January 2024, apprehensive investors will be cautious about making any moves at this time.
As a result, export earnings and the inflow of remittance may decrease while food prices increase, they said.
The US, China and European economies, which are the main drivers of growth in global markets, are rapidly losing momentum, as per a World Bank report released in September.
So, even another slight disruption to these economies may crease a recession in the coming year, it said.
With Bangladesh set to achieve developing country status in 2026 following the general elections next year, investors will be vigilant for the time being, which may slow economic growth in the process, said Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry.
Global economic growth is projected to contract to 1 per cent from 3 per cent this year, which may have a slight impact on Bangladesh’s economy.
“And although there are predictions of a global recession, I do not think that exports will fall this year as we export basic items,” he added.
Islam, also the managing director of PICARD Bangladesh, then suggested the country make preparations to welcome foreign investment as there is a possibility of buyers shifting their focus away from China in search of alternative sources.
Islam also recommended focusing on the domestic market and lifting restrictions on opening letters of credit for raw materials and capital machineries so as to not fall victim to supply chain disruptions.
Regarding 2022, he said the economy did not collapse as the government and businesspeople were firm in tackling the situation.
The coming days may be challenging though as there is a possibility of political unrest, said Mir Nasir Hossain, a former president of the Federation of Bangladesh Chambers of Commerce and Industry.
If the government ensures the availability of energy and political stability, business will definitely improve, he added.
The sole achievement of last year is that businesses survived amid a number of limitations and the global crisis as they were determined to do so at any cost.
Hossain went on to say that the government failed to mitigate the gas and power crisis stemming from the war as well as establish a single exchange rate between the taka and US dollar
“This, coupled with the local currency’s depreciation, caused many businesses to lose out,” he said.
Ahsan Khan Chowdhury, the chairman and CEO of Pran-RFL Group, said business will better this year compared to 2022 as various issues are being partly if not fully resolved.
“We suffered a lot for poor inventory management in 2022 due to the ongoing crises and even struggled to import raw materials. I think these problems will be resolved in 2023, which will help develop business,” he added.
Monjurul Alam, director for global business development at Beacon Pharmaceuticals, said the number of export destinations for the pharmaceutical sector may increase in 2023 as the global economy would recover if the Russia-Ukraine war comes to an end.
“Almost all pharma manufacturers are preparing for various challenges after Bangladesh’s graduation from a least developed country, which may help the sector to grow this year,” he added.
He then said the pharma sector passed a dull year in 2022 in terms of global business due to the direct impact of the Russia-Ukraine war and US dollar crisis in countries that import medicine from Bangladesh.
“The pharmaceutical sector could not register new destinations due the global economic impact,” he added.
Besides, the industry suffered a lot due to falling raw material imports amid restrictions on the opening of letters of credit.
Alam also said the cost of production has increased due to hike in value of the US dollar.
Meanwhile, the local automobile industry entered manufacturing while investors were bold enough to increase the momentum of two and three-wheeler production last year, said Hafizur Rahman Khan, chairman of Runner Group.
According to him, revenue generation fell in almost every sector due to inflationary pressure and economic uncertainties.
Running business in the year’s second half was very challenging due to the US dollar crisis and restrictions on opening letters of credit, Rahman said.
If foreign currency reserves continue to decline and US dollar prices continue to increase, businesses other than exporters will fall into despair, he added.
Regarding the general elections, Mohammed Amirul Haque, managing director of Premier Cement, said past experience shows that instability prevails for businesses during election years.
Supply chain disruptions this year led to the power and gas crisis while depreciation of the local currency pushed up commodity prices, leading to inflation and an increase the cost of doing business, he added.
FR Khan, managing director of Building Technology & Ideas, said the ongoing crises will continue and the global recession’s impact will fall on Bangladesh.
Businesspeople are always alert in facing any kind of challenge and they, alongside the government, will put in the effort to recover from such challenges, he added.
