[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Govt must improve law and order fast

Improving law and order has become imperative in recovering Bangladesh’s global image that took a beating for domestic politics over the past decade, said a top chamber leader.

www.thedailystar.net

Govt must improve law and order fast
Says president of AmCham

Syed Ershad Ahmed

Improving law and order has become imperative in recovering Bangladesh's global image that took a beating for domestic politics over the past decade, said a top chamber leader.

"Due to political instability and corruption, there has been significant damage to Bangladesh's reputation globally -- we need to work on rebuilding trust with international partners," Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh, told The Daily Star in an interview recently.

Factors such as law and order and political instability discourage foreign investors.

To attract foreign direct investment, demonstrable evidence of an improving business climate and transparent governance needs to be presented, he said.

Ahmed's observation comes at a time when Bangladesh's net FDI was found to have been overstated by $5.7 billion between fiscal years 2019-20 and 2022-23.

In the four fiscal years, Bangladesh actually received $5.86 billion as net FDI, a disappointing amount given the seeming political stability and stellar economic growth in those years.

Ahmed termed the last 10 years of the previous Awami League government "very pathetic".

"What I think is that our institutions were severely damaged in those years."

Institutions like the Public Service Commission and the Election Commission and the regulatory agencies such as the National Board of Revenue (NBR), the Bangladesh Bank (BB) and the police were compromised.

"This led to widespread disorder in the country and everything became politicised."

The previous AL regime saw widespread corruption and money laundering.

"The Anti-Corruption Commission and the Bangladesh Bank were supposed to foil those but they did not do their job."

Even the agencies meant to support businesses such as the port were not spared from politicisation, which, ultimately, weakened the business environment, and the business ecosystem suffered.

"If the ACC is not truly independent and effective, corruption will continue unchecked. Similarly, our Public Service Commission needs to ensure a fair recruitment process free from political influence. Only then we can build the foundation for sustainable economic growth."

Institutional reform is key, said Ahmed, country manager and managing director of Expeditors (Bangladesh), a global logistics company.

"We need strong, independent institutions that aren't swayed by political pressure or financial incentives. Without strong institutions, our business environment will continue to suffer," he said, while lauding the interim government's reform initiatives.

And all the institutions should be led by strong, impartial individuals who are not money-minded.

"Only then can we create a truly democratic atmosphere. The challenges we are facing, like cronyism and the politicisation of business organisations, are deep-rooted. And these issues won't just go away without structural changes."

Bangladesh's politicians practised the wrong sort of politics all these years, according to Ahmed.

They were supposed to pick politicians as leaders. Instead, they invited businesspeople to politics and made them ministers.

For instance, in January, two-thirds of the lawmakers elected in the 12th parliamentary election were business people, according to Shushasoner Jonno Nagorik, a non-government organisation.

"So, we made a big mistake here. Because politicians are supposed to be individuals who are connected with the people, those who have the tendency to sacrifice for people. What we saw was that those who became councillors were engaged in business also."

Parties should pick those people as leaders who have the mentality to serve the people and do not have the mentality to expand their wealth.

While businesspeople have the right to engage in politics, they should distance themselves from businesses when they become active in politics.

"When you are a politician, your focus should be on politics. But if you are involved in politics and business, there will be no benefit."

He cited the case of the US where successful businesspeople who join politics step aside from their businesses. They leave the businesses to the top management of their firms.

"Here, in our country, you will find that the politicians remain involved in their business directly. This should not be."

Some businesspeople had political aspirations, and they joined politics after becoming leaders of trade bodies such as the Federation of Bangladesh Chambers of Commerce and Industry.

"This is a regret for us. Had the trade bodies worked in favour of businesses, then our business environment would not have deteriorated so much."​

 

[Saif]

Is Motijheel losing its glory as commercial hub?

Motijheel, once the pulsing heart of Dhaka’s trade and commerce, has become a shadow of its former self. Empty office floors now whisper tales of abandoned ambitions.

www.thedailystar.net

Is Motijheel losing its glory as commercial hub?

Motijheel, once the pulsing heart of Dhaka's trade and commerce, has become a shadow of its former self. Empty office floors now whisper tales of abandoned ambitions.

For example, take the Ittefaq Mor-Dilkusha-Naya Paltan stretch. The two-kilometre patch has some 40 commercial buildings standing by one side of the road. Around 22 of them now have "to-let" signs dangling.

Their yearslong wait for tenants speaks of a commercial exodus that has drained the lifeblood from what was once Dhaka's most vibrant business hub.

Most buildings have not found tenants since the previous occupants left in the past five years. Besides, existing businesses, banks and non-bank financial institutions (NBFIs) are moving to Gulshan, Banani or Baridhara.

New businesses are also hesitant to assume a business address in the old town area.

Take Adamjee Court Annex Building-2, located next to Motijheel park, as another example.

Once a busy 12-story building rented by a bank, it was full of people and activity.

After the Covid-19 pandemic hit in 2020, the bank began to relocate its head office to Gulshan area in phases. Now, most floors in the building remain empty, leaving it gloomy even in daylight.

The scene is similar at the DSE Annex Building, roughly a 15-minute walk from Adamjee Court building. During a visit there recently, the 11-story structure was found eerily quiet at 1:00 PM, with only two or three people in the elevator.

This was beyond anyone's wildest imagination just a few years ago.

In the 2010s, when the building was full of stock brokerage firms, people had to queue just to enter the elevator. All the main activities of the Dhaka Stock Exchange (DSE) were also handled inside the building from 1959 until 2019.

Consequently, it was one of the busiest buildings in the area during trading hours. But now it is deserted in the middle of the day.

After the DSE relocated its office to its own building in Nikunja, thousands of square feet of space have remained vacant in the commercial structure.

Two brokerage houses and an insurance company have posted relocation signs, stating that they are also departing for greener pastures.

A similar sight was found at the Jibon Bima Tower in Dilkusha, where the Bangladesh Securities and Exchange Commission (BSEC) rented space for its office since the 1990s.

Two floors, each boasting 6,200 square feet, now remain vacant in the building after the BSEC shifted to its own building in Sher-e-Bangla Nagar in 2017.

Banks, whose headquarters once dominated Motijheel, earning it the status as the capital's downtown area, have mostly relocated to Gulshan.

A number of building owners in Motijheel said they are not getting commercial tenants despite offering comparatively lower rents.

Md Delwar Hossain, the owner of a building in Dilkusha, said he has been searching for tenants for four years as one floor remains vacant.

This area was highly sought-after in the 90s, with commercial spaces fetching the highest rents across all of Dhaka. But few people now call him to inquire about the floor.

"While the building itself is now old-fashioned, there are many vacant spaces that are not that old. The problem is that large conglomerates, banks, NBFIs and new-generation corporations are not coming to this area," Hossain said.

Most businesses were concentrated in Motijheel due to easy communication and proximity to public offices, he added.

Officials at Sadharan Bima Corporation, which has several buildings in Motijheel, said they have thousands of square feet of vacant spaces across their properties.

According to them, although vacant commercial floors have been a common sight in Motijheel for years, rents have not reduced. However, the increase in rent is slower than in other areas.

The average rent per square foot in this area ranges from Tk 60 to Tk 90, depending on location and amenities.

This is still lower than the rent one would expect to pay in newer commercial hubs like Gulshan and Banani.

According to bdproperty.com, a website for renting and selling real estate, the average rent in Gulshan range from Tk 180 to Tk 250 per square foot. In Banani, it ranges from Tk 70 to Tk 150.

Alongside the shift in commercial offices, cinemas in the area are also suffering.

Modhumita Cinema Hall, located on Toynbee Road, was once a top-rated movie theatre. But now it opens irregularly amid a dearth of visitors.

The situation is even worse for Ovishar Cinema Hall, which has been closed since the pandemic.

Md Liton, owner of Ovishar Store located next to the cinema hall, said he started his shop in the 1990s. Back then, he and his three brothers used to sell snacks.

The area surrounding the cinema hall was once swarming with people, who gathered to watch movies. As the cinema business declined, his three brothers left the store in search of other jobs.

Liton said that people once bought cinema tickets from the black market at prices three times higher than the official rate. Now, the hall building has become a ghost palace, having been closed for years. People now flock to the multiplexes in large shopping malls to enjoy movies.

Motahar Hossain Masum, who grew up near the Old Dhaka area and visits Motijheel frequently, said although banks have relocated their offices, several top food sellers remain and continue to attract a large number of people.

The self-professed gourmand shared some insights into the cuisine scene.

Established in 1958, Deshbandhu Hotel continues to serve food that evokes nostalgia for many.

Other popular hotels in the area include Ghoroa and Hirajheel. These hotels welcome a large number of diners daily.

In the 1980s, when the Bangladesh Chemical Industries Corporation (BCIC) building was constructed, its cafeteria attracted white-collar officials with its upscale design and quality food, Masum said.

Purbani Hotel also has a long history of attracting white-collar people, he added.

Motijheel's transformation into a different place at night is striking.

As people rush home after work, the area becomes eerily quiet. On weekends and public holidays, the streets in Motijheel host cricket, football, or badminton for children.​

 

[Saif]

Wahiduddin believes Bangladesh to get political govt next year

The planning and education adviser Wahiduddin Mahmud on Saturday expressed hope that Bangladesh would see an elected government next year.

www.newagebd.net

Bangladesh to see political shift next year amid challenges: Wahiduddin Mahmud
United News of Bangladesh . Dhaka 07 December, 2024, 12:27

Wahiduddin Mahmud | UNB photo

Bangladesh is set to witness a political shift next year, says planning and finance adviser Wahiduddin Mahmud.

Speaking at the opening session of the Annual Baltic Conference on Defence (ABCD) conference at a hotel in the capital on Saturday, organised by the Bangladesh Institute of Development Studies (BIDS), he hinted at significant political developments while underlining the nation’s critical economic challenges.

Mahmud, however, pointed out that income inequality remains one of the country’s most pressing concerns. 'To tackle this disparity, quality education is paramount, an area where Bangladesh still has a long way to go.' He said.

As Bangladesh transitions from its status as a Least Developed Country (LDC), Mahmud referred to the ongoing efforts to retain some benefits associated with the LDC status.

'We no longer have the option of remaining an LDC. Discussions to sustain certain privileges from developed nations are ongoing, with positive responses from many,' the adviser said.

In a separate session, Indermit S Gill, Chief Economist at the World Bank, provided insights into how Bangladesh could escape the middle-income trap.

Investment and job creation should be the focal points, he stated, urging the country to foster entrepreneurship and expand the use of technology.​

 

[Saif]

Prioritise enhancing business environment

Improve law and order, rebuild trust with international partners

www.thedailystar.net

Prioritise enhancing business environment
Improve law and order, rebuild trust with international partners

Bangladesh's economy is at a critical juncture due to widespread corruption, financial irregularities, and the politicisation of public institutions by the previous Awami League regime. Since the interim government took charge following the fall of the AL on August 5, it has been attempting to restore some stability in the financial and business sectors. However, the efforts being made are not sufficient compared to the damage inflicted on the business environment by ongoing political instability and law and order situation not being fully restored. According to Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh, it is imperative to improve the law and order situation in the country to recover Bangladesh's global image, which was significantly tarnished during the AL's rule. The government must also urgently address issues like political stability and corruption to rebuild the trust of international partners.

Although exports and remittances have increased over the past four months, the ongoing macroeconomic instability, high inflation, and political unrest continue to threaten economic growth and recovery. According to a recently presented government-commissioned white paper on the economy, $234 billion were siphoned out of Bangladesh between 2009 and 2023, during the AL's tenure. Economic growth has also been overstated since 1995, with the practice of inflating estimates more after the fiscal year 2012-13. Additionally, Bangladesh's net FDI was found to have been overstated by $5.7 billion between the fiscal years 2019-20 and 2022-23. These issues have significantly dampened our economic prospects, which now requires well-thought-out strategies and plans to recover.

During the reign of the AL, public institutions such as the Bangladesh Bank, the National Board of Revenue, the Election Commission, and the police were heavily politicised. This widespread politicisation has significantly affected the business climate. Moreover, as more businesspeople entered politics, they prioritised their business interests over political commitments, further politicising public institutions for personal gain. For example, according to Shushasoner Jonno Nagorik, two-thirds of the lawmakers elected in January's 12th parliamentary election were businesspeople.

Against this backdrop, the interim government must focus on bringing buyers and investors back to the country by addressing the ongoing political uncertainty and relatively fragile law and order situation. It must implement significant reforms in state institutions to rebuild trust with international partners. Furthermore, it should encourage the creation of new businesses to attract both foreign and local investors. Since business and commerce depends on political stability and the overall situation in relation to law and order, the challenges faced by businesspeople in these regards must be urgently addressed.​

 

[Saif]

Deferring LDC graduation not an option

Education and Planning Adviser Wahiduddin Mahmud said Bangladesh has no option to defer its graduation from the least developed country (LDC) club.

www.thedailystar.net

Deferring LDC graduation not an option
Education and Planning Adviser Wahiduddin Mahmud says

Planning Adviser Wahiduddin Mahmud speaks at the inaugural session of a four-day “Annual BIDS Conference on Development 2024” in Dhaka yesterday. Photo: star

Education and Planning Adviser Wahiduddin Mahmud said Bangladesh has no option to defer its graduation from the least developed country (LDC) club.

"Even if we want to, we may not be able to remain in the group of LDCs. Many people don't know that," he said.

The eminent economist made the remarks yesterday in Dhaka at a four-day conference organised by the Bangladesh Institute of Development Studies (BIDS).

As per the United Nations schedule, Bangladesh is set to graduate from the LDC status in November 2026.

However, owing to the economic crisis that has been prevalent for nearly two years, the issue of deferring graduation has been coming to the spotlight in recent months, particularly by local businesses.

With the economy in a fragile state due to the fallouts of global inflationary pressure, the Covid-19 pandemic, the Russia-Ukraine war as well as political turmoil and energy shocks on the domestic front, a section of exporters has been putting pressure on the government to shelve any graduation plans.

Although there is a lot of money in the balance sheets of some big industrial companies, it does not exist in reality. Workers have to be paid. But where will the money come from?— Wahiduddin Mahmud Education and planning adviser.

According to a UN report, trade preferences accorded to Bangladesh as an LDC have played a crucial role in the development of its economy and achievements in trade and social sectors. The loss of these benefits following graduation is expected to dent a lot of businesses by costing the country its trade competitiveness, especially if it fails to secure bilateral agreements with major export destinations.

In November, Finance Adviser Salehuddin Ahmed told the media that they are yet to make a decision on the scheduled graduation.

The United Nations Committee for Development Policy (CDP) reviews the LDC category every three years, assessing the progress of countries across three criteria, namely income, human assets, and vulnerability.

Based on these reviews, the CDP recommends which countries should be classified as LDCs to the United Nations Economic and Social Council (ECOSOC). The final decision is made by the UN General Assembly.

To graduate, a country must meet the threshold for two of the three criteria in two consecutive reviews.

"We have already qualified twice," Prof Mahmud said, referring to the previous reviews in 2018 and 2021.

If any country files a petition to the CDP's hearing committee saying that they are unable to graduate or asking to stay in the group of LDCs, it is considered degrading, he added.

"The Maldives and some tiny island nations applied for it, but it was unsuccessful."

When a country qualifies, it graduates automatically, the adviser explained.

"We need to continue discussions on unilateral concessions with different nations. Japan, Canada and the European Union can be favourable options," he added.

He also underscored the need for export diversification and economic diplomacy to negotiate in the global market.

Earlier, members of a panel that recently prepared a white paper on the state of the economy also advised the government not to defer graduation.

"Based on the committee's assessment of data and information, Bangladesh meets the requirements for LDC graduation despite the challenging economic situation," Debapriya Bhattacharya, who led the panel, said last week.

"So, we don't see any reason to hold back the graduation process."

In its report, the white paper committee said recent concerns about inflated economic indicators under the previous Awami League government would have little relevance in the case of LDC graduation.

The UN bodies will only revisit their calculations when a revised data set, including gross national income estimates, is available from government sources.

"Notwithstanding the reservations expressed by certain exporters' groups, there is hardly any plausible reason, as of now, for Bangladesh to request a deferment of the exit date from the LDC group," it said.

"Under these circumstances, Bangladesh will be well advised to pursue a substantive and effective LDC graduation strategy. This will require putting forward a transition plan to counteract the negative fallouts of Bangladesh's graduation out of the LDC group and enable the required structural transformation of the economy."

The white paper added that postposing graduation will invite political backlash.

According to a triennial review by the CDP in February this year, the current situation remains comfortable despite recent economic and political challenges.

Even the dampened economic performance during the current fiscal year is not expected to bring the country below the stipulated thresholds, it said.

Illusory wealth in big industry balance sheets

Speaking of how Bangladesh can build an egalitarian society after a mass uprising toppled the Sheikh Hasina regime on August 5, Mahmud said that the interim government is facing a huge shortage of resources.

This has made it difficult to increase investment in education, health and human resource development.

"A lot of money has been smuggled out of the country. People's money is in the banks, but the money has gone out," he said.

Although there is a lot of money in the balance sheets of some big industrial companies, it does not exist in reality, he said, mentioning the example of Beximco.

"Workers have to be paid. But where will the money come from?" he asked.

It is difficult to build an egalitarian society when contending with such realities.

"Now it has become a moral issue whether to buy dialysis machines or invest in public health," he said, adding that even seasoned economists and philosophers like Amartya Sen and John Rawls may not be able to come up with a solution for such a moral dilemma.

Indermit S Gill, the chief economist of the World Bank Group, said during a presentation at the event that middle-income countries, which are home to 6 billion people, were caught in a race against time.

"The external environment is making things harder, not easier. To escape the middle-income trap, countries need to undergo two transitions, not one. The transitions are between investment, infusion and innovation.

"To grow quickly, they have to discipline incumbents, reward merit, and capitalise on crises," Indermit said.

Binayak Sen, director general of the BIDS, delivered the opening remarks.

A total of 30 papers, two keynote addresses and 12 public lectures from Bangladesh and abroad will be presented and delivered at the conference, said Sen.​