Entrepreneurs, both small and large, are grappling with mounting financial pressure as rising interest rates drive up borrowing costs, and uncertainty looms over the uninterrupted supply of gas crucial for manufacturing.
Due to three major factors, entrepreneurs are at risk of defaulting on bank loans, as instalment amounts have increased with rising interest rates, according to business leaders.
At the same time, they said, the period for declaring a borrower a defaulter is now limited to three months.
They fear that interest rates may rise further and that production lines could be disrupted due to gas supply shortages.
Speaking to UNB, several small and large entrepreneurs claimed that law enforcement agencies, especially the police, must play a vital role at the field level, particularly where roads are blocked, and labour unrest erupts based on rumours or minor issues.
They believe that a political government can manage such situations more effectively than an interim government, as political parties have local workers engaged in various business sectors.
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The current situation calls for a strong policy to ensure a smooth supply chain of raw materials and a safe production environment.
At the same time, entrepreneurs have sought an uninterrupted supply of gas and electricity, which is essential for cost-effective production.
Political stability and investment confidence
Abdul Awal Mintoo, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told UNB that business thrives under a political government.
"Domestic and international trade will expand when a political government assumes state power. The international business community seeks strong commitments from the government for investment, which a political government can provide," he said.
Regarding reforms, he said that an interim government could not carry out all necessary reforms, as they require significant time and public support.
Challenges of high interest rates
Commenting on high interest rates, Mintoo, who is also the vice-chairman of the BNP, said that doing business under such conditions is extremely difficult and that Bangladeshi manufacturers will struggle to compete in the global market.
He attributed the liquidity crisis in banks to the excessive misuse of loans by previous government allies.
Banks accepted short-term deposits but issued long-term loans, leading to higher interest rates to manage funds.
He suggested establishing an alternative investment fund, a viable stock market to provide accessible funds through profit-sharing, or a low-interest investment fund, without which businesses cannot operate comfortably.
Concerns of Young Entrepreneurs
Rubaet Ahmed, a young entrepreneur and owner of Glorious Fashion in Ashulia, told UNB that certain facilities are essential to overcoming the crisis in the export-oriented garment sector.
These include flexible financing, strong security measures, a stable energy supply, and a government one-stop service desk for all export-import-related processes.
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He also highlighted the need for greater respect from government officials, which is currently lacking.
“We do not seek anything beyond respect from government officials. However, as entrepreneurs, we are sometimes treated like criminals despite investing capital and creating employment. This must change,” said Ahmed.
Economic outlook and policy recommendations
Dr Masrur Reaz, a former senior economist at the World Bank Group and now a public policy expert in Bangladesh, said that economic activity is gradually picking up following the political transition.
However, the financial sector has faced challenges in recent years due to large-scale loan scams, and many banks have lost their capacity for new investments. As the banking sector is the backbone of the financial system, stability will take time to restore, he pointed out.
"Globally, inflation and interest rates have declined, but Bangladesh’s situation is different due to discrepancies in financial sector data, which has created uncertainty in controlling inflation and interest rates," Dr Reaz said.
Explaining the current scenario, he noted that anyone managing the financial sector under such conditions would face significant challenges.
He advised entrepreneurs to remain patient and make the best use of their existing assets to sustain their businesses.