Evolving global order brings risks and opportunities for Bangladesh, economist Wahiduddin tells BIDS Conference
The evolving global order and changing geo-economic landscape present both challenges and opportunities for developing countries, as highlighted by renowned economist Wahiduddin Mahmud. He shared his insights during a public lecture titled “Evolving Global Order and Geo-economics: Implications for Less Developed Countries” at the annual BIDS (Bangladesh Institute of Development Studies) conference in Dhaka. Thailand keen on FTA with Bangladesh as soon as possible The session, moderated by Policy Research Institute Chairman Zaidi Sattar, featured discussions with key figures including Selim Raihan, Executive Director of SANEM (South Asian Network on Economic Modelling), and Dr. Binayak Sen, Director General of BIDS. Mahmud emphasized the significance of strong public support for governments to align political and foreign economic interests effectively. He pointed out that this support is crucial in tackling the exploitation of developing countries by multinational companies. He also noted the distinct nature of the current geopolitical tensions between superpowers, particularly the US and China, compared to the Cold War era. High-level Saudi business delegation in Dhaka to explore investment opportunities here Discussing the economic strategies of Vietnam and China, Mahmud illustrated how government involvement in privatized sectors can yield benefits. Zaidi Sattar reflected on the shift from globalization to economic nationalism, observing that even advocates of globalization are adopting protectionist policies. This, he suggested, requires deep consideration by developing countries in crafting their economic strategies. Selim Raihan commented on Bangladesh's historical non-involvement in geopolitics and its emerging role as a significant player amidst global power conflicts. FBCCI will support steel industry to increase exports to Commonwealth nations Overall, the discussions at the BIDS conference underscored the need for developing countries like Bangladesh to carefully navigate the new global order, balancing internal economic policies with external geopolitical pressures.
Curbing inflation without destabilising macroeconomic situation presents challenge for budget: Selim Raihan
Economist Dr Selim Raihan believes the National Budget of Bangladesh for the fiscal year 2023-24 is being presented at a difficult time, when it will be a challenge to devise policies to manage inflation while also maintaining a stable macroeconomic situation, Dr Selim Raihan is Professor at the Department of Economics, University of Dhaka, and the Executive Director of the South Asian Network on Economic Modeling (SANEM). Talking with UNB on the upcoming budget, Dr Raihan pointed out two major challenges--controlling inflation and macroeconomic management for the upcoming budget. “Higher inflation for a long time creates instability in the domestic markets and lower-income people are affected severely,” he said. Read more: No new pay scale, govt employees to get 20% dearness allowance in new budget The government’s measures to cut inflation have not proved effective, so new measures to reduce inflation need to be included in the budget, he opined. Dr Raihan said the monetary policy is not working to curb inflation as there is a mismatch with interest rates - the continued delay in withdrawing the interest rate caps also prolongs inflation. Besides, a big challenge of domestic market management is that government agencies could not implement effective market management against monopoly businesses. As a result, prices of many essential items are higher in the domestic market relative to the global market. Notably, prices of some items increase in Bangladesh at the same time that there is a downward trend in the international market, said Dr Raihan. Read more: No let-up in safe drinking water scarcity in Khulna’s Dacop Regarding macroeconomic management, he said reducing the defaulted loans and achieving the revenue collection target are big factors for stability. Forex reserves management and foreign exchange rate fluctuation also worked for instability of the macroeconomic situation, which are required to make it stable, he said. The International Monetary Fund (IMF) gave conditions for reducing defaulted loans to a desired level, but the latest update revealed no headway in that regard, which Dr Raihan said was alarming. The IMF’s desired target of increasing the tax GDP ratio by 0.5 percent each year, till the 2025-26 fiscal, is also proving a challenge for the National Board of Revenue. Read more: Inflation, revenue shortfall, dollar crisis the major challenges for economy ahead of election-year budget The SANEM chief said although the revenue collection target increased every year in the budget, in the absence of any coherent plan and institutional capacity-building initiatives for NBR, there is almost no progress towards attaining those targets. In fact, the revenue collection shortfall keeps getting wider, he pointed out. Dr Raihan suggested joint initiatives of Bangladesh Bank and the Ministry of Finance to reduce the defaulted loans, saying the central bank alone cannot handle the issue. He also sought the central bank’s effective measures to ensure good governance in the banking sector, averting the pressure of any influential group. Dr Raihan also suggested increasing allocation and coverage under the social safety net, to ease the woes of vulnerable groups. Read more: Bank default loans surge to Tk1.31 lakh crore: BB
The proposed budget for FY 2022-23 acknowledges the rising inflationary pressure, however, the expectation of limiting average inflation to 5.6% for the next fiscal is quite ambitious, given the current context and shifting global economic factors. South Asian Network on Economic Modeling (SANEM) came up with the observation while sharing its immediate reaction on the proposed budget for the fiscal year 2022-2023 on Thursday. Increased sales through TCB to mitigate the effect of inflation on low-income people, as mentioned in the budget, is commendable, it said. SANEM’s views on important features: The budget also promises to continue taking actions against hoarders, but does not offer any detailed action plan. Provisions for decreasing tariff on essential items, exploring alternative import sources or similar supply side interventions for tackling inflation, have not been clarified in the budget. In this regard, the implementation processes of policies aimed to relieve the public from inflationary pressure, has not been properly clarified. The main strategy to contain inflation, outlined in the budget as increasing the supply along with reducing the growth in demand, stands in contradiction with the medium-term policy strategy which aims to focus on consumption and investment to increase the domestic demand and exports to increase the external demand. More importantly, it would not be prudent to focus policy action on demand side whereas the inflation is being pushed by supply-side costs—this may have depressing implication for the economy. Balance between macroeconomic targets and development goals through policy coordination has not been reflected accordingly. If the inflation rate exceeds 6% then the real interest rate would become negative. However, the budget did not address this fact. Bangladesh is still maintaining the 6% and 9% rates which is not desirable. The budget prioritizes six challenges which are timely and appropriate. However, it is unfortunate that challenges of poverty and job growth have not been included. Contrasting the visible economic recovery from COVID-19 fallout, social recovery in terms of poverty alleviation and job growth has been rather slow. In this regard, three issues pertinent to social safety net should have been addressed: poor allocation, target mismatch in terms of inclusion and exclusion errors, and coordination failure among implementing agencies. With regard to human development, trade and investment, the budget follows conventions of its predecessors and has not addressed the associated challenges in the current context. In order to materialize strong domestic and external demand, the budget emphasizes swift implementation of establishment of economic zones and mobilization of foreign investments. However, definite policy directions have not been outlined in this regard. Although the budget regards that Bangladesh has successfully overcome the adverse economic impact of the COVID-19, it is rather an overstatement considering the impact of recent shocks, such as high inflationary pressure, escalated current account deficit, negative growth in remittances, stress on the US dollar exchange rate, strain on the foreign exchange reserves and long-standing challenge of job creation. It is commendable that stimulus support for SMEs will be continued, nevertheless, existing challenges faced by SMEs in accessing allocated funds have not been addressed. Also, the modality and process of stimulus support for SMEs remains unclear. Though the allocation for health and education has been increased in nominal terms, with respect to GDP share, allocation has declined for education and remained static for health. However, previous records have shown that allocation for health remained underutilized. On the other hand, the issue of education loss due to the COVID-19 pandemic has not been addressed either. The government’s proposal for a universal pension scheme is praiseworthy. Read: Bangladesh Bank to flirt with digital currency en route to cashless society However, the budget has failed to mention any concrete strategy in this regard and therefore it remains ambiguous how and when the scheme would be implemented. The expenditure cut in the revised budget for FY 21-22 once again illustrates capacity utilization failure of responsible institutions. Capacity utilization failure has been a recurrent theme throughout the years, but as usual has not been addressed in the newly proposed budget. On the other hand, revenue target for the next financial year has been set at Tk. 4,33,000 crore which again is rather unrealistic considering NBR’s consistent failure to achieve its own targets in the previous years. One of the positive sides of the budget is that the tax benefit for RMG has been extended to other exporting sectors. The budget also acknowledged that tax exemption for project implementation or maintenance work should not be in consideration. However, new tax exemptions are proposed, which is contradictory to that acknowledgement. Corporate tax rates are reduced for companies to make the economy business-friendly. "We can notice a variety of tax exemptions and we do not know what will be the result of it. Reforms of tax structures should have been proposed," SANEM said. The lack of proper feasibility studies and the cost and time overruns in many megaprojects have been a major area of concern which again have not been addressed in the budget. It is high time that a proper evaluation of progress in megaprojects and transport projects was undertaken. While e-governance and digitization of certain government services have been included in the budget, major institutional issues have been rather side-lined. For instance, much required reforms in banking sector have not been proposed. There also has been no major shift in policy structure to address the issue of rising default loans. The proposed budget provides scope of amnesty for money launderers with proposal of 15% tax on immovable property not repatriated to Bangladesh, 10% on movable property not repatriated to Bangladesh and 7% on cash and cash equivalents repatriated to the country. It is not clear how this policy measure will benefit the economy. This will rather encourage illicit money transfer and capital flight.
January of this year was the busiest month for garment workers in Bangladesh since the beginning of the COVID-19 pandemic. Workers spent 295 hours on average in the factory during the 27 working days in January, which is higher than usual. This was revealed in a research of South Asian Network on Economic Modelling (SANEM), in collaboration with USA-based non-profit organization, Microfinance Opportunities (MFO), on the quality of life of garment workers in Bangladesh. Also read: Inflation rate is double than the BBS data, says SANEM in a report Around 1,300 selected garment workers are surveyed every week since April 2020 under the project “Garment Worker Diaries”. These workers are employed in factories spread across the five main industrial areas of Bangladesh (Chittagong, Dhaka City, Gazipur, Narayanganj, and Savar). Three-quarters of the survey respondents are women, which roughly represents the composition of labour force in the RMG sector as a whole. This press release has been prepared from the survey data collected in January and February of 2022. Also read: Female labour force participation lagging in Bangladesh: SANEM webinar Excluding the one-hour lunch break, the workers worked 268 hours on average in January. Female workers worked 267 hours on average, while male workers worked 270 hours, excluding the one-hour lunch break. In the 24 working days of February, the workers spent 259 hours on average in the factory. Workers worked 235 hours on an average in February, excluding the one-hour lunch break. Read Duchess of Cambridge Kate Middleton wears garment made in Bangladesh Among them, female workers worked 234 hours on an average and male workers worked 235 hours on an average. In both January and February, half of the surveyed workers worked more than the legally allowed 10 hours, which accounts 8 regular hours and 2 overtime hours. For the work in December, female workers got a salary of Tk 12,000 on average in January, while male workers got salary of Tk 12,500 on average. Read BGMEA urges BEZA to expedite garment village construction at Mirsarai For the work in January, female workers got salary of Tk 12,000 on average in February, the same as in January. Male workers got a salary of Tk 13,000 on average, a Tk 500 increase over the January amount. In February, 54 percent of workers were paid through mobile financial services (bKash, Nagad, Rocket, etc.) and 46 percent were paid in cash. Read Embrace employees with disabilities, garment industry urged About 20 percent of the garment workers reported that at least one member of their household was ill during February. This illness rate was 26 percent in January.
The South Asian Network on Economic Modeling (SANEM) has claimed that the overall inflation rate in the country is more than double from the calculation provided by Bangladesh Bureau of Statistics (BBS). The SANEM claimed that the overall inflation rate in urban areas is now 12.47 per cent, which is 12.10 per cent in rural areas in Bangladesh. However, the report released by BBS on February 16 said that in the first month of January this year, the inflation rate in the country was 5.86 per cent. The rate was above 6 per cent to 6.5 per cent in December last, which was 5.98 per cent in November. Read: Speakers in webinar urge to promote EV business in Bangladesh Economists have earlier expressed doubt about the credibility of the BBS figures regarding inflation in the wake of the upward trend of commodities prices. This time in a study of SANEM found more information that shows the weakness of BBS reports. The SANEM released an online report on Thursday entitled "Inflation: Government Statistics vs. the Reality of Marginal People". Selim Raihan, executive director of SANEM, said the BBS provides information on inflation rate that does not reflect reality of economics, if the correct information is not brought out, the recovery process will not be sustainable.
Bangladesh lags behind in most indicators of female labour force participation rate and employment, a webinar was told on Tuesday. The female labour force participation rate has not improved much from 2010. As of 2017, it stood at 36.4 percent, while the corresponding figure for males was 38.6 percent. Especially, the percentage of the female population is glaringly higher in NEET, at 47 percent, compared to merely 10 percent of the male population in NEET. The unemployment rate among women is twice that of men, at 6.8 percent. SANEM and Bangladesh Mahila Parishad jointly hosted the webinar on "An Analysis of Gender Sensitive Budgeting: Bangladesh Perspective". The webinar was chaired by Dr Fauzia Moslem, President, Bangladesh Mahila Parishad, and moderated by Ms Eshrat Sharmin, Senior Research Associate, SANEM. Dr Selim Raihan, Professor, Department of Economics, University of Dhaka, and Executive Director of SANEM, delivered the welcome remarks. Among the panelists present were Ms Selima Ahmad, Member of Parliament and President, Bangladesh Women Chamber of Commerce and Industry; Dr Sharmind Neelormi, Professor, Department of Economics, Jahangirnagar University, and Central Committee Member, Bangladesh Mahila Parishad; and Ms Samanjar Chowdhury, Operations Lead, BRAC Youth Platform, according to a press release. The keynote presentation was given by Professor Dr Sayema Haque of Department of Economics of University of Dhaka, and Research Director of SANEM. With 51 percent of women in 2020 being involved in child marriage, Bangladesh ranks among the top 10 countries in the world, she said. She also said that the rate of gender-based violence is also concerning, with 54.7 percent of women being a victim of intimate partner violence in 2015. Attempting to show the gender sensitivity of budget allocations in various ministries, Dr Bidisha analysed the improvements and deteriorations in some key gender equality indicators. Pointing out how the rate of primary level completion and gender parity index has improved, she shed light on the challenges such as higher education, Technical and Vocational Education and Training enrollment, and technological inclusiveness, the rates of which have declined. Dr Bidisha stressed the importance of working on these areas to reduce discrimination. “Bangladesh lags behind in most indicators of female labour force participation rate and employment,” she said. Read: 68% of businesses yet to receive any stimulus: SANEM She mentioned that the Labour Force participation rate of women has not improved much from 2010, with the percentage of male and female labor participation rate being 38.6 percent and 36.37 percent, respectively, in 2017. Stressing on the importance of gender-sensitive budgeting, Dr Bidisha talked about how this can be a tool to address existing fault lines in policy implementation. “This can help the allocation of funds based on gender disparity across all sectors, along with the assistance of a proper monitoring and evaluation mechanism.” To implement a gender budget in Bangladesh, she said, a call circular outlining 14 criteria and yardsticks is sent out to all ministries. After every program is assessed and checked, a gender-sensitivity score of between 0 to 100 is assigned to the projects. These evaluations are then analyzed through the Recurrent Capital, Gender, and Poverty Database (RCGP) model to decide the percentage of expenditure allocation towards women's benefit. Finance Ministry formulates the gender budgeting report after amalgamating the information of all such ministries. Between the fiscal years 2009-10 and 2021-22, expenditure allocation towards women has gone up, she added. However, for several ministries such as the Ministry of Primary and Mass Education, and the Health Services Division, even though indirect expenditure has gone up, a downward trend in direct expenditure has been observed since such important ministries have been reducing direct budgeting. Although FY 2021-22 has seen the implementation of several key policies and programs for women in the budget, that is only one side of the coin, she said. On the other side, several notable gender-sensitive projects have been unapproved after funding was discontinued, she said. Dr Bidisha went on to emphasize the various challenges faced by Bangladesh when it comes to gender budgeting. She mentioned how the gender budget comprises both operating and development budgets, even though the impact of these two budgets is not similar for the marginal population or the larger cohort, along with the fact that not all development projects contribute towards female empowerment in the same way or manner. “Lack of transparency and the discontinuation of crucial gender-specific projects has also been an issue.” READ: SANEM finds 70% wage-earners in 4 dists. worse off in a year She categorized the gender sensitivity of ADP into three categories: gender-specific policies, such as the establishment of Four Mohila Polytechnic Institutes in the country; gender-induced policies, such as the development of Entrepreneurs and Connection for Employment project; and undefined policies, such as the establishment of four engineering colleges, polytechnic institutes in 23 districts, and increased facilities for admission in existing polytechnic institutes. A steady increase in "directly" gender-sensitive projects has been observed from 2017 to 2021. Still, the proportion of directly gender-sensitive projects have gone down by 2 percent in the Ministry of Women and Children Affairs during this period. Summing up her presentation with some key recommendations, Bidisha emphasised the need to strengthen monitoring and evaluation of projects, with the implementation status of the programs being monitored regularly. She suggested prioritizing projects that directly target SDGs (e.g., 5,8,3,4) during budget allocation. The importance of impact analysis and gender-sensitivity analysis was stressed upon, along with the need for improved coordination between ministries, suggesting Ministry of Women and Children Affairs to lead the ministries on these issues. This would require further strengthening of the capacity of the Ministry. The Mid Term Budgetary Framework (MTBF) also needs to be reviewed for incorporating better allocation in gender-sensitive projects. Finally, international best practices such as gender audit, ex-ante, and ex-post gender impact assessment of policies should be gradually introduced in gender budgeting. Dr Selim Raihan stressed the importance of ensuring women's social, political, and economic rights, stating that economic growth would be deemed meaningless without the proper establishment of such rights. He stated how even though all government bodies have widely acknowledged the need for women's empowerment, proper implementation has been lacking. “Especially from the onset of the COVID-19 pandemic, the burden on women has increased disproportionately.” Speaking of how the gender budgeting template is adequately comprehensive, he raised the question of how much it is actually implemented.
The business confidence in Bangladesh in April-June 2021 quarter showed improvement compared to the April-June 2020 quarter, but revealed that the business cost has risen, according to a recent survey. South Asian Network of Economic Modelling (SANEM) in collaboration with The Asia Foundation presented the results from the fifth round of a nationwide firm-level survey. The survey results, conducted from July 2-17, were disclosed through a webinar which was moderated by Dr Selim Raihan, Professor of Economics, University of Dhaka, and Executive Director of SANEM. Kazi Faisal Bin Seraj, the Country Representative of Bangladesh of The Asia Foundation was present during the event. Read: Focus on policy reforms to boost private sector investment The yearly Present Business Status Index (PBSI) score of the fifth round is 46.37 whereas it was 40.55 in the fourth round – which shows a gradual progress. But, a sectoral difference has been observed in the survey as the yearly PBSI score has differed in various sectors. For example, sectors such as light engineering (40.34), wholesale (39.98), retail (42.34), transport (41.99) and other service sectors (37.27) did not improve as much as the pharmaceuticals (52.40), financial (56.50) or RMG sector (49.56) as we see if we look at the individual scores. Compared to the January-March 2021 quarter, the quarterly PBSI score has fallen during April-June 2021 due to various forms of lockdown from April to June. A score of 42.57 was seen for this quarter, which was 51.38 in the fourth round, 48.83 in the third round, 47.96 in the second and 29.48 in the first round. The quarterly PBSI score, which was rising consistently over the last rounds has seen a setback being the second lowest score of the five rounds - which is concerning for the country’s economy and the business firms. In terms of sectoral improvement, it was mentioned that the quarterly PBSI score of the light engineering, wholesale, retail, transport and other service sectors are lower compared to the other sectors. This indicates that the mentioned sectors are facing more difficulties than the other business sectors. Read: Population below poverty line doubled, extreme poor The Business Confidence Index (BCI) has been used in the study to forecast the expectation of the firms regarding the next quarter. During the 4th round of the survey, it was forecast that the BCI will fall in the April-June 2021 with a score of 41.39 and has turned out to be correct. But the study also shows that the firms are hoping for an improvement in the next quarter (July-September 2021) and so the survey has given a BCI score of 49.74. But, again, the light engineering, wholesale, retail, transport sectors are falling behind in this matter as well with a score of 45.08, 46.51, 47.87, and 44.34 respectively. Interestingly, it was observed that firm size matters when it comes to quarterly Present Business Status Index. The survey showed that while the overall quarterly PBSI score stands at 42.57, for large firms, it is 48.42, the score is lowest for the micro and small enterprises (39.70) and the medium sized firms are in between them with a score of 43.75. So, the large firms are comparatively faring better than the other two and the micro and small firms are suffering the most. Besides, the export oriented firms are performing better with a score of 46.34 compared to non-exporting firms whose score stands at 40.26. Moreover, the findings show that manufacturing firms are doing better than the service oriented firms, and firms based in Dhaka are at a better place than the firms located outside Dhaka. Therefore, location, export status, firm type and firm size have been affecting the quarterly PBSI as per the study’s results. While the survey of the last quarter showed a weak recovery of 67% of the firms, this percentage has come down to 64%, which is a very marginal improvement. Also, 31% of the firms were seeing a moderate recovery during the last round but the number has come down to 27% during this round. A positive finding is that number percentage of strong recovery has gone up from 2% to 9%. While these percentages are only marginal, a gradual improvement is seen nonetheless as some firms have found ways to cope with the pandemic. The firm size also plays a role in determining the strength of recovery as the findings have shown that while 73% of the small and micro firms have been observing weak recovery, for large firms, this number stands at 45%. In addition, some factors which contribute to the overall economic recovery such as foreign remittance, export status, vaccination programme, banks’ credit to the private sectors, stimulus package and its disbursement, etc. The survey demonstrated that contribution of these factors have increased compared to the previous round and the mentioned factors have been contributing strongly and consistently. Another important finding has come up during the survey when the firms have been asked about the extent of recovery of their business since March 2020. On average, 57% of their business has been recovered in March 2021 compared to March 2020 which has unfortunately reduced to 35% during June 2021. Thus, recovery has deteriorated on average and a significant variation is seen regarding this when we look at the firm sizes: micro and small enterprises have suffered the most with a drastic reduction from the previous 46.9% to 28.3%. It was found that 21% of the firms received stimulus packages during April-June 2021, which is very close to that of the previous round’s 22% and 65% did not receive it during this quarter as opposed to last round’s 69%. Therefore, no significant variation is seen here. It was also seen that only 6% of the firms who did not get the package in the last quarter availed it in this quarter and among them, 4% were SME and 17% were large firms. Of the 21% of the firms who did receive it during April-June 2021, RMG sector (52%) takes up the 1st place, followed by Textiles (36%) and Leather (30%) sectors. Then, it was shown that only 9% of the micro and small firms have received the stimulus package during this quarter which is the same as the last quarter, whereas 45% of the large firms were able to avail the package during April-June 2021. The survey found that lengthy procedure, difficulty in availing services from the banks, complicated application process, bribe, etc. were some of the problems the firms who availed the package had to face in order to receive it during the January-March 2021 quarter and the problems have existed during this quarter as well. It was also presented that, on average, the quarterly PBSI of the firms who have received the package is better with a score of 47.70 than firms who did not as their score is 41.21. Read: 68% of businesses yet to receive any stimulus: SANEM It means that stimulus package has played a role in improving the quarterly PBSI of the firms. It was observed during the survey that 65.7% such firms are using their own savings, 28.1% firms are borrowing or taking loans, 19% are laying off workers in order to cope. The percentage of worker lay-off may be underestimated. It is matter of great concern that many firms might have to exit the market permanently if they do not get any external help or package. The study has found that 60% of the executives of the firms have taken at least one dose of vaccine and the tendency to take the vaccine was more in the pharmaceuticals and financial sectors. Furthermore, executives of Dhaka-based firms have taken the vaccine more compared to the other firms and representatives of large firms took the vaccine more compared to that of the small and medium firms. When asked about the percentage of the workers who have taken at least one dose of the vaccine during the survey, it was found that about 25% of employees took at least one dose; workers of firms located in Dhaka or working in the manufacturing sector have the tendency to take the vaccine more compared to other sectors or locations. The business firms are hoping to see an improvement in the upcoming quarter. He mentioned how businesses were affected heavily due to the pandemic and various forms of lockdown which has created uncertainty and deteriorated the country’s economy. Keeping the patterns, there is a need to develop area and sector specific protocols by involving the stakeholders. The hygiene experts, stakeholders from all sectors, workers and citizens need to work together in order to find a way to keep the economy of the country running amidst the pandemic. Moreover, it is important to find the solutions in the context of our country’s challenges without trying to draw comparisons with other countries as each country operates differently and are facing different problems. Dr Raihan suggested that strong vaccination programme, better distribution of the stimulus package and thorough COVID management at various level is essential for the recovery of the country’s economy. The workers from must be vaccinated as soon as possible for all sorts of firms to run smoothly in the upcoming days. While the programme of distributing stimulus package is very commendable and Bangladesh was one of the first South Asian countries to start this programme, Dr Selim Raihan hopes that the government will also assess the distribution system of the current stimulus package and ensure that the intended firms are receiving the packages. He suggested that short but effective lockdowns must be implemented if need be so that the business firms do not suffer tremendously and the healthcare system and other related sectors should also be improved in order to improve the overall economy of Bangladesh. The first round of the survey (held in July '20 with 300 firms) revealed the urgent state of business in the country. The second round (conducted in October '20) and the third round (conducted in January '21) showed signs of economic recovery. Held in April ’21, the fourth round exposed a deterioration of business confidence followed by the second wave of COVID-19. The fifth round of the survey was conducted nationwide in July 2021 on 501 firms. This round has provided insights on the pulse of the economy as the economy transits through the second wave of the pandemic. 500 firms have been surveyed in every round since the 2nd round of this survey. The main objective of this ongoing project is to assess the impact of the COVID-19 crisis on business confidence and outlook in Bangladesh. During the fifth round, 501 firms were surveyed among which 255 were manufacturing firms and 246 were service-oriented firms. The survey was conducted in 37 districts of the 8 divisions of Bangladesh. The survey was conducted by interviewing the business representatives of the selected firms over phone calls. Firms were asked to express their opinion on six key issues: profitability, investment, employment, wage, business cost, and sales/exports. Based on the responses, three indices were calculated: Yearly Present Business Status Index (PBSI), which was used to compare the performance over April-June 2021 with that over the same quarter last year, Quarterly Present Business Status Index, which compared performance over April-June 2021 with that over January-March 2021, and Business Confidence Index (Next Quarter) which compares the expectations regarding the performance in July-September 2021 with that over the present quarter (April-June 2021). Across the three indices, a score of 50 indicates no change in the status, a score of less than 50 indicates deterioration while that above 50 indicates an improvement in business status/confidence.
The country’s garment workers have little access to adequate information related to COVID-19 immunization, according to a joint survey by the South Asian Network on Economic Modeling (SANEM) and Microfinance Opportunities (MFO). The survey found that only 22% of the workers who wished to be vaccinated had information on how to gain access to jabs, Sanem said a press release on Sunday. “This is a concern because inability to ensure access to COVID-19 vaccines will put millions of garment workers, who are employed in one of our most crucial industries, at risk,” it said. READ: Focus on policy reforms to boost private sector investment: SANEM In order to facilitate the recovery process of RMG production, export and the economy as a whole, factory owners, government officials, policymakers and advocacy groups will have to come together to prioritize the health and safety of workers. SANEMand and MFO have been jointly conducting a series of surveys to better understand how the lives of garment workers in Bangladesh have evolved during the COVID-19 crisis. The press release said that the ready-made garment industry in Bangladesh which has been one of the key drivers of economic growth, has faced challenges since the start of the pandemic. Consequently, the lives of the workers employed by the sector have been affected in various ways. READ: 68% of businesses yet to receive any stimulus: SANEM Under the title "Garment Worker Diaries", SANEM and MFO have been collecting monthly data since April 2020 on the employment, income, food security, wage digitization and health of garment workers employed in factories across the five main industrial areas of Bangladesh (Chittagong, Dhaka City, Gazipur, Narayanganj, and Savar). The data disclosed were collected from a pool of 1,285 workers during surveys conducted over the phone on April 23, 2021. Just over three-quarters of the working respondents are women, roughly representative of workers in the sector as a whole. The survey focused on COVID-19 lockdown conditions as well as on garment workers’ awareness of and opinions about COVID-19 vaccinations. Despite the nationwide lockdown, garment-producing factories across the manufacturing sector were allowed to operate with strict guidelines in place. However, in the absence of sufficient public transport, some apparel workers could not commute to their factories as they normally would: 8% of the workers surveyed told us they had to use alternative means to get to work. READ: SANEM finds 70% wage-earners in 4 dists. worse off in a year Further, only 4% of surveyed workers reported using factory-provided transportation, indicating that not all factories took the necessary measures to ensure transportation to work for those workers who are reliant upon it. As it stands though, 76% of the surveyed workers reported that they walk to their workplaces, while only 10% used rickshaws, 6% used auto-rickshaws, 2% used bus, and 2% used CNGs. Finally, 92% of the surveyed workers also reported that there was no change in their means of transport, indicating that the majority of workers usually travel to work on foot anyways. Only 2% of the surveyed workers had received the COVID-19 vaccine prior to the survey. On being asked whether they think they are eligible to get vaccinated, 36% of respondents said they were eligible, 28% said they were not eligible, and 34% said they did not know if they were eligible. Among the 36% of respondents said they were eligible for the vaccine, 76% said they want to get vaccinated. Among the 28% of respondents stated that they were not eligible for the vaccine, 63% said they would get the vaccine if they became eligible. And among the 34% of respondents who weren’t sure if they were eligible, 65% said they would get the vaccine if in fact they were eligible Overall, 69% of respondents said they were willing to get vaccinated if they were eligible to get the vaccine whereas 31% said they did not want to get vaccinated. Out of the 31% who were unwilling to get the vaccine, 48% were afraid of side-effects, falling ill or dying, 23% did not feel the necessity or the benefit of getting vaccinated, 17% said they would rely on their religious faith to stay protected, 3% said they were pregnant or suffering from other health problems or allergies, 2% said they were prohibited by their husband, a little less than 1% said they were waiting for everyone else to get vaccinated, and 7% gave us some type of other response.
Economists at a webinar on Sunday urged the government to focus on policy reforms to boost private sector investment which is essential to stimulate the post-COVID recovery process. They also remarked that in the absence of comprehensive data collected by national statistical agencies such as Bangladesh Bureau of Statistics (BBS), it is extremely challenging for policymakers to identify, target or design effective policies to help the worst affected groups of the populations. The observations came up with the webinar organized by South Asian Network on Economic Modeling (SANEM) titled “Budget 2021-22: Reality and Expectations” to discuss the importance of the national budget in addressing the challenges of the ongoing pandemic. READ: 68% of businesses yet to receive any stimulus: SANEM Dr Selim Raihan, Professor of Economics Department at Dhaka University and Executive Director of SANEM said since the budget for FY 2021-22 is going to be the second budget announced during the pandemic, policymakers should primarily focus on addressing the urgent needs that have emerged due to the ongoing crisis. “It is extremely important for the policymakers to come to terms with the reality of the current situation and acknowledge the gravity of the socioeconomic crisis that the country is currently facing," he said, stressing upon the importance of COVID-19 management related budget allocations to salvage the health sector through ensuring timely vaccination drives, border controls and building capacity of the medical workforce. One of the key issues that he highlighted is the lack of proper data collection and monitoring since the beginning of the pandemic. He also referred to the findings of SANEM’s ongoing quarterly Business Confidence Survey which reveal that micro, small and medium enterprises (MSMEs) have been most negatively impacted due to the pandemic. Despite the severity of the impact, government stimulus packages for MSMEs have been inadequate, making it even more difficult for them to survive through this unprecedented crisis. As these MSMEs play a vital role in the supply chain and also create employment opportunities for the majority of the workers working in the informal sector, recovery of the MSMEs is a major contributing factor to the recovery of the economy as a whole. Dr Raihan mentioned that, although GDP growth rate is an important measure to assess the advancement of the economy, it is high time for policymakers to come out of the obsession of repeatedly using GDP and instead focus on socioeconomic indicators such as poverty, inequality and employment to assess the wellbeing of the nation. “The government needs to properly define the corporate social responsibility of the various business associations. Business associations have an important role to play in this time of crisis. But unfortunately we have seen that at this time they are more occupied with their own demands,” the economist added. Dr Sayema Haque Bidisha, Professor of Economics Department at Dhaka University and Research Director of SANEM delivered the keynote presentation. Dr Sayema acknowledged that the budget for the next fiscal year would have to consider both pre-COVID as well as post-COVID challenges. She pointed out that the existing budget structure suffers from low revenue generation and slow implementation of ADP. Furthermore, despite the consistently high growth in GDP, the pace of employment generation has not been impressive and there has been low spending in human resource development. “In addition, the pandemic has now impacted the livelihoods of millions due to job losses, business closures and reduction in income. A digital divide has become evident in the education sector and rise in dropout rates and early marriages have emerged as major concerns. In this context, the upcoming fiscal budget will play a critical role in dealing with the pandemic fallouts,” she added. The presentation highlighted a declining trend in revenue collection in the recent budgets: 83% of the actual revenue target was met in the fiscal year 2016-17 which decreased to 75% in 2017-18 and 74% in 2018-19. A closer analysis of the composition of the NBR tax revenue reveals that the proportion of income tax in the overall revenue has also declined over the past 5 years. In the fiscal year 2016-17, income tax made up 35.4% of the total tax revenue while in 2021, it declined to only 31.5%. READ: SANEM finds 70% wage-earners in 4 dists. worse off in a year The government’s Annual Development Programme (ADP) implementation rate has also been staggeringly low in the current fiscal year. ADP implementation progress over July 2020-April 2021 has been below 50% across several key ministries and divisions including Health Services Division, MoPME, MoHPW, Ministry of Industries, Medical Education and Family Welfare Division, MoWCA, MoSW, Food, Labor and Employment, Planning Division. Furthermore, government domestic borrowing in financing the national budget has also increased from 14.8% in FY 2019-20 to 19.4% in FY 2020-21. Dr Sayema stressed that the prime objective of the upcoming fiscal budget should be to ensure better health management while restoring the income level of people through employment generation. To attain this objective, she mentioned four key areas of priority: Health, Education, Social Safety Net and Agriculture.
Insufficient allocation, lengthy procedure, difficulty in bank-related services, and lack of information about the procedure left 68% of businesses unable to avail the government's stimulus package, the South Asian Network on Economic Modelling (Sanem) said Sunday. However, effective implementation of the stimulus package is critically important and assessment is urgently required on the package implemented so far. The packages need to be redesigned and expanded amid the current wave of Covid-19, they said. The government should undertake a sectoral approach to gauge the needs and identify the necessary policy measures for the worst affected industries such as leather and tannery, light engineering, transport, retails, restaurants, food processing, they added. Small and medium enterprises (SMEs) should be a priority in channelling the loans and stimulus packages. Also, effective implementation of the stimulus package is critically important. An assessment is urgently required on the stimulus package implemented so far, the experts suggested. Also read: SANEM finds 70% wage-earners in 4 dists. worse off in a year The observations came up at the webinar "Covid-19 and business confidence in Bangladesh: Findings from the 4th round of a nationwide firm-level survey." Sanem, in collaboration with Asia Foundation, initiated the quarterly Business Confidence Survey in July 2020. The third round of the survey was conducted in January and the fourth round in April 2021, which covered 253 firms from the manufacturing sector and 250 from the services sector. "The sectors that need priority are light engineering, transport, retail, and leather and tannery as their recovery rate is slow. The stimulus packages are having positive impacts on the firms' recovery," Sanem Executive Director Selim Raihan said. Also read: SANEM survey: Population below poverty line doubled, extreme poor trebled in 2020 "The firms, on average, have been able to recover 57% of their damages occurred during this pandemic (March 2020 -March 2021), according to the survey. It shows the firms have not got back to the pre-pandemic situation, and it might take a while for them to be able to do so." Selim said the business confidence for April-June 2021 deteriorated compared to the one during January-March 2021; posing a threat to future businesses. The survey also found that the majority of the stimulus package recipient firms were from the manufacturing sector – 82.7% of all firms. Amongst the industrial sectors, 58% of the RMG firms received the stimulus package, whereas this rate is 40% for the textile and 30% for the leather industry. Also, it was the large firms who had greater access to the stimulus package: 46% of the surveyed large firms received the stimulus package in contrast to 30% medium firms and 9% small firms. Also read: Almost three quarters of firms yet to receive stimulus: SANEM Former lead economist of the World Bank Dhaka Zahid Hussain said recovery across the economy has been experienced to some extent; however, it has not been uniform across all sectors. "Time and again, it has been evident that large firms are at an advantage compared to micro and small firms. Large firms often have more influence and power, leading to better bargaining power and hence, giving them better access to stimulus packages," he added. Dhaka Chamber of Commerce and Industry President Rizwan Rahman said the central bank and monetary institutions must formulate strict guidelines for the banking sector to ensure that loans are disbursed to small and micro-enterprises.