Bangladesh trade milieu hit by high rates, unstable law & order: DCCI

High bank lending rates, unstable law and order marked by extortion, energy uncertainty, lack of coordination in revenue management and absence of policy continuity in industrial regulations are affecting the overall trade environment and eroding confidence in both local and foreign investment as well as business operations, according to the Dhaka Chamber of Commerce & Industry (DCCI).

DCCI president Taskeen Ahmed told a press conference that the unchanged policy rate has forced businesses to borrow from banks at 16-17 per cent interest, creating mounting pressure.

High lending rates, unstable law and order marked by extortion, energy uncertainty, lack of coordination in revenue management and absence of policy continuity in industrial regulations are affecting the trade environment and eroding confidence in investment and business operations, trade body DCCI has said.
Rising production and distribution costs are also fuelling inflationary pressures, it noted.

“The high volume of non-performing loans (NPLs) and the reduction of the loan classification period from nine months to three months have created an undesirable situation in the financial sector, which has led to instability in the industrial sector,” he was cited as saying in a DCCI release.

“Industrial production is being hampered due to inadequate gas supply and the recent increase in gas prices for new industries and captive power plants by Tk 40 and Tk 42 per unit respectively,” he said, mentioning that both domestic demand and export targets are being missed as a result.

He also pointed to structural weaknesses in the revenue management system, saying the lack of automation leads to harassment of compliant taxpayers, while many remain outside the tax net, depriving the government of revenue and slowing collection growth.

Taskeen said delays in land acquisition, high land prices, a 41-per cent average increase in service charges by the Chattogram Port Authority and underutilisation of inland waterways have significantly raised the cost of doing business. “Rising production and distribution costs are also fuelling inflationary pressures,” he added.

As the recently-signed trade agreement with the United States does not guarantee duty-free access for the readymade garment sector, Taskeen called on the government to renegotiate the terms with the US administration.

Fibre2Fashion News Desk (DS)