Bangladeshi businesses and economy face the brunt of political turmoil
An IBT Report
Businessmen, traders and shopkeepers are reeling under the ongoing blockade and hartal, having incurred massive losses since the political unrest began on January 5. They are eager to see an end to the violence, at any cost, to save their businesses. They have demanded that a stringent law be enacted, so that action can be taken against miscreants who engage in subversive activities. Finance Minister AMA Muhith said achieving the GDP growth target in the current fiscal has become uncertain due to ongoing nonstop blockade and hartal since January 5. ‘Growth prospect is now highly doubtful,’ the minister told the media while briefing about the ongoing situation at the secretariat last month.
Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) president, Kazi Akram Uddin Ahmed, told IBT that hartal and blockade should be banned by enacting a law, since it is the economy and the business sector that most often suffer due to political violence. Expressing his frustrations, Ahmed said, ‘Our expectations of achieving exports worth US$ 50 billion, by 2021, have been belied, as the blockade has been continuing since January 5. Buyers are now switching over to Malaysia, Myanmar and other countries, because of the ongoing political unrest in Bangladesh.’
‘Most of the entrepreneurs have become frustrated because of the suffocating situation. The steps taken by the government, so far, have not been effective, even though it is saying the scenario will change in a short time.’ The business leader observed that this was no political movement but an upsurge of violence. ‘We, the business community, do not want to be victims of the dirty politics of our politicians. In 2013, during the general elections, our economy stumbled once, because of the political violence. We started to regain the flow of business in 2014, but, now in 2015, we are again suffering badly. The situation is the worst that we, as businessmen, have ever seen,’ he added.
The FBCCI president said, ‘We will hold demonstrations, as announced in our schedule. We will organise a peaceful nationwide human chain, holding the national flag; this is our last-ditch effort. We want to send a message to the politicians, on the day of our demonstration, that we do not want political activities that ruin the economy, hamper development, and shatter the hopes and dreams of the country’s businessmen.’
According to the Dhaka Chamber of Commerce and Industry (DCCI), the country lost Tk. 36,445 crore in the first 16 days of the blockade, which is equivalent to 2.69% of the gross domestic product (GDP). Based on these figures, it is clear that the total economic losses during the month of the blockade, which began on January 5, was around Tk. 68,000 crore, which is greater than even the losses caused by the political destruction that occurred in 2013.
DCCI figures record the losses to the apparel sector over the past month, at Tk. 25,275 crore, as this sector has already lost Tk. 13,480 crore in the first 16 days of the continuous blockade and repeated hartals.
The current political unrest has caused huge losses to the transport sector, which would have been no less than Tk. 9,000 crore over the past month. The agricultural sector also suffered massive losses, which could be around Tk. 8,641 crore over the same period. The losses of the housing and tourism sectors, two sectors that have been hit hard, could be Tk. 7,500 crore and Tk. 6,300 crore, respectively.
The estimates are based on DCCI data, which put the losses of these two sectors, in 16 days of blockade, at Tk. 4,000 crore and Tk. 3,360 crore, respectively.
According to figures released by the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), 19 garments factories have lost $ 19.02 million worth of business in 18 days in the first month of this year, because of cancellation or orders and additional shipment costs of products. Businesses are losing over Tk 2,277 crore every day, due to the ongoing blockade and the shutdown, with the garments’ sector receiving the hardest blow. The garments sector records a loss of Tk. 842.5 crore on a day’s countrywide blockade or shutdown.
Blockade halts hard rock sales
A large volume of hard rock is stockpiled at Maddhyapara Granite Mining Company Ltd (MGMCL) as a single tonne of rock has not been sold since the blockade started in early January. Rock production can be suspended anytime just for shortage of space, said Mir Hannan, general manager (marketing) MGMCL in Parbatipur upazila of Dinajpur.
Official said they sell around 1.2 lakh tonnes of rock monthly, which is equivalent of monthly production.
The workers specially of loading section are passing hard times sitting idle due to lack of work. Around 150 people work at the delivery section daily basis. ‘I usually earn Tk 400 each day, as I have no work, I do not get any wage in the last 40 days. I have been passing a hard days with my family’, said Abdus Sobhan, a desolated worker. Germania Trest Consortium (GTC), a Belarus based company, took the charges of cash starved MGMCL in September 2013. Later it started production recruiting fresh manpower.
GTC is responsible for development, maintenance and production of the mine signed a contract for 6 year to produce 9 million tonnes of rock. Jabed Siddiqui, general manager of GTC, said the country annually required 60 to 70 lakhs tonnes of rock. Keeping it in mind, they started producing rock operating three shifts. ‘But the produced rock remained unsold for political unrest for the last couple of weeks,’ said Jabed adding the company incurred losses of Tk 1 crore each day due to the political turmoil. Abul Basar, managing director of the company, said they are in big trouble due to the ongoing blockade as they cannot sell rock despite having demand.
Rise in price of rice
According to businessmen, the daily demand of rice in Dhaka is over 1,500 tonnes, most of which come in from Naogaon, Natore, Dinajpur, Rangpur, Kushtia and Joypurhat. Bangladesh Auto Rice Mill Owners Association President AKM Korshed Alam Khan said the blockade and end of Aman rice harvesting season had upped paddy prices. ‘Insecurity has pushed up transport costs. Overall, the prices of rice have increased a little,’ he told IBT.
A truck’s fair from Dinajpur to Dhaka used to be Tk 17,000 to 18,000. But it is now not possible to hire trucks even with double the amount. Rice-mill owners say they had not hiked rice prices at their end. A supply crunch and an increased transport cost have pushed up rice prices at the retail level, they say. ‘What we fear most is arson attacks,’ Babubazar Rice Traders’ General Secretary Nizam Uddin said. ‘We’ll lose everything if our trucks carrying rice is torched. That’s why we are not bringing in rice from other districts. This has led to a supply shortage. Moreover, the increased transport cost has also contributed to higher rice prices,’ he told IBT.
Huge losses to be incurred in leather industry
The ongoing countrywide blockade enforced by the BNP-led alliance has caused Tk 4.59 billion loss to the leather sector, businessmen say. The Bangladesh Tanners’ Association gave this figure at a press conference held recently. Reading out a written speech, association President Shaheen Ahmed said: ‘The country’s transport system has collapsed due to the ongoing political unrest and violence. It has created a serious crisis in the transport of leather and leather goods.’
‘Transport of finished leather and leather goods to the Chittagong port has become almost impossible. Transport costs have tripled. But there is no surety of the goods reaching the port despite that. We’re facing huge losses,’ Ahmed said. The businessmen demanded 10% cash incentive on exports to compensate for the losses. They also demanded the constitution of a Tk 50 billion fund to extend low-interest loans to the sector. Ahmed said the Tk 1.5 billion pledged by the government for the shifting of tanneries from Dhaka’s Hazaribagh to Savar was ‘insufficient’.
Battered car sales
More than 6,000 cars are stranded at ports amid importers’ reluctance to take delivery of the vehicles fearing vandalism on way to their final destinations. ‘Most of us are afraid of attacks on the highway for the political unrest. That’s why, taking delivery of cars from ports have become slow,’ said Habib Ullah Dawn, president of Bangladesh Reconditioned Vehicles Importers and Dealers Association (Barvida).
Some of the imported vehicles came under attack at the beginning of the political turmoil, after which importers became cagey about taking the cars out of the ports, Dawn said. Of the amount, 4,400 are stuck at Mongla port, the seaport that mainly handles reconditioned cars imported from Japan, while the rest are in Chittagong port, according to importers. Each day, car importers have to pay a total of Tk 27 lakh as overstaying fine to port authorities, Dawn said. ‘We would much rather pay the fines than see our cars getting torched. We are suffering for no fault of ours,’ said the Barvida president.
The number of cars released by importers stood at 475 in January, down 36 percent from the previous month. Subsequently, the number of cars stuck at the port rose to 4,400 from nearly 3,900 at the beginning of January, according to port data.
Importers now usually take delivery of their cars on weekends, which have remained more or less violence-free so far, the officials said. Apart from forcing importers to count overstaying fees, the unrest has also taken toll on the sales of cars, Dawn said. ‘Our sales have nosedived for the turmoil. We cannot keep our showrooms open for the risk of attacks,’ he said, adding that reconditioned car sellers incur losses of Tk 30 crore a day for the unrest.
‘We enjoyed wonderful sales last year — the year 2015 began with doom.’ Reconditioned vehicle dealers sold 16,400 units of cars in 2014, up 69 percent year-on-year, according to the Barvida president. Our sales have plummeted. People do not want to buy cars when the country is going through such turbulence,’ said Abdul Haque, managing director of Haq’s Bay, one of the leading reconditioned car dealers. On the one hand, customers for cars have come down sharply, and on the other, there is safety concern for vehicles on roads.
Travel also stumbles
Growth in domestic air travel slowed down last year mainly on the back of one of the major carriers’ shift in focus to international routes. Domestic air travel grew 5% year-on-year in 2014, in contrast to 10% growth recorded for the previous year by the Civil Aviation Authority, Bangladesh. Last year, 680,420 people travelled by air within the country.
Regent Airways, which focused more on international routes, however carried around 35% fewer passengers nationally last year, as it cut back two domestic routes due to high fuel costs, said Sam Issac, chief adviser to the airline.
The airline now operates only on the Dhaka-Chittagong and Dhaka-Cox’s Bazar routes and has instead diverted its resources to international routes. ‘International routes hold immense business prospect,’ Issac said, adding that Regent registered four-fold increase in passenger count on international routes last year.
United Airways, another domestic carrier, had around 2.35 lakh passengers last year on the domestic route, down roughly 3%, said Kamrul Islam, the airline’s deputy general manager of marketing support and public relations. He attributed the slip in passenger count to the launch of US-Bangla Airlines in July last year. The airline now operates eight flights daily. Many people tend to avoid costly air travel in favour of other modes of transport in times of political stability, he said.
For instance, many travellers are now opting for air travel even if it is more expensive, as the non-stop countrywide blockade has rendered road and rail travel unsafe. Novoair, which has been operating flights on domestic routes since January 2013, however, registered around 32 percent year-on-year growth in passenger count last year, riding on its increased seating capacity. On average, the airline operated 7-8 flights daily last year, while the number was 5-6 flights in 2013, said Mofizur Rahman, its managing director. In 2014, Novoair carried around 1.63 lakh passengers, up from around 1.23 lakh in 2013, he added.
Remedies anyone?
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said the economic loss to the countrywide ceaseless blockade and recurring shutdowns would be no less than Tk. 75,000 crore. According to their statistics, the major losers were apparel sector with Tk. 30,000 crore, wholesale and retail business with Tk. 15,000 crore, agriculture and poultry with Tk. 9,518 crore, transport sector with Tk. 9,500 crore, tourism with Tk. 6,500 crore and frozen foods with Tk. 250 crore. Ahmed said no business could survive with incurring such huge losses, which would also cause unrecoverable dent to the national economy. The FBCCI chief demanded a total ban on blockade and shutdown and interest waiver of businesses, badly affected by the political violence.
