Mir Nasir Hossain, former president of FBCCI, the premier business association of the country's industrialists, is also a former director of Eastern Bank Ltd. In an exclusive interview, he shared his views on the state of trade, the private sector, and the overall economy. 

He believes that to overcome the ongoing business crisis, a secure environment and a fair operational setup are essential. Without these, investments cannot be sustainable. Furthermore, given the changing circumstances, comprehensive economic development is necessary. 

Question: The country is experiencing major political changes. What is the current state of business?

Mir Nasir Hossain: The management of the past 15 years left much to be desired. Although power capacity increased, the quality of electricity remained poor. The gas situation was equally problematic, especially in the past two years when we received less than half of the gas demanded, affecting production and driving up costs. We tried running factories on alternative fuels, but that came at a much higher expense. Additionally, devaluation against the dollar and dollar shortages hindered us from opening LCs, and consequently, raw materials couldn’t be imported, impacting production adversely. Customary complexities, such as customs, advance income tax and HS code issues, led to days-long delays at ports, often worsened by harassment and bureaucracy within revenue departments.

To top it off, the emergence of new extortion schemes is unsettling. Earlier, one group collected extortion; now, it’s another. Law enforcement also struggled, with police absent in several areas post-protests, leaving us facing various obstacles. While deploying the armed forces and activating the police has normalised the situation somewhat, the past few months have seen notable industrial damage. 

Question: Business was already stalling towards the end of the last government’s term. There was hope that the new government would bring momentum to business, but instead, factory vandalism and cases against business owners have left them disillusioned, leading them to hold back on new investments. What should be done to alleviate this fear? 

Mir Nasir Hossain: Bank interest rates have risen from 9% to 14-15%, making sustainable business difficult under such high rates. Moreover, the new loan default rules now declare defaults within 90 days of non-payment, adding to our concerns. Alongside rising interest rates, gas supply remains insufficient. To eliminate the business crisis, a secure environment and fair conditions for business operations must be established. Without this, investments won’t be sustainable. We need to improve our macroeconomic indicators, focusing on more than just GDP. Administrative costs must be lowered. If bribery is needed to secure utility services, costs will only rise.

We have high expectations from the current government, as they are striving to bring order, especially within the financial sector. Customs issues, raising the tax-GDP ratio, and a focus on direct taxes are also necessary. Until we can create a comfortable economic atmosphere, a conducive investment climate won’t materialise. During the last government, bank loans surged, money was reprinted for refinancing, and the supply of funds in the private sector dwindled. With external loans now at $100 billion from a previous $20-25 billion, and a dollar shortage, overcoming these issues is crucial. Supply chains remain weak, and extortion, whether institutionalised or otherwise, continues. Agricultural produce is disproportionately priced between production sites and Dhaka due to additional costs. Addressing this gap is critical. 

Question: What steps should be taken to strengthen the banking sector? 

Mir Nasir Hossain: Given the scale of our economy, there’s no justification for having 60-65 banks. Take India, for example; a vast country with around 5-6 government banks, along with a few private ones. Many of our banks and insurance companies were established for political reasons, creating a circle of corruption through which they were formed. Regulatory bodies often turned a blind eye to this. To restore order, establishing rule of law is essential. 

Question: How can product prices be controlled? 

Mir Nasir Hossain: After much lobbying, the Ministry of Commerce created a Tariff Commission, tasked with price monitoring. A Dhaka Chamber study found rice production costs to be Tk16-17 per kg, but it sells for Tk60-65 per kg. These middlemen benefit, while farmers lose out, and consumers pay a premium. Enforcement through police alone won’t work; a systematic approach is needed to bridge this price gap between producers and consumers. Forecasting must be improved, and government actions should be research-based to avoid future crises. Social security programmes should also be expanded and streamlined. 

Question: In the last 15 years, business associations were often led by government-backed representatives. With a return to democratic processes, how can these associations serve the interests of both businesses and the public? 

Mir Nasir Hossain: Political affiliations affected not only business but also the education and healthcare sectors. When there’s no environment for fair national elections, how can we expect democratic processes in other elections? Business associations need to advocate for policies supporting both small and large industries. However, they have often been tools for implementing government agendas. Significant reform is needed. True business representatives must be allowed to lead these associations, ensuring they are policy-driven. 

Question: What measures should the government take to expand export markets? 

Mir Nasir Hossain: We lack adeptness in trade negotiation. The Ministry of Commerce’s WTO wing should focus on increasing exports, but trained officials are frequently reassigned. For instance, a personal officer to the Commerce Secretary attended a WTO training in Geneva, which he can’t apply to trade expansion. Skilled negotiators must be developed, especially given the compliance hurdles many of our export products face. 

Question: Despite everything, do you see hope for the future? 

Mir Nasir Hossain: I am always optimistic. Bangladesh is a country of immense potential, yet its progress has been hampered by mismanagement, corruption and malpractice. By addressing these issues, Bangladesh could avoid looking back and truly harness its potential. 

Source: Bangladesh Pratidin (Translated)

BDST: 1330 HRS, OCT 29, 2024