Sectors recovering at varying paces: MCCI
Image: Collected
Although the country's monetary activities gained pace following the coronavirus containment steps came to a finish on May 30, it really is still remote from common levels, a respected chamber said in a review.
"The speed with which various business activities have picked up varies from sector to sector based on the demand for goods and offerings," the Metropolitan Chamber of Commerce and Sector (MCCI) explained in its overview of the economic condition in Bangladesh between July-September 2020.
During the quarter under critique, the gradual rise of electricity, petroleum and gas use indicates that the financial system is returning to normalcy.
A big segment of informal industries, services and other activities have also resumed businesses but they appear to be performing at a lower level than their full capacities.
For example, the export-oriented garment and household leather industries alongside the domestic metal, food-processing and transport sectors are not running at full quickness yet.
However, the positive adjustments ought to be interpreted carefully.
"Private investors want to cope with the problem rather than making further investments however the positive thing is that economic actions are increasing gradually," the report said.
Bangladesh is now confronting some major difficulties in steering its overall economy to a bigger development trajectory, the MCCI added.
These challenges include sluggish implementation of development projects, low investment and sluggish growth of income.
Therefore, a significant upsurge in public and private investment is essential to keep up competitiveness and generate even more growth.
Relating to agriculture, the MCCI explained that the federal government rolled away a refinance scheme of Tk 5,000 crore to help the sector deal with the financial losses incurred simply by Covid-19 for a great 18-month tenure, with a 6-month grace period.
In line with the latest Bangladesh Bank data, as much as 43 banks signed participation agreements with the central lender to disburse the fund.
However, only a tiny number of lenders have up to now made disbursements and by September 2020, merely Tk 1,892 crore, or 37.84 per cent, of the quantity was provided as loans to around 78,526 farmers.
In the broad industry sector, the making sub-sector recorded a minimal growth of 5.84 per cent in FY20 compared to the past fiscal, when it had been 14.20 %.
Within manufacturing, the large and medium scale industries' sub-sector performed similarly worse than it had in the previous fiscal, growing 5.47 % in FY20 following 14.84 % in FY19.
The small-scale production industries as well witnessed a stunted growth rate of 7.78 % in FY20 against 10.95 % in FY19.
Even so, to overcome the possible Covid-19 impacts about the sector, the government rolled out a bail-out package of Tk 30,000 crore in April to supply working capital for influenced sectors and service sector organisations at a minimal interest rate.
Accordingly, on April 12, the central bank launched the stimulus package and by September 17, some 2,062 large companies received low-cost loans totalling Tk 25,461 crore, or 84.87 per cent of the package.
Bangladesh Bank in the future formed a good Tk 5,000 crore pre-shipment credit rating refinance scheme for native goods and the export sector.
But regardless of the scheme, export-oriented sectors have not produced any improvement, the MCCI said.
The scheme was issued on April 13 but only Tk 16.6 crore, or 0.33 %, had been disbursed by September 30.
But on August 24, the central bank relaxed the guidelines for availing the pre-shipment credit refinance scheme with a great aim to help native exporters continue shipping goods.
The tenure was also extended from the previous four-month timeframe to 2 yrs.
Meanwhile, many service sectors, sans education, have previously resumed their activities amid the existing crisis and also have contributed to the country's monetary recovery.
In line with the trade human body, among all pieces of domestic credit, individual sector credit growth stood at 9.48 per cent between September 2019 and September 2020 while it was 10.66 % through the same period for 2018-19.
Meanwhile, people sector credit rating growth was 32.04 % by the end of September 2020 in comparison to an increased growth of 44.40 % towards the end of September 2019.
Export earnings found in the July-September amount of FY21 increased by 2.58 % to $9.90 billion from $9.65 billion in the corresponding quarter of the previous fiscal.
The overall export growth in July-September of FY21 was largely driven by the garments sector, which alone fetched $8.13 billion, or 82.12 per cent, of the total exports.
In line with the government's efforts to tackle the Covid-19 fallout, Bangladesh Lender has raised the export development fund (EDF) to $5 billion from $3.5 billion.
As of September 30, 2020, about $2.99 billion or 59.80 % was distributed among 2,202 applicants.
In the first three months of the existing fiscal, the web foreign direct investment (FDI) decreased by 60 % to $68 million from $170 million in the corresponding 90 days of FY20, according to the central bank's balance of payments data.
On the other hand, the gross inflow of FDIs through the period under review also decreased by 24.69 % to $540 million from $717 million in the corresponding 90 days of FY20.
FDI inflow to Bangladesh is low in comparison to that of several countries at similar degree of development, the MCCI said in its review.
Source: https://www.thedailystar.net