Spesakers at a webinar stressed effective implementation of the stimulus package terming it as critically important and suggested to conduct an assessment so urgently on the ratio of implementation of the stimulus package far.
They however observed that the small firms were largely out of stimulus package coverage. Out of the 301 Micro and small firms, only 8 per cent of the firms have received the stimulus package.
South Asian Network of Economic Modeling (SANEM) in collaboration with the Asia Foundation presented the results from the second round of a nation-wide firm-level survey on “COVID-19 and Business Confidence in Bangladesh: Towards Economic Recovery.”
The results of the survey, conducted over the month of October, were disclosed through the webinar which was moderated by Dr. Selim Raihan, Professor of Economics, Dhaka University, and Executive Director of SANEM.
The event was also graced by eminent economists and business personalities including Dr. Ahsan H Mansur, Executive Director, Policy Research Institute of Bangladesh (PRI); Abul Kasem Khan, Managing Director, A.K. Khan Telecom Limited; Asif Ibrahim, Chairman, Chittagong Stock Exchange; Maliha M Quadir, Founder and Managing Director, Shohoz Limited; and Dr. M. Masrur Reaz, Chairman, Policy Exchange of Bangladesh.
In comparison to the first round of the quarterly survey which included 303 firms, a larger and more representative sample of 502 firms across 37 districts participated in the second round. Out of the 502 firms, 252 belonged to the manufacturing sector whereas 250 belonged to the service sector.
The moderator, Dr. Selim Raihan opened the discussion by highlighting the importance of private sector confidence in economic recovery and its implications on effective policy formulation.
The key findings of the study include: compared to the past quarter, the present business status over July-September has shown significant improvement overall key elements with the exception of deterioration only in terms of business costs.
However, if compared to the same quarter last year, the improvement has not been much impressive, an interesting finding has been the gap between expectations and reality: a comparison of the PBSI and BCI indices revealed that firms have not performed as well as they expected over the quarter of July-September, sector-wise comparison has revealed faster recovery in garments, textile, pharmaceuticals, food processing, retail, restaurants, ICT and financial sector.
According to Dr. Selim Raihan, although business confidence for the next quarter has improved slightly, it is clear from the study that businesses are still quite skeptical of the future. The study also confirms that the experience in not consistent across all firms: large and medium firms have shown greater improvement in business status and are therefore more confident compared to micro and small firms.
Among the panelists, Dr. Ahsan H Mansur mentioned that the survey findings were consistent with his own assessments of the present situation.
He further opined that such findings would help to correct the overly optimistic predictions regarding Bangladesh’s future growth prospects that have been presented by several quarters since the start of the pandemic.
He also acknowledged that availing finance is a much bigger challenge for small and medium enterprises unlike large companies who have access to international finance. Therefore, the government needs to comprehend a second stimulus package with a focus particularly on SMEs.
Abul Kasem Khan reiterated the same suggestions: large companies have much better connectivity and higher reserves compared to smaller companies who are suffering immensely due to a lack of finance.
According to Asif Ibrahim, such business costs are not conducive to business growth. He mentioned that small and medium enterprises form an important part of the supply chain and their proper functioning is crucial for the recovery of the entire economy.
Masrur Reaz said, the second round of the survey will greatly help in infusing realism and avoiding complacency as the Bangladesh economy proceeds towards recovery.
He further highlighted that a decrease in public revenue can have a spiraling effect on public investment, increasing employment opportunities and economic recovery for Bangladesh.
Reaz noted was the need to strengthen and revitalize the rural economy which will play an important role in absorbing unemployed workers who have returned from cities and foreign countries following the reverse migration phenomenon that was experienced after the pandemic.