Published in The Independent on Sunday, 29 December 2013.
Economy Bleeds
Mir Mostfizur Rahaman with Md Akram
Never in the history of the country’s politics was so devastating for the economy as it has been in this year, causing a loss of TK 100 thousand crore and affecting millions. The country’s top business leaders are apparently stunned at the ‘irresponsible behaviour of the polity’ and took the pain to mention that the loss might never be recoverable. And all these happened when the economy braving the global recession was on the track drawing envy from regional players. The violent politics cost nearly one per cent of the GDP, economists said decrying immediate steps to put a brake on the reckless adventure of the political leaders from both the ruling and opposition parties.
Professor Mustafizur Rahman, executive director of Centre for Policy Dialogue (CPD), said, “As capital formation across the country is reduced by one per cent due to the ongoing political turmoil in the name of frequent long spells of hartal and blockade, the GDP (Gross Domestic Product) growth rate will be fallen by 0.90 per cent in the current fiscal year 2013-14.”
FBCCI president Kazi Akram Uddin Ahmed said, it would be very difficult for the businessmen to recover the losses incurred by the national economy due to the frequent hartals and blockades.
“Although businessmen have to keep their businesses closed because of the political programmes, they still have to pay their staffs’ salaries and the loan instalments on time,” the Federation said.
But it would not be possible for businessmen to pay the interests of bank loan under the present circumstances, which will ultimately make a negative impact on the banking sector, FBCCI said.
According to FBCCI estimate, the economy has suffered around Tk 1,00,000 crore losses due to a total of 62 hartals and blockades from January 1 to December 21 as one day of hartal or blockade costs the national economy more than Tk 1500 crore.
All the major arteries of the economy, specially the export sectors have been shattered due to the violent politics that has been prevailing for the last one year. Following is the damage-assessment report of some major sectors:
RMG
Readymade garmentssecor (RMG), the top foreign currency earning sector of the country will be the top victim of the ongoing political unrest.
Shahidullah Azim, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the independent that the country’s largest export earning readymade garment sector incurred Tk 10,000 crore losses in the current year due to the political unrest at the beginning of 2013.
Out of the total losses, the apparel manufacturers faced Tk 6,000 crore losses in the last one and half months, caused mainly by the severe political violence, long spells of hartal and blockade across the country in the past few months, he added.
As per a BGMEA report titled “Hartal/Blockade Impact Assessment Survey from December 1 to December 28,” it has been found that the foreign buyers had cancelled US$ 37,75,517 worth import orders of Bangladeshi apparel experiencing back-to-back long spells of nationwide hartal and blocade in the past month.
Moreover, the apparel manufacturers incurred $ 25,90,775.43 losses occurred by the vandalism during the blockade and hartal in December.
In addition, the apparel manufacturers had to sell out their products to the global markets allowing $ 1729058.82 discounts as they failed to make on-time shipment during the recent long spells of blockade and hartal by the opposition.
A total of $ 79,94,410.39 worth shipment was de`layed in the current month following the ongoing political unrest across the country.
Besides, the apparel exporters paid $ 11,84,025.44 air fright in December as they delivered the export orders by air after failing to make the shipment by ship during the frequent long spells of hartal and blockade in December.
As a result, the RMG exporters had accounted $ 87,460 excess transportation cost in the current month.
Leather industry
The export orders for finished leather, leather goods and footwear have drastically declined by around 60 per cent following the political standoff, frequent long spells of nationwide hartal and blockade in the last one month, making a heavy blow to the sectors.
The industry insiders said the foreign buyers of Bangladeshi finished and crust leather and leather goods were refraining themselves from making new export orders in the last month as they were skeptical of timely delivery of their import orders amidst ongoing nationwide political violence.
The back-to-back long spells of countrywide blockade and hartal by the opposition have drastically broken down the entire supply chain of the three sub-sectors of leather industry—tannery, leather goods and footwear industries—and also made the entrepreneurs anxious about the achievement of export target of US$ 669.80 million,set by the government for the current fiscal year 2013-14.
Frozen food
Country’s frozen food sector, the second largest export earning sector, has suffered Tk 1.8 billion losses in the last three months (October to December) as the ongoing political turmoil and frequent long spells of nationwide hartal and blockade disrupted the production and supply chain management of the sector.
Every year, Bangladesh earns about US$ 550 million foreign currencies through exporting frozen foods to nearly 50 countries including US, UK, Japan, Germany, France, Italy, Spain, Russia, Belgium and Netherlands, the frozen food exporters said.
This time, the ongoing political violence in the name of frequent blockade and hartal across the country made a big blow to the country’s frozen foods sector, the BFFEA leaders said.
Md Amin Ullah, president of BFFEA, said stockpile of about 10,000 tonnes of frozen fish and shrimp amounting to 10 billion has been created at the exporter’s warehouse.
Usually, the entrepreneurs export a large amount of shrimp at high prices during the period of August to November centering the Christmas, he said.
“But this year, we failed to get the export orders before Christmas due to the destructive political programmes like hartal and blockade,” he said.
As a result, prices of per kg frozen shrimp were reduced by one dollar in the international market, he said and added that thus, the profit margin of the exporters on stock shrimp was fallen by Tk 77 crore.
The amount of working capital and term loans taken by the frozen foods exporters from public and private commercial banks was around Tk 1,700 crore, he said and added that the exporters have to pay about Tk 40 crore interests on those loans for the last three months despite the hindrance of export.
Pharmaceuticals
According to the reports, the pharmaceuticals sector has incurred losses of around Tk 1,000 crore over the last two months due to political unrest that broke down the entire supply chain management of the sector.
”The ongoing political violence and frequent long spells of countrywide hartal and blockade pushed the country’s promising pharmaceutical sector on the verge of ruin” Momenul Haq, senior vice-president of Bangladesh Association of Pharmaceutical Industries said.
But the entrepreneurs had to pay the bank interests, staff salary, factory rents and utility charges on regular basis, he said.
A huge stockpile of produced medicine has been created the factories as the frequent long spells of blockade made a barrier to the delivery of produced medicine to the retailers across the country.
Besides, the ongoing political violence also made a serious barrier to the medicine manufacturers to bring raw materials from the Chittagong port as most of the vehicles were set on fire by the picketers on the highway.
In the first quarter (July-September) of the current fiscal year 2013-14, the pharmaceutical sector recorded 9.59 percent year-on-year growth in sale, he said and expressed deep concern over a massive regression of the growth in the period of October to December experiencing severe political violence.
Poultry
The poultry industry of Bangladesh has suffered losses of more than Tk 4000 crore due to political instability in the last three months, leaving Tk 250 billion investment and Tk 300 billion annual turnover of the sector in stake, said Moshiur Rahman, convenor of Bangladesh Poultry Industries Coordination Committee.
Around 36 thousand farms across the country have already been closed and 7 million people are about to be unemployed. He said and added that 15 thousand tonne of broiler chicken and around 3 crores 15 lakh eggs remained unsold every week.
Besides, the breeders are forced to destroy around 3 million day-old chicks every week in scarcity of feed and transport facilities.
And, medicines worth Tk 15 crores became unsold every week due to political unrest.
The industry which has an investment of Tk 250 billion and annual turnover of Tk 300 billion is in stake.