Ensure stable energy prices for economic recovery

The Dhaka Chamber of Commerce and Industry (DCCI) today urged the government to focus on ensuring uninterrupted and affordable energy for both local and export-oriented manufacturing units to further accelerate Bangladesh’s economic recovery in 2023.

Also, emphasis should be placed on improving the ease of doing business and developing an infrastructural environment that is conducive for attracting local and foreign investment, according to a press release from the trade body.

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In addition, the country’s exports need to be diversified while facilitating access to credit for cottage, micro, small and medium enterprises should take priority as well, it said.

The global economic downturn stemming from the Covid-19 pandemic and ongoing Russia-Ukraine war have hindered Bangladesh’s growth. However, the enterprising spirit of the local business community and joint efforts of the public and private sectors have largely assisted the country’s economic recovery.

Still though, the recent increase in energy prices is disrupting the production of energy-intensive industries, making it increasingly difficult for them to compete in international trade, it added.

So, the DCCI is of the view that long-term planning should be adopted following a predictable pricing policy for determining energy prices.

In order to ensure energy security, it is necessary to urgently explore new gas fields, strengthen long-term energy supply contracts and find alternative sources for import.

Besides, it is necessary to prioritise ensuring an uninterrupted supply of energy for all industries, the trade body said.

The ongoing foreign currency shortage and devaluation of the taka against the US Dollar has challenged the country’s financial sector, resulting in some negative impacts on the import of energy, industrial raw materials and supply chain for export-oriented industries.

Considering the situation, more emphasis is needed on increasing incentives to increase remittance inflow in order to enhance the country’s foreign exchange reserve.

At the same time, “currency-swap” may be prioritised to meet the necessary import expenditure.

The DCCI also believes that in order to mitigate the liquidity crisis in the financial sector, the ongoing austerity measures taken by the government should be maintained and project implementation efficiency should be increased while ensuring good governance.

Due to the global economic situation and inadequate revenue collection in the country, the government has had to borrow more than its target from local banks in recent times. As a result, the available credit for manufacturers in the private sector may decrease.

If the private sector credit flow is interrupted, local investment and employment retention may decline and the DCCI feels that, in order to achieve higher revenue collection, the government should focus on complete automation of revenue management, introduce necessary reforms to existing revenue laws and increase the avenues for revenue generation.

In this connection, special attention should be given not to harass any existing taxpayers, the trade body added.

The DCCI further said the government has to take initiatives to sign free trade agreements with various markets and regional economic blocs in order to continue the existing export growth after Bangladesh graduates from a least developed country (LDC) in 2026.

“In this transitional period of LDC graduation, we need to ensure proper readiness and preparation of local businesses,” it said.

Skills development, technological advancement, enhanced backward linkage industries, reforms to tax and tariff structure and continued negotiations for ensuring “International Support Measures” even after LDC graduation are important agendas the government should focus on as well.

To increase local and foreign investment in the country, there is a need for timely reforms to various laws such as the Companies Act, Arbitration Act, and Bankruptcy and Insolvency Act.

Special attention should also be given on creating skilled manpower exports by utilising the technological excellence of the Fourth Industrial Revolution to meet the needs of local industries as well as those abroad.

In this case, there is no alternative but to emphasise and strengthen the industry-academia relationship for best utilisation of the country’s demographic dividend, the DCCI added.