Lack of info, support barrier to more Japanese investment
Japanese companies doing business in Bangladesh are facing challenges during the coronavirus pandemic, including a lack of information and support from authorities, which may dent the flow of investment, according to investors and a recent survey. Besides, a culture of procedural delays at government offices and frequent policy changes discourages Japanese investors from starting a business in Bangladesh. Till December 2019, around 310 Japanese companies were conducting business in Bangladesh, with investments reaching $386 million.The country office of the Japan External Trade Organisation (Jetro) recently conducted a survey among 75 Japanese companies on the challenges they were facing in running operations during the pandemic.It showed around 67 per cent of Japanese companies were witnessing troubles due to the suspension or reduction of commercial flights, and 64 per cent for 14-day mandatory self-quarantine after arrival in Bangladesh. Another 63 per cent faced difficulties involving coronavirus infection control, 61 per cent dealing cases of infections (medical system and bed availability), and 61 per cent in case of inviting business travellers and technical instructors to Bangladesh.Sixty per cent of companies say they are going through difficulties over travelling outside of Bangladesh, and 57 per cent to vaccinate Japanese expatriates in Bangladesh.Thirty-one per cent faced troubles over delay in exports and imports, 24 per cent mentioned order cancellation and reduction, 9 per cent working capital shortage, and 8 per cent about the overdue letter of credit settlement.Paban Chowdhury, executive chairman of the Bangladesh Economic Zones Authority (Beza), said there was room for improving the business environment in Bangladesh and relaxing some rules and regulations to attract more FDI. The Bangladesh Bank, the National Board of Revenue, and the commerce ministry have already issued several circulars regarding the relaxation of investment rules.
Cash takes back seat as Covid drives card use
The use of both credit and debit cards went up heavily in March as people purchased more products and services through digital means amid the recent resurgence of Covid-19. Total card loans held by lenders stood at Tk 1,783 crore in March, up 18 per cent from a month ago and 57 per cent year-on-year, data from Bangladesh Bank shows.The growth in March was also the highest in the last seven months since September last year as the previous highest growth was 24 per cent in August. Clients’ dependency on debit cards increased substantially in March as the figure stood at Tk 22,000 crore, up 22 per cent from that a month earlier and 45.33 per cent year-on-year. The growth of debit card transactions is also the highest in the last eight months as the number of cardholders surged 44.66 per cent in July.The issuance of credit cards was on the rise in March, when the outstanding number of bank credit cards stood at 17.37 lakh whereas it was 17.13 lakh the month before. Similarly, the number of debit cards issued by banks stood at 2.24 crore in contrast to 2.20 crore respectively.
Record foreign aid use in next budget
Making hay while the sun, it appears, is the finance ministry’s mantra as it goes about preparing the budget for fiscal 2021-22, its second in the backdrop of the extraordinary challenges thrown by the pandemic.The government is sitting on a record amount of foreign aid and at the same time, the development partners are chipping in liberally to help Bangladesh weather the pandemic gale. Closer to home, banks are sitting on excess liquidity and nowhere to lend to given the precarious state of the economy.It is these two wellsprings of funds that the ministry will draw upon for the most part to bankroll the budget for the next fiscal year amid shrunken domestic revenue mobilisation. The government is hoping to use a record Tk 115,000 crore (about $13 billion) in foreign funding in fiscal 2021-22, up 35.4 percent year-on-year, according to finance ministry officials.Banks are expected to provide Tk 76,252 crore towards the financing of the budget, down 4.4 percent from this fiscal year.The government would extract Tk 37,000 crore from non-bank sources, up 4.8 percent from fiscal 2020-21.Historically, in Bangladesh, when the budget is drafted, a 5 percent deficit was projected but the actual deficit would invariably be about 4 percent every year as the ministries and divisions failed to use their allocated funds. However, since fiscal 2018-19, the budget deficit has been trespassing the 5 percent-mark. This fiscal year, it is tipped to cross the 6 percent-mark.