Letting the economy be truly shiny

| Updated: October 18, 2017 00:21:48

Letting the economy be truly shiny
Doing business is considered a difficult job in Bangladesh and a host of factors are held responsible for it. But, if not other areas, trading seems to be the easiest of all business avenues. That is why trading remains at the top of business activities and it has been expanding at a fast pace in both urban centres and villages. 
A newspaper report, published last Saturday on the business and investment activities in Sylhet, one of the affluent areas in the country, in terms of land, money and availability of gas and electricity, confirmed the trend. The report quoting the Sylhet City Corporation sources said in and around the city of Sylhet the number of shops has gone up threefold over the last 16 years. The number of shops having trade licences is over 60,000 now and shops of nearly half of that number are operating without any sort of licences. In contrast, the Sylhet region witnessed the establishment of a highly insignificant number of even cottage industries during the period.
What has been experienced in Sylhet is nothing different from that of other areas of the country. The number of shops and trading centres has been growing unabatedly across the country. Some industries are coming up. But their number is very small. One of the reasons behind the fast growth of shops and trading establishments in rural areas could be the inflow of remittance money in greater volume. Most migrant workers on their return home and their dependents usually try to find an easy solution to their livelihood needs through the establishment of shops and business establishments. 
However, shops and business establishments are providing jobs to millions of people but under an informal arrangement. The wages and salaries given by these establishments are highly inadequate and irregular. 
The main reason for taking up trading on a massive scale could be the fact that it involves fewer hassles compared to other business or investment activities. If one has money one can start within days a shop which is readily available on rent and the commodities one would deal in can be procured from local or foreign sources. The only thing the owners of such establishments would have to manage is a trade licence from the local municipalities or city corporations. However there are scores of small shops that do not bother to procure even the trade licence. 
But as far as starting of industrial ventures, big or small, the situation on the ground is far more complicated. The initial shock a prospective entrepreneur would get when he or she would try to own a piece of land in a suitable location. It is scarce and even if it is found in accordance with the requirement, the price would be prohibitive. The second shock the entrepreneur concerned would receive when he or she would seek power and gas connections. It may take years to manage the same at huge costs. The situation would not be anyway better for the entrepreneur in the matters of procuring funds from banks. Banks are found to be generous in lending money to traders but not so in the case of entrepreneurs wanting to set up an industry since the former are found reluctant to do long-term lending. 
But the fact remains that the rate of default in lending to traders is quite high. Moreover, in the cases of default, the banks concerned usually do have in their possession some tangible collateral against funds borrowed by industrial units. But there are plenty of instances where the banks got nothing from delinquent borrowers from the trading circle. Some banks are already in deep trouble by lending large funds to a few so-called big trading houses in Chittagong. 
An economy that is largely dependent on services sector that meets the domestic demand to a great extent cannot acquire the much-needed depth. Riding on a relatively higher level of domestic demand and small scale growth in external sectors, the economy can manage to grow at a decent pace, but the major national objectives such as greater employment generation and resource mobilisation by gaining external competitiveness would continue to elude the country.  
To achieve those objectives, the country needs to invest more in manufacturing. Unfortunately, such investment has remained more or less stagnant for the past few years for a number of reasons. Most macro-economic indicators have been stable in recent years. Yet the private sector investment has not picked up. The troubled politics could be a reason. Power and energy crisis, poor physical infrastructure and high cost of doing business are also cited as reasons. But, apparently, there exists a crisis of confidence among the private sector people. The policymakers should try to find the reasons behind it. 
There should be no reason to feel complacent if the country acquired the lower middle-income-country or middle income-country statuses. If the depth of the economy remains shallow and millions of people remain unemployed or underemployed, the economic gains, in terms of higher GDP growth, would not mean anything, ultimately. 

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