Published 01 Jan,2021 via The Financial Express - Bangladesh would need at least three years to not just get back to the full speed of the economic activities but to overcome the losses caused by the Covid-19 pandemic, the chief of the country's oldest trade body said.
"It must be understood that overcoming heavy losses during the initial period of the pandemic and then returning to normal trade and business volume will take time," Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI) President Barrister Nihad Kabir said in an exclusive interview with the FE.
She added: "This will require ongoing policy and financial support with more simple and swift implementation mechanism."
"In these circumstances, another stimulus will have to be funded and managed by the government in a modified and targeted form, using the lessons learned from the first phase of Covid-19."
Barrister Nihad Kabir also said the first round of the stimulus package was not tagged to retention of employment but there should be a job-retention requirement in the second round if businesses wish to avail of the low-interest stimulus packages, particularly wage support.
But the expected pace of the economic recovery largely depends on how quick the country starts vaccination among the actors here against the lethal pathogen, the MCCI chief thinks.
Talking about the poor implementation of the package for CMSME (cottage, micro, small and medium enterprise) sector, she said disbursement should be channelled through financial institutions and micro-credit institutions which are capable of reaching the target businesses, rather than just through banks and NBFIs (non-bank financial institutions).
Soon after the deadly virus hit the country of around 170 million people, the government has so far declared 21 stimulus packages worth Tk 1.21 trillion, which is 4.34 per cent of the GDP, according to the finance ministry data.
Riding on fiscal support, the private sector-led economy started rebounding with registering positive growth in export earnings, remittance and forex reserves in the first four to five months of the current fiscal year (FY) 2020-2021.
Responding to a question about sustainability of the signs of recovery, the MCCI president said there was a significant upturn in the recovery in the first quarter of the FY but the second wave of the pandemic caused some concerns.
Ms Kabir has also expressed fears that the export sector is likely to be negatively affected again because of severe impact of the second wave of the pandemic in the US and Europe, major destinations of Bangladeshi products.
As a spillover effect, she said, it could hurt the domestic economy, including the service sector but export earnings may take a hit in the next quarter.
Remittance inflows have defied expectations in a positive way but many of the workers come back and have not been able to return to their job destination countries, according to her.
"This will probably have an effect on remittance inflows in future and lower imports do not forecast a growth in the economy and therefore is not necessarily a good sign."
For further facilitating the recovery process in the coming months, the MCCI president said the government, alongside vaccination, needs to prioritise immediate upgrading of its capacity with ensuring governance at all levels to overcome the administrative inefficiency.
At the same time, focus needs to be given for making a comprehensive database of the citizens that will help target the right sets of people for assistance and boost the informal sector.
Massive investment requires to be made in areas like IT, healthcare, education and skills development to make the economy more efficient in responding to the crisis in the coming days, she suggested.
Talking about the challenges in new year, Ms Kabir said the first challenge is to obtain vaccine for Covid-19 while dealing with issues such as job loss and disruption in the education system will also be challenging.
She suggested the government prioritise in making a comprehensive database that will help overcome many problems.
The vast majority of our employment is in the informal sector for which the country has a little data and a very little mechanism for targeting financial assistance.
The government should prioritise providing targeted assistance to the workers in the informal sector who lost jobs, helping them regain jobs.
"We're in a second wave. In my humble opinion, notwithstanding the beginning of the vaccination - we need at least 2-3 years to not just get back to the full speed of operations in the economic front, but to make up the losses of the past several months," she added.
About the new opportunities in the post-Covid regime, she said e-commerce has jumped in scope and volume. It should be encouraged and not taxed and regulated into oblivion.
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