1 week Ago
Despite some episodic spikes here and there, the economy of Bangladesh is still struggling, and the government isn't sure what the top priority should be. Businesses are under pressure as inflation rises beyond 9 percent and GDP growth slows to 5.2 percent in FY24 with further downward trend.
As we know, family-run and promoter-led firms dominate the Bangladesh economy, especially in the textile, export and manufacturing industries. Nearly 4 million people work in the readymade garment industry alone. Many company leaders/owners have been put behind bars or are absconding due to recent upheavals, which have interrupted operations and made decision-making more time-consuming.
Further degradation will cause closures, pay reductions, and rapid layoffs. In response to similar problems, nations like Vietnam and India offered financial aid and tax breaks to save domestic companies. But Bangladesh rather eliminated incentives and reportedly raising taxes, which may make recovery far more challenging.
What's at stake if large companies fail? The collapse of large companies would shock Bangladesh's job market. Over 80 percent of formal occupations are directly or indirectly related to these companies. Layoffs will cause families to experience immediate financial instability and income loss.
Not only the manufacturing industry but also transporters, raw material suppliers, port personnel, and logistics providers would all see a sharp drop in business, which would result in a large number of job losses. The loss of jobs in the unorganised sector, which is heavily reliant on the spending power of those in corporate occupations, would make poverty worse. The economy as a whole will suffer from a deteriorating labour market.
As incomes decline, consumer spending will also decline, which will force more businesses to shut down or scale back operations. There will be more protests and strikes, which will lead to higher unemployment rates and more instability in society. Similar periods of political and economic instability have been experienced by nations like Pakistan and Sri Lanka as a result of delayed interventions.
Bangladesh is unable to afford to take the same path. What the government must do now Large companies and promoters need immediate breathing space to survive. The government must step in with low-interest loans, deferred taxes, and grace periods for repayments.
Vietnam saved thousands of businesses this way. Bangladesh must act similarly to prevent layoffs and closures. Investment incentives must also be restored to attract capital and revive confidence in economic zones that are now stagnant.
The workforce needs skill development badly. Mismatched skills keep 40 percent of graduates unemployed. The 'Skill India' mission trained millions and increased employment.
Bangladesh must duplicate such initiatives to prepare its workers. Reviving clothing export orders necessitates careful attention. Simplifying trade regulations, offering export incentives, and lowering transportation costs can all help.
Vietnam invested $1.2 billion in textiles to compete; Bangladesh must do the same or risk falling behind. Equally important is simplifying regulations.
Endless red tape slows corporate growth and hiring. To grow and stabilise employment, the government must streamline processes. A last chance to act Bangladesh's large companies don't just create jobs -- they sustain entire ecosystems.
If these companies collapse, millions of jobs will vanish, poverty rates will spike, and social unrest will escalate. Countries like Vietnam and India acted fast to prevent such outcomes with bold interventions. Bangladesh, however, risks falling further behind if it continues to delay action.
The time for hesitation is over. The government must step up with financial support, regulatory reforms, and investment incentives to protect jobs and stabilise corporations. Employment must be prioritised to prevent economic disaster and ensure Bangladesh's long-term recovery.
Reconstituting boards or temporarily releasing funds to ailing banks would not help. Business continuity, including corporate and large loan restructuring for distressed companies, is key here. Policy makers need to think beyond and act sensibly.
The author is chairman of Financial Excellence Ltd Despite some episodic spikes here and there, the economy of Bangladesh is still struggling, and the government isn't sure what the top priority should be. Businesses are under pressure as inflation rises beyond 9 percent and GDP growth slows to 5.2 percent in FY24 with further downward trend.
As we know, family-run and promoter-led firms dominate the Bangladesh economy, especially in the textile, export and manufacturing industries. Nearly 4 million people work in the readymade garment industry alone. Many company leaders/owners have been put behind bars or are absconding due to recent upheavals, which have interrupted operations and made decision-making more time-consuming.
Further degradation will cause closures, pay reductions, and rapid layoffs. In response to similar problems, nations like Vietnam and India offered financial aid and tax breaks to save domestic companies. But Bangladesh rather eliminated incentives and reportedly raising taxes, which may make recovery far more challenging.
What's at stake if large companies fail? The collapse of large companies would shock Bangladesh's job market. Over 80 percent of formal occupations are directly or indirectly related to these companies. Layoffs will cause families to experience immediate financial instability and income loss.
Not only the manufacturing industry but also transporters, raw material suppliers, port personnel, and logistics providers would all see a sharp drop in business, which would result in a large number of job losses. The loss of jobs in the unorganised sector, which is heavily reliant on the spending power of those in corporate occupations, would make poverty worse. The economy as a whole will suffer from a deteriorating labour market.
As incomes decline, consumer spending will also decline, which will force more businesses to shut down or scale back operations. There will be more protests and strikes, which will lead to higher unemployment rates and more instability in society. Similar periods of political and economic instability have been experienced by nations like Pakistan and Sri Lanka as a result of delayed interventions.
Bangladesh is unable to afford to take the same path. What the government must do now Large companies and promoters need immediate breathing space to survive. The government must step in with low-interest loans, deferred taxes, and grace periods for repayments.
Vietnam saved thousands of businesses this way. Bangladesh must act similarly to prevent layoffs and closures. Investment incentives must also be restored to attract capital and revive confidence in economic zones that are now stagnant.
The workforce needs skill development badly. Mismatched skills keep 40 percent of graduates unemployed. The 'Skill India' mission trained millions and increased employment.
Bangladesh must duplicate such initiatives to prepare its workers. Reviving clothing export orders necessitates careful attention. Simplifying trade regulations, offering export incentives, and lowering transportation costs can all help.
Vietnam invested $1.2 billion in textiles to compete; Bangladesh must do the same or risk falling behind. Equally important is simplifying regulations.
Endless red tape slows corporate growth and hiring. To grow and stabilise employment, the government must streamline processes. A last chance to act Bangladesh's large companies don't just create jobs -- they sustain entire ecosystems.
If these companies collapse, millions of jobs will vanish, poverty rates will spike, and social unrest will escalate. Countries like Vietnam and India acted fast to prevent such outcomes with bold interventions. Bangladesh, however, risks falling further behind if it continues to delay action.
The time for hesitation is over. The government must step up with financial support, regulatory reforms, and investment incentives to protect jobs and stabilise corporations. Employment must be prioritised to prevent economic disaster and ensure Bangladesh's long-term recovery.
Reconstituting boards or temporarily releasing funds to ailing banks would not help. Business continuity, including corporate and large loan restructuring for distressed companies, is key here. Policy makers need to think beyond and act sensibly.
The author is chairman of Financial Excellence Ltd.
