Business leaders yesterday warned the caretaker government that the ongoing crackdown on corruption has created a ‘climate of fear’ which might push the economy to ruin, while Chief Adviser (CA) Fakhruddin Ahmed tried to allay their fears and boost business confidence by proposing a series of business-friendly reforms.

The views were exchanged at the first ever high-level dialogue between the government — represented by Fakhruddin, Army Chief Moeen U Ahmed, and Finance Adviser Mirza Azizul Islam — and the business leaders, on the topic of, Bangladesh Economy and Future Perspective, at Radisson Water Garden Hotel in the capital.

During his speech to the business leaders, Fakhruddin admitted that the ongoing reforms have ‘negatively’ affected business confidence, but he said it is not ‘unexpected during rapid and significant’ changes to the established modalities, while business leaders demanded the government ensures that they will be able to run their businesses without fear of ‘undue harassment and regulations’.

In order to thwart the negative effects, Fakhruddin said the government is considering creation of a high-level regulatory reform committee, which will examine the laws and regulations, eliminate redundant and irrelevant laws, and simplify those that are needed.

He also proposed a Bangladesh Better Business Forum, to be chaired by himself, and comprising high-level representatives from the public and private sectors who would identify problems and recommend systemic solutions.

The government also plans to build the capacities of selected government institutions to better facilitate the private sector, and has plans to initiate a quarterly survey of business confidence so it can ‘constantly feel the pulse of the private sector’.

The chief adviser also said the government efforts to support the private sector will also have to incorporate social expectations from businesses, such as creation of jobs, good affordable products, being environment friendly, and fair and safe workplace conditions.

He said ready-made garments still overwhelmingly dominate the export sector, a phenomenon which ‘ought to be changed’.

Noting the problems of bureaucratic bottlenecks, the chief adviser said the government is going to systematically address the problem of facilitating business needs through administrative and regulatory reforms.

Army Chief Gen Moeen’s 11-point proposal included creation of an interim development fund with the confiscated illegally earned money and the fines levied on the corruptionists, and creation of a Bangladesh Economic Development Committee as a public-private economic governance body to oversee all economic activities.

Proposing a financial dividend scheme for all private sector businesses or self-employed persons to cover their retirement benefits, Moeen also tabled a tax and interest-rate cut for people living below the poverty line. He suggested utilising non-governmental organisations (NGOs) to ‘further substantiate sustained growth in the rural economy’.

Moeen said all pending projects will be implemented seamlessly through the tenures of successive governments.

He also proposed disinvestment of all government shares in foreign companies, and recovery and reinvestment of irregular shares of various organisations to generate more than $10 billion in the capital market, while simultaneously generating grassroots economic activities by encouraging micro-credit, and agricultural and industrial development.

Revealing that an international business conference of expatriates will be held in November this year to bring in non-resident Bangladeshi investments, he added that the manpower to be exported need to be endowed with more skills to improve on the current $5.9 billion from the export.

Finance Adviser Mirza Azizul Islam, however, observed that he sees no economic crisis, as no macro-economic indicator has slid ‘towards the negative’.

The business leaders, on the other hand, warned that the ‘economy is not in good health’, and that it needs urgent attention because of the fear factor and difficulties in doing business, high interest rates, tough taxation, uncertainties and the consequent lack of investment, and the rising cost of living.

MA Rouf Chowdhury, a director of the Federation of Bangladesh Chambers of Commerce and Industry, said one of the pressing challenges faced by the business community is the ‘fear factor’ created by the anti-corruption drive, taxation drive, bank details and money-source identification drives, dismantling of markets on government lands, pedantic questioning on every business activity, and ‘too many lists of offenders’.

Asking, where is the freedom if it’s a ‘free-market economy’, Rouf added that ‘an overzealous pursuit of these drives and publication of these lists have created a climate of fear, a feeling of uncertainty, and a confidence-crisis among businesses, preventing them from creating wealth for the nation’.

“I call upon you [the chief adviser] to spare the many who were involved in petty corruption, but not the few who abused power to amass wealth. Publish a clear list. Punish them severely,” said Rouf.

He added the government is sending mixed signals. “We [the businesses] are encouraged by the chief adviser and the chief of army staff to import essential commodities without fear, but we are questioned by the banks and NBR about the source of our money.” He cited a few more examples and concluded, “There is a big gap between what’s being said and what’s being done, as a result the business community is confused.”

Rouf also observed that the supply of essential goods is in ‘serious danger of a shortfall’, which is a bigger threat than the high prices, as importers are afraid of harassment by the banks and the National Board of Revenue, the intensity of which is worse in district towns.

He also cited the falling rate of investment, rising interest rates, the tight monetary policy, and said the economy is sliding towards a ‘stagflation’ with inflation and an economic stagnation going on together, as the inflation is due to the rising costs rather than demand. Rouf also said NBR should encourage the business community rather than having VAT and tax inspectors continue to ‘threaten and frighten’ them.

Agreeing with Rouf, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Annisul Huq said, “We [the business community] are all very scared,” as the anti-corruption net has been cast far too wide.

“Please, draw a clear parameter of who would fall under the purview of corruption,” he said adding that businesses are being harassed by 7 to 8 regulatory, taxation, and law-enforcement agencies at once, which is preventing the entrepreneurs from running their businesses.

President of the International Chamber of Commerce, Bangladesh Mahbubur Rahman said there is a public perception that ‘within a limited time-frame coupled with constraints on resources and administrative capacities, the government should not have undertaken too many agenda even at a micro-level, losing focus on the priorities’.

“It is not that the businesses want the anti-corruption drive to stop, but they do expect it to be carried out with due care and of course without sending a wave of panic through the entire range of business activities in the country,” he added.

Mahbubur also urged the government not to sign the International Monetary Fund’s Policy Support Instrument as it would be ‘compromising the country’s sovereignty allowing the international agency to act just as a credit rating agency in relation to Bangladesh’.

He also asked the government to ‘calculate very carefully the merit of donor assistance’ as a third of the donor commitments were not made available in the last fiscal year, and because $710 million was paid in interest out of the $1.57 billion aid that had been disbursed.

Both Fakhruddin and Moeen fielded questions from a large number of business leaders and bureaucrats, who attended the dialogue along with diplomats and the navy and airforce chiefs.