Winning the confidence of the business community in particular and the public in general is a challenge for the government, said the International Chamber of Commerce-Bangladesh (ICC-B).

Businesspeople should be allowed to manage their affairs with ease and take their own investment decisions. On the basis of the existing realities, it is not that businesspersons want the anti-corruption drive to stop, but they expect this to be done with due care and of course without creating ‘panic’, the chamber said in its latest quarterly news bulletin.

Referring to the ADB’s fear of GDP falling to 6.5 percent due to flood and inflation, the ICC-B said the government’s target of 7 percent GDP for the current fiscal could be achievable only if the three major components of GDP — agriculture, industry and service — enhance their contribution further.

“Recent slowdown in the growth of gross capital formation and slow private investment, however, do not invoke much optimism in this regard. It’s estimated that an additional investment of Tk 200-250 billion will be required to attain the projected GDP (gross domestic product) of 7 percent. The businesses reiterate their earlier suggestions of ensuring an enabling environment for investment including favourable cost of capital,” the news bulletin said.

Bangladesh economy is now passing through a difficult time with enormous challenges ahead. The spiralling price of essentials and increasing inflation are the biggest pressure on the economy. The unabated price rise has put under threat the impressive achievements made after January 11, 2007, the chamber said, requesting the government to look into the matter immediately and continue to maintain a liberal import policy as a short-term measure, particularly for food grain import.

The chamber said the present government took office with a strong popular support to hold a credible national election, improve law and order situation, fight corruption and strengthen governance. “Almost 100 percent public acceptance of this government with full respect at the beginning is now perceived to be on the decline in the public mind mostly due to spiralling prices of food and essential commodities even though the government has limited option to intervene in a free market economy, except fiscal intervention and law and order situation, which of course it is doing,” the chamber said.

The ICC-B said the current reform measures including drive against rampant corruption are unlikely to yield immediate results. “The benefits will, however, come in mid- and long-term. The steps now being taken would definitely contribute to forming a strong base for the future economy.”

The chamber said impressive disbursement of term loans during the last fiscal year has led to moderately high growth in the manufacturing sector. Robust export growth, buoyant inflow of remittance and improving port situation have strengthened performance of the external sector. Invigorated capital market and increasingly competitive telecoms market stood out as positive outcomes of the economy in FY2007.

The balance of payment (BoP) situation of the country is also in a very good position, the chamber said. Official remittance from the expatriates in the preceding year has reached about US$6 billion, which certainly provided a big cushion for the BoP situation in FY07.

On the other hand, narrow export basket of Bangladesh is likely to face heightened competition, as the EU restrictions on readymade garment export from China will be lifted from January of 2008 while US restrictions will go from January 1, 2009. In this new competitive scenario, sustaining the current high export growth will be an uphill task in the coming years, although the annual export earnings have already reached $12 billion and are expected to reach US$ 16 billion in the next two years, the chamber said.