Business has not gained the momentum we expected: Fazlul Hoque

Sketch: TBS

TBS: Overall, how much relief has come to business? How much momentum has returned, and what challenges are businesses facing?

Fazlul Hoque: During the interim government, we in the private sector were disappointed by what we saw as a lack of attention to business. We expected the new government to give the private sector proper importance. Even before it took office, our discussions with the prime minister gave us the impression that there was a commitment to the private sector.

You can see that intention in the budget, which includes measures aimed at making business easier and encouraging investment.

But intention and performance are different. The government faced difficult circumstances from the beginning. Ramadan is always a sensitive time for the local economy. Then came the war involving Iran, uncertainty in the oil market, fuel supply problems and later the gas crisis.

Because of these factors, business and investment have not gained the momentum we expected. Some of it is bad luck, but I also think the situation could have been managed better. Better forecasting and earlier planning for rationing or load management could have reduced some pressure.

TBS: You were talking about the banking sector and the five banks. What is the state of banking operations now?

Fazlul Hoque: I think the situation is slowly improving. Businesses are still getting support for opening LCs and carrying out operations, but the process is slower.

Banks have gone through ownership changes and uncertainty, so executives are cautious. The most important thing now is to restore confidence.

The decision concerning the five Islamic banks is bold. But these banks also need capital. The government and Bangladesh Bank have to find a way to inject equity, and foreign investment could be one option.

If the decisions we are now seeing are implemented properly, I hope the banking sector can return to a reasonably healthy position within about a year.

TBS: A large stimulus package is being offered to reopen closed factories, and many banks have already signed agreements with Bangladesh Bank. There were allegations of irregularities in previous stimulus packages. What is your assessment of this one?

Fazlul Hoque: The package looks very good on paper, but I have questions about some conditions.

One condition, as I understand it, is that the factory must be closed, but its loans cannot be classified. That creates a paradox. If a factory has been closed for some time, there is a strong possibility that its loans have already become classified.

Even if you give a closed factory a new loan and reopen it, can it repay both old and new loans? And when operating factories are already struggling to get enough gas and electricity, where will the additional energy for reopened factories come from?

The package needs more due diligence so that the money goes to businesses that can genuinely become viable again.

TBS: BIDA, BEZA and the Public-Private Partnership Authority have been brought together under a new organisation called Invest Bangladesh. Will this bring back momentum in investment?

Fazlul Hoque: Honestly, I do not see a direct connection between merging three organisations and increasing investment.

None of the three had shown outstanding performance. So simply putting three weak-performing bodies together does not automatically create a strong organisation.

The real issue is the system. We have talked about one-stop services for decades, but businesses still have to go to different offices for electricity, water, licences and other approvals.

Unless Invest Bangladesh can ensure those agencies provide services within a fixed time and are held accountable when they do not, changing the structure or name will not make much difference.

TBS: How do you see Bangladesh's domestic political situation at this moment?

Fazlul Hoque: At the moment, I do not see the political environment as very unstable. What we normally understand as the political arena is relatively calm.

I also do not see an immediate risk of sudden instability. The opposition is operating in parliament and through statements and programmes. As an ordinary citizen, I hope political programmes remain peaceful and do not turn violent.

TBS: Are new jobs being created in the private sector, or is the number of jobs shrinking compared with six months or a year ago?

Fazlul Hoque: If I am completely honest, I think the number is shrinking somewhat. I do not have a figure, and I do not want to guess.

But the job market is certainly not expanding. We have not seen major new investment. Some smaller investments are happening, but some factories have also closed over the past couple of years.

If you look at the plus and minus together, there is a strong possibility that net employment is negative.

TBS: So, you cannot give people looking for jobs any good news very soon?

Fazlul Hoque: At least I do not have any quick good news for them. Some people are getting jobs, of course, but we have never been able to create jobs at the same pace as the number of people entering the market.

The situation will not improve significantly until new investment becomes effective. Those who can start something on their own may also consider entrepreneurship.

TBS: Can business organisations be freed from partisan politics? Do you see a way out?

Fazlul Hoque: The way is simple. First, the government should not encourage politicisation. If the government encourages it, many people may find it difficult to resist.

Second, professionals themselves have a responsibility. Whether we are businesspeople, journalists, doctors or members of another profession, our organisations should focus on professional interests.

If a government policy is good, we should appreciate it. If it is bad for our sector, we should criticise it and suggest changes. Once an organisation becomes politically aligned, its credibility suffers. Professional organisations need to maintain some distance from party politics.

TBS: When can the FBCCI election be held?

Fazlul Hoque: I have been given responsibility for 120 days, and I am still hopeful that we can hold the election by 30 November.

We are trying to make the election as democratic and controversy-free as possible. We want an environment where excessive spending, gifts and the influence of money are reduced.

The major issue is the amendment to the Trade Organisation Rules. We have collected views from different groups and submitted our recommendations to the commerce ministry. Once the amended rules are issued, at least 90 days will be needed. If the amendment comes within the necessary timeframe, an election within November is still possible.

TBS: Looking ahead, how do you see the coming days? What is your outlook for the next one or two years, or the next few months?

Fazlul Hoque: The next few months will be extremely challenging, mainly because of the energy crisis.

Exports are still at a manageable level, but if we cannot improve the gas and electricity situation, production and exports will come under greater pressure.

Factories have already been unable to use their full capacity. Even when production falls because gas is unavailable, businesses still have to pay wages, bank installments and other bills.

The government should consider temporary policy support, including some relief on gas bills or instalment facilities where supply has been severely disrupted. Such support will not recover the losses businesses have already suffered, but it can give them some breathing space.

The interview has been edited for length and clarity.

TBS: Overall, how much relief has come to business? How much momentum has returned, and what challenges are businesses facing?

Fazlul Hoque: During the interim government, we in the private sector were disappointed by what we saw as a lack of attention to business. We expected the new government to give the private sector proper importance. Even before it took office, our discussions with the prime minister gave us the impression that there was a commitment to the private sector.

You can see that intention in the budget, which includes measures aimed at making business easier and encouraging investment.

But intention and performance are different. The government faced difficult circumstances from the beginning. Ramadan is always a sensitive time for the local economy. Then came the war involving Iran, uncertainty in the oil market, fuel supply problems and later the gas crisis.

Because of these factors, business and investment have not gained the momentum we expected. Some of it is bad luck, but I also think the situation could have been managed better. Better forecasting and earlier planning for rationing or load management could have reduced some pressure.

TBS: You were talking about the banking sector and the five banks. What is the state of banking operations now?

Fazlul Hoque: I think the situation is slowly improving. Businesses are still getting support for opening LCs and carrying out operations, but the process is slower.

Banks have gone through ownership changes and uncertainty, so executives are cautious. The most important thing now is to restore confidence.

The decision concerning the five Islamic banks is bold. But these banks also need capital. The government and Bangladesh Bank have to find a way to inject equity, and foreign investment could be one option.

If the decisions we are now seeing are implemented properly, I hope the banking sector can return to a reasonably healthy position within about a year.

TBS: A large stimulus package is being offered to reopen closed factories, and many banks have already signed agreements with Bangladesh Bank. There were allegations of irregularities in previous stimulus packages. What is your assessment of this one?

Fazlul Hoque: The package looks very good on paper, but I have questions about some conditions.

One condition, as I understand it, is that the factory must be closed, but its loans cannot be classified. That creates a paradox. If a factory has been closed for some time, there is a strong possibility that its loans have already become classified.

Even if you give a closed factory a new loan and reopen it, can it repay both old and new loans? And when operating factories are already struggling to get enough gas and electricity, where will the additional energy for reopened factories come from?

The package needs more due diligence so that the money goes to businesses that can genuinely become viable again.

TBS: BIDA, BEZA and the Public-Private Partnership Authority have been brought together under a new organisation called Invest Bangladesh. Will this bring back momentum in investment?

Fazlul Hoque: Honestly, I do not see a direct connection between merging three organisations and increasing investment.

None of the three had shown outstanding performance. So simply putting three weak-performing bodies together does not automatically create a strong organisation.

The real issue is the system. We have talked about one-stop services for decades, but businesses still have to go to different offices for electricity, water, licences and other approvals.

Unless Invest Bangladesh can ensure those agencies provide services within a fixed time and are held accountable when they do not, changing the structure or name will not make much difference.

TBS: How do you see Bangladesh's domestic political situation at this moment?

Fazlul Hoque: At the moment, I do not see the political environment as very unstable. What we normally understand as the political arena is relatively calm.

I also do not see an immediate risk of sudden instability. The opposition is operating in parliament and through statements and programmes. As an ordinary citizen, I hope political programmes remain peaceful and do not turn violent.

TBS: Are new jobs being created in the private sector, or is the number of jobs shrinking compared with six months or a year ago?

Fazlul Hoque: If I am completely honest, I think the number is shrinking somewhat. I do not have a figure, and I do not want to guess.

But the job market is certainly not expanding. We have not seen major new investment. Some smaller investments are happening, but some factories have also closed over the past couple of years.

If you look at the plus and minus together, there is a strong possibility that net employment is negative.

TBS: So, you cannot give people looking for jobs any good news very soon?

Fazlul Hoque: At least I do not have any quick good news for them. Some people are getting jobs, of course, but we have never been able to create jobs at the same pace as the number of people entering the market.

The situation will not improve significantly until new investment becomes effective. Those who can start something on their own may also consider entrepreneurship.

TBS: Can business organisations be freed from partisan politics? Do you see a way out?

Fazlul Hoque: The way is simple. First, the government should not encourage politicisation. If the government encourages it, many people may find it difficult to resist.

Second, professionals themselves have a responsibility. Whether we are businesspeople, journalists, doctors or members of another profession, our organisations should focus on professional interests.

If a government policy is good, we should appreciate it. If it is bad for our sector, we should criticise it and suggest changes. Once an organisation becomes politically aligned, its credibility suffers. Professional organisations need to maintain some distance from party politics.

TBS: When can the FBCCI election be held?

Fazlul Hoque: I have been given responsibility for 120 days, and I am still hopeful that we can hold the election by 30 November.

We are trying to make the election as democratic and controversy-free as possible. We want an environment where excessive spending, gifts and the influence of money are reduced.

The major issue is the amendment to the Trade Organisation Rules. We have collected views from different groups and submitted our recommendations to the commerce ministry. Once the amended rules are issued, at least 90 days will be needed. If the amendment comes within the necessary timeframe, an election within November is still possible.

TBS: Looking ahead, how do you see the coming days? What is your outlook for the next one or two years, or the next few months?

Fazlul Hoque: The next few months will be extremely challenging, mainly because of the energy crisis.

Exports are still at a manageable level, but if we cannot improve the gas and electricity situation, production and exports will come under greater pressure.

Factories have already been unable to use their full capacity. Even when production falls because gas is unavailable, businesses still have to pay wages, bank installments and other bills.

The government should consider temporary policy support, including some relief on gas bills or instalment facilities where supply has been severely disrupted. Such support will not recover the losses businesses have already suffered, but it can give them some breathing space.

The interview has been edited for length and clarity.