Md Jashim Uddin is the president of South Asia's largest trade body, the SAARC Chamber of Commerce and Industry. He also served as the president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the country’s apex trade organisation. Also, the chairman of Bengal Commercial Bank PLC, Jashim Uddin spoke to the Bengali daily, Bangladesh Pratidin, about the country's trade, politics, economy, and contemporary issues.

Lamenting that businessmen are bleeding, he pointed out issues like soaring loan interest rate, fuel shortage and its price hike, dropping of imports of capital machinery and raw materials, and labour unrest as well as attacks on factories.

In the current situation, businessmen – big or small – are not able to repay their loans and pay salaries to employees. How do you see their plight?

This plight of businessmen was not created today, rather it was created a long time ago. Since the COVID-19 pandemic, we have been going through problems. Besides, the Russia-Ukraine war has pushed up global commodity prices and created a dollar crisis. These are the reasons for today's predicament. In the case of Bangladesh, the country’s affected sectors are banking and energy. I have been talking about these two issues since my tenure as the FBCCI chief.

In a country like ours, capital machinery, raw materials, and many daily commodities have to be imported alongside fuel. Due to the US dollar appreciation, prices of these things go up. Electricity and energy crises have worsened. Many people believe that the problems have arisen after 5 August, but it is not correct. We have been facing these issues since the previous government.

When the economic condition worsened due to COVID-19, the Bangladesh Bank issued a circular stating that no one would become a defaulter if he/she did not pay the bank loan instalments for up to nine months. The central bank has gradually reduced the period to 90 days now for borrowing from the International Monetary Fund (IMF). But, the economic situation has yet to improve.

Many businessmen sometimes tell me that we were in better condition during COVID. That means we are in a worse situation now compared to that period. I cannot run the factory due to gas shortage and power crisis, while there was labor unrest which lasted two months. How do I repay the loans to banks?

The biggest problem is that if one establishment in a group of companies defaults, the entire conglomerate is dubbed defaulter. To fix the issue, we discussed it with the Bangladesh Bank governor for a long time. A law has also been passed in this regard, but there was no implementation of it and the issue remains unresolved. The law must be implemented.

The low- and middle-income people are suffering immensely due to inflationary pressure. The incumbent governor believes that inflation will go down only by increasing the policy rate, but as a businessman, I do not think so. More than 80% of the country's people are in the informal economy, while 70% of people do not have any banking activities. How will the increased policy rate work then?

Rather, we have to import raw materials, capital machinery, and fuel. If the interest rate increases, prices of goods climb higher leading to an increase in inflation. In fact, many things work behind inflation. So, only dealing with the interest rate will not help reduce it.

The supply chain is the key area to deal with for curbing inflation. A farmer in Saturia is selling aubergine for Tk60 per kg. After changing hands, its price reaches Tk75, and in Dhaka, one has to buy that item for Tk150 a kg. Is there any issue related to the bank interest here? That means supply matters here and this issue must be figured out.

If the interest rate increases, there will be no competition in the world market. On the one hand interest rate is high, but on the other hand, we are running factories with LPG, CNG, and diesel without getting gas. As a result, the cost is increasing and we are losing competitiveness in the export market as well as in the country. Imports of consumer goods have decreased by 27% in the last few months. Besides, imports of machinery and raw materials have dropped.

You're talking about interest rate hikes and their impact on debt repayments. As you said many traders have become defaulters in the last three months. What is the way out of here?

We are not in a normal situation now and this was not created overnight, rather it has been happening for a long time. You cannot fix it in a day. Loan repayment has been reduced from nine instalments to three. Businessmen will become defaulters only if they fail to pay one instalment every month from the next year. If one company in a group defaults, all its other companies are barred from importing goods and doing business.

Compliance must be implemented gradually. The situation should be handled slowly. Instead of nine instalments, traders should be facilitated by at least six instalments. Gradually reduce the period once the situation improves. Publish the list of wilful defaulters. As high as 95% of businessmen repay loans. Otherwise, how come the banks improved in their business?

How will we repay loans if we do not get gas and electricity as required, and become unable to import raw materials? Traders are bleeding. These problems should be resolved through discussion.

Your words seem to have businessmen's backs against the wall, really?

Of course. Taking loans from banks at 9% interest, I started the factory. Now the rate is around 14%. Recently, the Bangladesh Bank has once again hiked the policy rate. That means interest will increase by 1% more. Meanwhile, the interest rate of non-bank financial institutions has become 15%-16%. How will we survive?

The government had ensured me a smooth supply of power and energy while setting up the factory, but now it is unable to provide those. There is no guarantee that it will be able to supply those smoothly in future, because everything is now dependent on imports.

In the United States, about 60% of power is generated from coal, while in India, it is about 80%. But even though we have coal, we did not use it. Where will we get $2-$3 billion for importing energy? We need a roadmap on energy. To increase the capacity of BAPEX, we need to use coal by extracting it.

How do you evaluate the current government's initiatives in the energy sector?

The interim government continues with day-to-day activities. There should be a roadmap for fuel imports. I think the elected government can make a plan for this. People's expectations from the head of this government are very high. To everyone, Dr Muhammad Yunus has a different kind of popularity. We expect that if the current government ensures reforms in various sectors, it will bring good for the country, because the partisan government cannot accomplish such reforms.

The electoral system must be reformed. We need reformation in the Bangladesh Bank. Besides, it is required to separate the policy and implementation departments of the National Board of Revenue (NBR), and increase the tax-GDP ratio. To increase the revenue, the tax net should be widened instead of increasing the amount of tax.

The burden is being increased on those who pay VAT! It has been going on for a long time. We think the NBR should be restructured to expand the tax net. Many are eligible to pay taxes and they should be brought under the cover. As a result, businessmen will not suffer.

Small traders are in trouble with VAT and tax. If there are 100 shops in a market, there are EFD machines in 20 shops. The remaining people do not pay VAT. We have to get relief from this sort of discrimination.

The government has taken several reform initiatives and you have also talked about reforms at various times. What should the government prioritise in reform?

The incumbent government should give the highest priority to organise the democracy of Bangladesh. Our big problem is that one government cannot transfer power to the next government smoothly. The Election Commission has to be reformed to ensure it. If democracy is well organised, accountability will be ensured.

Many allege that there is a lack of democracy among businessmen. For example, voting is not being held in the FBCCI elections!

While serving as the FBCCI president, I sent a letter to the commerce ministry requesting it not to give registration to any more trade associations. We have 42 business sectors but there are about 460 associations. Although there is a provision for constituting an association for a sector, there are more than 10 associations in each sector. Why did it happen?

Once, there were eight posts of nominated directors (in the FBCCI). Now the number has risen to 37-38 on a board of 80 individuals. I had proposed reforms. A law was passed in 2022, but it has yet to be implemented. Many of our associations lack good governance. Genuine participants cannot contest the FBCCI polls. The same individual has been the director year after year. We need new leadership.

I think it will not be right to hold the next FBCCI elections without reforms. Things will remain the same as before if reforms are not made. The reforms should be done for those who are doing business. Real traders need representation. Democracy should be ensured by abolishing ‘pocket associations’. The right person should be elected.

In the past, businessmen became interested in politics and politicians also used them. As a result, are the businessmen under pressure now?

Of course. Businessmen have engaged themselves in politics after being fallen in trouble. Many traders made donations to politicians and then they thought why they are not joining politics! This is how our businessmen have been involved in politics. At the same time, politicians have done business. I think we should not be involved in politics. But a business-friendly environment should be created. Since independence, the environment has not been friendly for businesses. So, traders had to do a lot of things, finding no other way. It is also true that they did not do all things intentionally. The image of the entire community is being tarnished only for 2%-3% of traders.

Are there syndicates in the market?

During 1/11, many left business after arrests. Now people do consumer goods business. We will have an impact on the market due to the 27% decrease in consumer goods imports. If there is a crisis, the price increases. The traditional method is still in place in the consumer goods business. It needs to be reformed. The sale of the products outside the dealer should be stopped. Many things can be manipulated in the traditional way. The supply chain needs to be reformed. Products are coming to the market after changing hands. These things should be dealt with. We should use a model like Europe-America.

The government should discuss with businessmen while formulating policies as traders have to implement those. In that case, taking our opinions before formulating policies will make things much easier. The bureaucrats imposed many policies on us. The NBR used to sit with us before the budget, but the demands of the traders remained ignored. That means a drama was played with us. I hope these dramas will be stopped in the present reality. This is our expectation from the interim government.

Where is the country's RMG industry heading?

Buyers have lost confidence due to the unrest in the ready-made garment (RMG) sector after 5 August. Some of them have gone to China, India, Pakistan, and Vietnam to place orders. Now if we can stabilise, the orders will come back.

Amid all these incidents, what makes you feel hopeful?

Bengali is a nation of heroes. Although we did not have a lot of things in 1971 as now, the country has become independent. The youth have brought a change and the sacrifices they made to build a society free from discrimination, should not go in vain. I hope the current government will hand over power to a political government through an acceptable election ensuing significant reforms so that in future, we do not have to go in the dark.

In the changed circumstances, many businessmen have been accused in murder cases. Journalists and people from different professions have also been implicated in lawsuits. Many were not in the country at the time of the incident. How do you see the matter?

The government has also admitted that it was not appropriate to sue people in a blanket way in the cases. To take advantage, some people have sued businessmen, industrialists, and journalists. As a result, businesses are facing survival threats with the uncertainty of paying salaries to the employees. The government should look into these issues. Political party leaders are behind these cases. I hope the parties will take action against the instigators.