Former Vice-Chancellor of Jahangirnagar University and prominent economist Prof. Abdul Bayes believes the interim government should permit industrial entities to utilize necessary funds for production, supply, import, and maintaining market stability for employees.
In an exclusive interview with the multimedia news portal Bart24.com, Professor Bayes expressed concern that recent violence, arson, and looting of industrial establishments would adversely affect the overall economy.
He discussed critical issues facing the country’s economy, including industrial production and foreign investment amid the current fragile law and order situation.
Barta24.com: The majority of the country's import sector relies on large importing companies. What actions should the government take with these importers to stabilize the market?
Prof. Abdul Bayes: Currently, they have no options. The government's policy should be that businesses should not be punished for the actions of individuals. If someone commits a wrongdoing, they should be held accountable, but businesses should not suffer. For instance, S. Alam Group is a key importer of essential commodities; their operations should not be hindered by regulations that freeze accounts. Monitoring for issues like money laundering is essential, but businesses should be allowed to manage their finances to maintain operations. Importers bring valuable experience and infrastructure to the table, and we should adopt indirect measures to minimize the impact on businesses.
Barta24.com: Many in the wholesale market claim that political changes have complicated the import sector, leading to instability. What should the government do to ensure a steady flow of goods and control prices?
Prof. Abdul Bayes: The issue isn’t that the government opposes importers. Challenges such as rising import costs and the dollar crisis are significant factors. However, the primary issue lies in our internal market management, which is severely lacking. We need effective supervision and enforcement of laws. Prices are affected by demand and supply dynamics; the dollar crisis and supply chain disruptions drive prices up. The government is trying to manage demand by increasing interest rates, which may not be sustainable. If growth slows, loans become unaffordable, affecting employment. Previous leadership failed to address these issues adequately, and while current measures are positive, they need to be more timely and effective. The old syndicate mentality is resurfacing, and without improved governance, we won't see market stabilization.
Barta24.com: Recent acts of violence against major entrepreneurs have halted production and threatened the livelihoods of many workers. What impact could this have on the macro economy?
Prof. Abdul Bayes: The effects will be profoundly negative. Burning and looting are not viable solutions. If industry owners engage in wrongdoing, legal frameworks exist to address that. Attacks on facilities, like the Gazi Tire Factory, are unacceptable. Law and order is paramount for economic stability. While some may find temporary stability under authoritarian regimes, this approach cannot be a long-term solution. The current government's inability to maintain law and order is concerning; everything, including commodity prices, is linked to this situation. Ongoing unrest is eroding profit margins, and the government must find a way to restore control.
Barta24.com: How do you evaluate the interim government's actions to stabilize the banking sector?
Prof. Abdul Bayes: So far, they have taken commendable steps, like addressing liquidity issues without draining reserves or printing excessive money. These are positive developments. However, reliance on World Bank and IMF loans is not a sustainable solution. While current measures may provide temporary relief, we need to focus on long-term reforms to ensure a stable banking sector.
Barta24.com: The chief adviser of the interim government has reported receiving assurances of $7 billion in loan assistance from various countries, including China. What is your view on the potential challenges of this support?
Prof. Abdul Bayes: All loans carry risks, especially if mismanaged. We already have significant funds unutilized from previous years. The question remains: how will we deploy this new funding? Past borrowing has not always led to productive investment. It's crucial to identify viable projects for this $7 billion. Furthermore, we must be wary of the potential for consultants to siphon off significant portions of the funds, leaving little for local use. Whether a new government or the current one remains in power, the pursuit of loans will continue.
Barta24.com: If the socio-economic situation is unstable, what are the prospects for foreign investment?
Prof. Abdul Bayes: When previous administrations faltered, foreign aid agencies were largely silent. Currently, there seems to be renewed interest, but we must remember this is an interim government. While some reforms may occur, substantial changes will require a return to political governance. Ultimately, it is vital to implement reforms swiftly and prepare for elections. A flawed democracy is preferable to no democracy at all.