71% businesses on recovery path: Study

Around 71% of business institutions in the country say their businesses are on a path to recovery following an unprecedented slowdown caused by the Covid-19 pandemic. 

The findings of a survey conducted by South Asian Network on Economic Modeling (Sanem) ‍ and The Asia Foundation were shared on Saturday.

According to the survey titled "Covid-19 and Business Confidence in Bangladesh: Towards Economic Recovery", there has been a 50% recovery in the confidence of businesspeople. Besides, improvement has also been observed in sales, profit, investment, employment and business cost of the firms, according to the report.  

The survey was conducted on 502 firms in four divisions in the country, with 252 firms from the manufacturing sector and 250 from the service sector. Survey respondents were categorized by size into micro, small, medium, and large.

The survey conducted a business scenario comparison between Q3 and Q2 of this year, and also analyzed business prospects for the current quarter.

In its study report, Sanem said, "About 71% of the surveyed firms believe that they are on the path to economic recovery. Some 4% consider it to be a strong recovery, while 41% and 26% believe it to be moderate and weak respectively."

Sector-wise, large firms are experiencing the highest recovery – 78%. The recovery rate of small and medium firms is around 65%.

On the other hand, 29% of business institutions do not see any probability of recovery, the report says.   

Selim Raihan, executive director of Sanem, said these firms are struggling due to a range of factors, including loss of capital, low demand for products, and a lack of access to finance from the government's stimulus packages.

Selim Raihan said the RMG, textile, pharmaceuticals, ICT, food processing, retail, financial and ICT sectors were recovering faster during the July-September quarter.

He also remarked that the real estate sector had demonstrated an impressive rate of recovery.

The transport and restaurant businesses that had reopened after being shut for several months were recovering slowly, said Selim Raihan, adding that the leather, light engineering, and wholesale sectors were also showing similar signs of normalcy.

Sanem also reviewed the issue of business recovery on the basis of indicators, such as company sales, profit, investment, employment, and business cost.

Comparing Q3 with Q2, the study indicated an improvement in companies' sales index from 11.32% to 53.92%, and in the profitability index from 10.85% to 51.81%. The employment index had risen from 27.36% to 47.59% and the investment index had increased from 25.94% to 49.40%.

According to the survey, a spike in business costs during the period indicated a boost in business activities.

According to data from companies participating in the survey, the business cost index against sales had been 36 prior to the coronavirus outbreak. 

Sanem has collected information from the ground regarding business recovery, and the disbursement of the stimulus package announced by the government to mitigate the impacts of the coronavirus crisis.

The study reveals that as of September, 72% of businesses had not received any money from the government-announced stimulus package, while 9% of company proprietors did not know enough about the package.

Of the 301 small firms covered in the survey, 8% had received incentives. Of 44 medium-sized firms, 20% had received the funds.

156 large firms took part in the survey, of which 41% had received the stimulus funds. However, according to the report's findings, it was easier now for firms to access the fund, compared with the previous quarter.

Dr Selim Raihan said thanks to a complicated process, non-compliance with all the bank conditions, and a lack of information about incentives, small companies were not being able to access the funds.

Speaking on the occasion, Ahsan H Mansur, executive director of Policy Research Institute (PRI), said recovery progress will be slower and the Business Confidence Index will be much lower than the previous year.

After three consecutive quarters of business closure, recovery is temporary. A review of the government's revenue collection, import data, and investment figures reveal a weak picture of the economy, he also said.

According to Abul Kashem Khan, former president of the Dhaka Chamber of Commerce & Industry (DCCI), small traders are unable to sustain themselves amid the pandemic. Larger organisations may be surviving by bringing in money from other entities.

Maliha M Qadir, founder and managing director of Shohoz Limited, said there is no allocation for startups in the coronavirus package. It will take quite a while for startups to get money from the funds announced in the budget. 

Former DCCI President, Asif Ibrahim; Chairman of Policy Exchange of Bangladesh, M Masrur Reaz, and Country Representative of Asia Foundation, Kazi Faisal Bin Seraj also spoke on the occasion.