Covid-19 leaves district economies, tourism in tatters

District economies, tourism in death throes

• Around 350 hotels and resorts in Sylhet and Moulvibazar are almost empty now.
• 90 percent of hotels in Cox's Bazar are not paying their employees since May.
• One-fifth of small and micro businesses in districts have already been affected so much that they have gone into closure in the meantime.
• In Khulna, 20-30 percent of shops have been shut down impacting the lives of at least 20,000 employees and their families.
• In Sylhet, 90 percent tourism employees are on leave without pay.

At this time in other years, the country's only freshwater swamp forest, Ratargul, would be brimming over with hundreds of tourists. The beautiful Lalakhal, Jaflong, Pangthumai and Bisnakandhi, located around the swamp forest,would also pull in crowds of tourists.

Amazing Srimangal under Moulvibazar district would at this time attract tourists in their droves with its lush green tea gardens in the rainy season.

But all these places are now desolate. The lifting of the shutdown on May 31 after more than two months is yet to bring any tourists to these areas.

Thus the onslaught of the Covid-19 pandemic has gone on, making life critical for hundreds of thousands of people – from hotel boys to street tea sellers, rickshaw-pullers, transporters and retailers.

Around 350 hotels and resorts in Sylhet and Moulvibazar are almost empty now. Only some security personnel are guarding the establishments while others have been on unpaid leave for the last couple of months.

The situation is similar in Rangamati, Bandarban, Khagrachari, Cox's Bazar and Patuakhali, places which used to draw a huge number of domestic tourists at this time of year.  

A lot of money was poured into developing hotels and resorts and transportation to cater to the needs of tourists and thereby do business. Some owners who have taken out bank loans have started to feel concerned about a repayment of the loans.

Cox's Bazar has been bearing the brunt the most. Some 450 hotels and their nearly half a lakh employees embody the crisis the Covid-19 pandemic has created, with 90 percent of the hotels not having paid their employees since May. Those who are paying are giving a maximum of 60 percent of an employee's monthly salary.

As people are earning less, the impact has been on consumption. So, the sales of thousands of retailers and small vendors have gone down despite the lifting of the shutdown three weeks ago. 

The situation in other districts has improved a bit after the withdrawal of restrictions on public movement.

The Business Standard has received information from 14 districts relating to the local economies. Our correspondents have visited marketplaces there and found a good number of shops still shut even after the reopening of the economy after 66 days.

The responses of businesses are almost similar. Small and micro businesses – clothing shops to tea stalls and vegetable vendors – have already been affected so much that one-fifth of the businesses have been wiped out in the meantime. Shops that sell essential commodities are running with limited sales.

Take the case of Khulna, a non-tourism area unlike Chottogram Hill Tracts and Sylhet, having around 40,000 grocery shops and small retailers of all kinds. Some 20-30 percent of those shops have been shut down, impacting the lives of at least 20,000 employees and their families.

"Another 20 percent of shops may be closed down in a few months," fears Rezaul Karim, president of the shop owners' association in Khulna.

The situation is the same in Satkhira, Jashore, Rangpur, Kurigram, Barguna, Bhrammanbaria, Bogura, Bandarban, Cox's Bazar and Moulvibazar.

For example, the virus-led crisis has impacted the pisciculture, restaurants, clothing and cattle business in the border district of Satkhira.

According to the district livestock office, shrimp farmers in Satkhira incurred at least Tk377 crore losses from coronavirus and Cyclone Amphan.

Clothing traders in the district said they reopened businesses as the government had relaxed the shutdown, but the sales were almost zero. 

Meantime, many restaurant staff have already switched to auto-rickshaw driving for survival.  

Moulvibazar motels and resorts have laid off a large segment of their 2,500 employees. It is mostly the small and medium businesses in the district that have gone through a mass termination process.

In condition of anonymity, a five star resort official said the employer ordered them not to talk to the media on job or salary cuts.    

The employees themselves also avoid facing the media for two reasons — they believe they will get back their jobs once the situation normalizes and they will require papers from their formal employers to join new jobs.  

In Sylhet, 90 percent of tourism employees are on leave without pay.          

Hotels, motels and guest houses have been totally shuttered since March in the eastern Bangladesh city on the banks of the Surma. Sylhet hotel owners' association leader Foyez Lodi said their woes would not end anytime soon even if the situation normalized.  

"Because people in the next two years will earn less and spend less. You cannot expect a tourist rush like in previous years. We will have to begin from almost zero," he noted.

"Layoffs in the upcoming days will be inevitable," he feared.

In the Chattogram Hill Tracts district of Bandarban, food catering businesses are also heavily affected by the pandemic. Tourist-centric restaurants and hotels in the district have remained closed since March.

Nearly 1,500 staffers of around 70 hotels, motels and resorts in Bandarban have been sent on leave. The owners said they are paying 20 percent of salaries.

The hotels were allowed conditional reopening in the first week of June. But they were shuttered just three days into their reopening for lack of guests and a fresh lockdown owing to coronavirus infection red zone.

Impacts on the economy

Initially, Covid-19 disrupted the supply chain and now, after three months, the shocks are being felt on the demand side also, according to Dr Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM).

"Declining purchasing power and job cuts, even in the formal sector, have created a demand deficiency," observed Mujeri.

He said the situation of petty businesses at the district level is critical as they have lost their capacity to reopen their businesses after a three-month shock. They have hardly any income surplus to absorb the shocks.

"They live in the informal sector and have no platform to project their demands," he noted.

Informal economy is very dominant in Bangladesh and accounts for over 85 percent of jobs. Informal economy includes wage labourers, self-employed persons, unpaid family labour, piece-rate workers and other hired labour, etc.