Cover Story

At the Whim of Politicians

Political instability, lack of resources and corruption have proved to be major obstacles for the business community in Bangladesh for quite a while now. Frustrated with the current scenario, a section of the country is thinking of winding up their businesses at home and looking for opportunities abroad. If this happens on a wide scale, it can have a devastating effect on the economy of the nation.

Naimul Karim

It was in the early 90s that Zakir Hossain, after spending around ten years in the United States, decided to return to Bangladesh. Having been exposed to the market abroad, Hossain wanted to start a new brand of restaurants in Dhaka. He opened a foreign food-joint in the capital and as one of the rare foreign restaurants in the city, Hossain's venture boomed in the late 90s. This encouraged him to expand his business. He eventually went on to open another restaurant in 2000, this time with an aim to establish a stronger foothold in the market.

An owner of a series of restaurants located across Asia, it was Hossain's dream to settle in his home-country and further expand his business in Bangladesh. However, the deteriorating political scenario, corruption and the worsening condition of the country's infrastructure have compelled him to rethink his strategy regarding his ventures in Bangladesh.

“With the way things are going right now, I'm seriously thinking of winding up my business here and migrating to some other country,” he exclaims. “Corruption is at large; government authorities come and harass us for extra money whenever they can. Even after paying the required taxes, authorities come to us for extra money to serve their personal needs and their rate has been increasing every year,” he adds.

Statements made by some of the leading businessmen in the country at a conference organised last month, reveal the unpleasant experiences that Hossain and other members of the business community have to go through. Businessmen claim that many are compelled to 'buy their protection' through 'ransoms' that keep the political classes happy. A practice they say, that is very common in the business world.

Apart from the disappointing political scenario, frequent power-cuts and a shortage in gas supply add to Hossain's problems. “Load-shedding has no doubt increased my expenditure. What's even more frustrating is that during hartals, I struggle to run the generators in my restaurants since it's a hassle to transport petrol from pumps,” he explains.

The 54-year-old entrepreneur, who has businesses set-up in Kuala Lumpur and Bangkok, claims that the current scenario is extremely discouraging for businessmen. “The political instability has created a grotesque situation . I am planning to sell my business here and move to another place in the next couple of years."

An unstable atmosphere has compelled several other members of the business community in the capital, to think like Hossain. Some of them have started looking at available options outside the country.

"As long as there is tension at home, everyone will try to keep their options open. If people can take a minimum amount of money outside and live a comfortable life abroad, they'll naturally do so," explains Dr Mustafa K Mujeri, former Chief Economist, Bangladesh Bank.

Md Nurul Islam, who deals in the real estate sector, has a similar story to narrate.

Having finished his studies abroad, Islam, despite being advised to live overseas, by his friends, returned to Dhaka and started his business. "Ten years ago, many of my friends went to Canada as investors since it was a very easy thing to do back then, but I thought otherwise," he recalls. As the real estate sector developed over the years, so did Islam's business. The growth in the housing arena helped his cause. However, Islam claims that the uncongenial atmosphere for business in the city has been taking its toll since last year.

"It's the over-all situation that affects my business. Starting from the hour-long traffic jams and the lack of resources to the political rivalry and hartals; when everything adds up, it provides a frustrating scenario," exclaims Islam. He says that while it's not a common phenomenon for the richer members of the business community to feel the heat, constant political and financial problems in the last couple of years have begun to affect them as well.

"One usually expects hartals or changes in the share market to affect the less affluent businessmen since they don't have the capacity to recover from their losses. They run on strict budgets. However, frustration amongst richer businessmen is a bad sign for the economy," explains a desperate Islam, who himself is in search of the opportune moment to leave the country.

Like Islam several other people have been desperately seeking a way out. A recent report published in The Daily Star states that several businessmen and bureaucrats migrate to richer countries as investors every year. It further states that people are willing to shell out huge amounts of money in order to become investors. For instance, a person has to transfer at least 500,000 Canadian dollars (Tk 4.13 crore) to migrate to Canada as an investor or an entrepreneur.

The Malaysia My Second Home (MM2H) programme requires a person to make a fixed deposit of approximately 90,000 dollars with a Malaysian bank in order to get a residential permit for 10 years. Reports suggest that more than 1,800 Bangladeshis have been enrolled for the MM2H programme which led to a transfer of roughly $280 million (about Tk 2,300 crore), between 2002 and 2010, to Malaysia. Clearly the government's restraint on the amount of money being taken abroad isn't working as people have found alternative routes to transfer their cash.

Immigration to richer countries is definitely not a new concept in Bangladesh. However, if shutting down businesses and leaving the country, due to the worsening political scenario, becomes a trend, it can have an adverse affect in the near future. "In the world of globalisation, capital flow or flow of labour is very much possible. Money will naturally flow to places where it is possible to live. If there is a net outflow, then it's bound to affect us," says Dr Mujeri.

Former advisor to the caretaker government, Dr Hossain Zillur Rahman is of the opinion that while the migration of businessmen might not immediately affect, the economy, it may however, cause severe problems in the future. "Power crisis and political instability,along with hartal, force people to look for second homes outside. The government has to become aware of the reasons for which businessmen and others are going out," says Dr Rahman.

As a result of the growing concern , the country's top business leaders, in a meeting this month, condemned the 'destructive programmes' and urged the political parties to settle their disputes through dialogue. The leaders decided to draft separate proposals to both the Prime Minister and the leader of the opposition.

Describing the various problems that the business community faces during hartals, Mir Nasir Hossain, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), says, "The current political scenario has affected both the domestic and export market over here. We face a lot of problems. Our goods don't reach in time because of the hartals and other political problems."

Commenting on the issue of various entrepreneurs leaving town, he says,"A business person will always look for innovative ways to earn, and it won't be a surprise if someone looks to go abroad to start a chain or move a section of their business . This is how globalisation started. The government should provide us with an environment where we can do business.”

Contemplating on how serious the issue can get in the near future, Dr Mujeri lists the various factors that need to be considered. "If entrepreneurs face problems due to political instability and other reasons, they'll still try to work it out for a while, but if it continues, they will look for an alternative way. Now if there is an opportunity for them to start a business elsewhere, they might think about it. But moving a business from one place to another also has a cost; there are different factors involved. Until and unless they are forced to shift, they won't move along. We have to take care of that aspect, and encourage them to invest here," he says.

It is a known fact that brain drain has affected almost all the important fields in the country. Media reports suggest that more than 65 per cent of all newly graduated doctors seek jobs abroad and that the country loses 200 doctors from the government sector each year-- political influence in the medical job scenario being one of the main reasons behind the appalling statistic.

The government's negligence has also affected the agricultural sector, with a large number of agricultural scientists leaving the country every year. An insider from a government organisation states lack of innovative measures, early retirement policy and lack of benefits as the main reasons behind the migration of scientists.

The engineering field has also seen its share of migrants. With promotions and jobs given mostly on political consideration, it marginalises the non-political yet worthy candidates. These are some of the reasons that encourage students with good academic track records to go outside the country.

Despite the unfriendly conditions, the fact that the nation's economy has managed to fare well is a wonder. In the words of Finance Minister, AMA Muhith, it indeed, is, an 'incredible economy'. In the last fiscal year, when the world was going through a financial crisis, Bangladesh was one of the few countries that saw a positive export growth in the last fiscal year. Young entrepreneurs are entering the business world, every year, with fresh ideas that contribute to the economy.

Yet with no attempts by the major parties to solve the present political stalemate along with untenable levels of corruption and increasing threats to physical security, many members of the business community are getting anxious, enough to leave the country. The political parties must pay heed to these warning signs and create a stable environment for business to survive and flourish.

(The names of certain sources in this article have been changed as per their request)