Ukraine war affected 70pc of businesses

Nearly 70 percent of businesses in Bangladesh have been impacted due to price increases of raw materials and weak consumers demand, which are primarily attributed to the ongoing Russia-Ukraine war.

The businesses identified five top problematic areas -- rising cost of raw materials, lack of beneficial policy implementation, difficulties in accessing finance, weak domestic demand and inefficient human resources.

This was revealed in The LightCastle Business Confidence Index (BCI) 2022-23 conducted by LightCastle in partnership with The Daily Star and launched at a city hotel yesterday.

The survey for the index was conducted during the March-June period of this year.

It evaluated the perspectives of 167 industry leaders representing over 25 sectors, including multinational corporations, local conglomerates, startups, and SMEs, providing a comprehensive snapshot of Bangladesh's dynamic business landscape.

It delves into the private sector's journey amidst economic headwinds driven by geopolitical challenges, with a specific focus on the impact of the Russia-Ukraine war.

The report found that despite facing structural shifts, Bangladesh's private sector has shown a positive outlook in cumulative business sentiment – represented by an overall score of 6.69.

Interestingly the local small and medium enterprises have fared better (14.91) than local conglomerates and multinational companies (6.31).

The difference in scores is mainly driven by external factors as the performance of the larger organisations tends to fluctuate more significantly with the changes in the global market.

According to the report, slower economic growth, increasing prices of raw materials and reduced consumer demand have contributed to a lower but positive confidence index this fiscal year.

The report said the financial challenges surfaced as a result of financial irregularities, high level of non-performing loan, cash shortages, reduced savings and currency devaluation.

Industry leaders highlighted higher projections across sales, consumer demand, selling price and employment while profitability, investments and exports are expected to remain on the lower side.

The rising expenses and difficulties in managing operational cash flow have led companies to abandon their hopes of higher profitability in the next six months.

They are also forfeiting further investments to maintain necessary cash reserves to withstand any potential volatility, the reported revealed.

Moderated by M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, the programme was addressed by Aameir Alihussain, managing director of BSRM, and Asif Ibrahim, vice chairman of the Newage Group of Industries.