Firms are worried that their cost of business might increase in the coming months which may hinder their growth, according to the Bangladesh Business Confidence Survey 2022-23 unveiled today.
Measured on a scale of 0 to 100, with less than 50 reflecting contraction or less optimism and more than 50 pointing to expansion or optimism, the Business Confidence Index (BCI) is expected to fall to 22.4 over the months to June 2023, down from 35.8 earlier.
“This is giving a worrying signal to the businesses,” said Ferdaus Ara Begum, chief executive officer of the Business Initiative Leading Development (BUILD), while presenting the major findings of the survey at the InterContinental Dhaka.
The USAID-funded Feed the Future Bangladesh Trade Activity supported the survey among 567 micro, small, medium and large businesses between September and November.
Of the firms surveyed, 284 are from the manufacturing sector while the rests are from the service sector.
The information related to the fifth edition of the survey was collected on seven issues to prepare the index: employment, the volume of order or demand, business activity, operating capacity, selling price and investment, overall business cost, and investment.
Out of the seven components, only the overall business cost index was in negative territory, giving a pessimistic perception, Ferdaus Ara said.
She said around 72 per cent of the business entities cited there might be an increase in the business cost over the six months from the survey period of September-November.
“The low index indicates that the rising cost of doing business is an upcoming challenge that needs to be taken care of.”
Although businesses are concerned about the rising cost, they have a positive outlook for business conditions over the next six months: the overall score of the BCI stands at 74.4, giving an optimistic perception of business conditions in the six-month from January to June this year.
“Business entities across Bangladesh are confident that the volume of orders for the manufacturing sector, demand for services in the service sector, selling prices, and business activity will increase in the next six months,” said the BUILD.
“As a result, businesses are willing to expand their employment and investment over the same period.”
The BUILD is a private sector dialogue platform set up in 2011 by the Dhaka Chamber of Commerce and Industry in partnership with the Metropolitan Chamber of Commerce and Industry and the Chittagong Chamber of Commerce and Industry.
However, business entities, especially in the manufacturing sector, have low confidence in costs, highlighting the need for immediate action to address the cost burden of businesses emanating from the spike in the prices of electricity, water, gas, and raw materials, the BUILD said.
