LC drop squeezing investors’ confidence

Special Correspondent
 
The country's business environment has faced significant turbulence, leading to a dramatic decline in new investments. Traders have expressed a severe crisis of confidence, reflected in a staggering 44% drop in the issuance of Letters of Credit (LCs) for the import of capital equipment, according to sources from Bangladesh Bank.
The fall in LC openings signals a broader issue of diminished investor confidence amid ongoing national instability. In the last two months, both the import of capital goods and intermediate goods has seen sharp declines, pointing to a broader contraction in economic activity.
Economic experts are highlighting the urgent need to restore investor confidence to stabilize the economy. They advocate for the establishment of a reform committee to address the current challenges and rejuvenate economic growth.
The turbulence in the business sector is attributed to a combination of factors, including anti-caste student protests, political upheavals, severe flooding, and instability within the garment industry. These issues have collectively undermined industrial entrepreneurs' confidence in making new investments.
To counteract these challenges and stimulate economic stability, there is a growing call for decisive reforms and improved law and order. The ongoing crisis underscores the critical need for a concerted effort to restore a stable and predictable business environment.
Economist MasrurRiaz has emphasized the critical role of capital equipment imports as a barometer for future investment trends. Speaking to the media, Riaz noted, "One of the main indicators of investment increase or decrease in the coming days is the import of capital equipment. If we look at that area, we see that it is continuously decreasing."
Recent data underscores this concern, with the opening and settlement of import Letters of Credit (LCs) falling by approximately 13% over the first two months of the fiscal year. This decline is attributed to a range of issues, including ongoing political unrest and instability.
Traders and business leaders are expressing growing apprehension about the potential for worsening conditions if violence continues in industrial regions. In response to the current challenges, they are calling for immediate improvements in law and order and requesting special facilities to ease debt repayments.
The urgent need for a stable business environment is underscored by these developments, with economists and industry stakeholders urging the government to take decisive action to restore confidence and support economic stability.
RizwanRahman, former president of the Dhaka Chamber of Commerce and Industry (DCCI), has underscored the critical importance of security in attracting investment. Speaking to reporters, Rahman stated, "When investing in a country, one thinks about security first. Why would anyone invest money when they don't feel safe?"
Rahman's comments come amid growing concerns about the current investment climate in Bangladesh, marked by significant declines in the opening of Letters of Credit for capital equipment and intermediate goods. The ongoing political unrest and instability in industrial areas have heightened fears among potential investors.
The call for improved law and order is increasingly urgent as business leaders and economists stress that restoring a sense of security is essential for revitalizing investment and ensuring economic growth.