Bangladesh Economy reels from hartals

BANGLADESH NEWS

In a modest assumption, 15 days of shutdown have cost the economy the equivalent of $3 billion, a figure that could well have financed the construction of the Padma bridge.

The costs do not take into account the brutal killing of people and damage to property.

Since December last year, the country has witnessed exactly 15 days of hartals — each day causing a loss of around $200 million, by one estimate.

The estimated annual average cost of hartals is between 3 percent and 4 percent of the country’s gross domestic product (GDP) — now around $110 billion.

These costs include foregone earnings and lost employment and output, as well as long-term impacts due to reduced savings, indebtedness, capital losses and reduced profitability for businesses.

One of the most serious aspects of damage caused is the negative image costs of hartals in deterring foreign investors from making their way into the country, making Bangladesh increasingly less able to compete with regional competitors.

Strikes also impose non-economic costs on people, including considerable psychological stress and a sense of personal insecurity.

A study conducted earlier by the United Nations Development Programme (UNDP) and rough estimates by International Chamber of Commerce Bangladesh reveal these shocking figures and impacts.

This is the broader picture, but a farmer or a day labourer or a bus conductor might be least bothered about these figures and estimates. For them, every day is a struggle to earn their living and keep their heads above the water.

“I had no income in the last three/four days,” said Mohammad Ridoy, a teenaged bus conductor.

The owner did not operate the bus fearing damage and torching by picketers, said Ridoy, who earns around Tk 200 on a usual day.

The recent spate of hartals was unleashed by the Jamaat-e-Islami, protesting the verdict of the death penalty to one of its leaders — Delwar Hossain Sayedee — for war crimes he committed in 1971.

The BNP-led 18-party opposition alliance enforced yesterday’s strike in protest against what it said attacks by armed ruling party men and police on its leaders.

Ahsan Mansur, executive director of Policy Research Institute, a research organisation, said no systematic study had been done on the impacts of a shutdown on the economy.

But citing the recent strikes and the UNDP study, he said the nature of cost of hartals and its impact assessment had to be redone.

Mansur said the effect of recent shutdowns was higher than in the past because of a disruption in road and rail communication, and fear of insecurity among people as also a lack of buying spirit.

“The recent hartals are much more damaging because the economy today is more integrated,” said Mansur, citing the fact that goods-laden trucks could not ply on roads even at night amid fears of damage.

Damage to rail tracks by picketers also affected public movement and transport of goods. “The cost becomes very high if trucks cannot move even at night,” said Ahsan.

“So the impact is not limited to shipment of export consignments only. It has also hurt farmers who send vegetables, fish and other agricultural goods to urban areas,” he said.

Disruption in communication also takes a toll on industries that cater to the domestic market. Products are piling up at their warehouses, he said.

A feeling of insecurity have affected domestic demand. “Businesses keep shops and offices open. But customers don’t come,” Mansur said.

However, Akbar Ali Khan, a former adviser to the caretaker government, finds the estimates by the UNDP ‘highly blown up’.

The static losses of hartal per year are likely to be in the range of 0.5 percent to 1 percent of the GDP, he said

“Particularly, the losses resulting from strikes are compensated by private sector by substituting holidays as workings days and by working secretly during strike,” Khan said.

Khondaker Golam Moazzem, additional director (research) of the Centre for Policy Dialogue, said hartal impacts the economy as a whole. But the impacts on all sectors and all regions are not equal. So the overall effect may not be as high as it is perceived.”

“But the cost of economy would be higher for a prolonged hartal,” he said.

IMPACT ON INDUSTRIES AND TRADE

“Hartal affects the entire production and supply chain. We had to cut production to avoid congestion at warehouses,” said Asif Iqbal, executive director (marketing) of Meghna Group of Industries, a commodity processor.

Annisul Huq, a former president of the Federation of Bangladesh Chambers of Commerce and Industry, said the recent incessant shutdown affected production in his apparel factories as all workers could not attend work.

“We have to ship export consignments regularly. But we could not send clothes for shipment in the last five days,” said Huq, also a former president of Bangladesh Garment Manufacturers and Exporters Association.

“One of the trucks carrying apparel items was torched. It was on the way to the Chittagong Port for shipment. The rest two trucks escaped the violence during the hartal,” he said.

Almost all the products, valued at $1.68 lakh, were burned, said Huq, who holds stakes in Mohammadi Group, a garment manufacturer.

“The major loss is the damage to our image abroad,” said Fazlul Hoque, a former president of Bangladesh Knitwear Manufacturers and Exporters Association.

At Chittagong Port, the incessant shutdown caused a dip in delivery of imported products, forcing importers to count huge losses for overstay of their imported goods in the port yards.

The daily delivery of import containers slumped to 200 twenty-foot equivalent units (TEUs) due to shutdown, from nearly 1,500 TEUs of containers on normal days.

Khurram Naieem, a clearing and forwarding (C&F) agent, said one of his Dhaka-based clients had to pay more than $250 as demurrage to the port authority.

He had to count extra Tk 4,000 for each of 20 trucks to transport the goods to Dhaka, he added.

FARMERS GET LOW PRICES

Torikul Islam, a farmer in Jessore, said he had stopped selling potatoes since Sunday as middlemen were offering low prices, citing a lack of transport movement.

“We got low prices for vegetables such as beans and gourds as the number of wholesalers was low in the market,” said Mohammad Shahbuddin, a farmer in Narsingdi.

“The quality of vegetables also falls unless we harvest in time,” he said.

PRICES GO UP IN CITIES

The prices of essential commodities also went up due to disruption in the supply chain. The prices of onions, potatoes and some vegetables edged up amid inadequate supply, according to Trading Corporation of Bangladesh.

Street vendors, hawkers and roadside retail shops also registered low sales.

Jahangir Alam, who sells cigarettes, betel leaves and candies on a footpath near Farmgate, said his sales drop to Tk 900 a day during hartal, from Tk 1,200 on a normal day.

“I do not support hartal. Low sales have eroded my income,” he said.