Concerns Over Weaker Banks and Investment in Bangladesh’s Textile Sector

Shokat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), expressed during a discussion on August 10 that it would be more effective to close weaker banks rather than attempt to merge them.

He questioned the rationale behind investing in failing banks, stating, “Why continue to pour money into banks that are, frankly, dead? The focus should be on compensating the bank depositors instead. Regardless of any restructuring, the ownership will remain the same, and those banks will inevitably revert to their previous state.”

Russell emphasized the need to shut down these underperforming banks and suggested reallocating some of their branches to healthier institutions in order to preserve jobs. He was speaking at a dialogue organized by the Centre for Policy Dialogue (CPD) titled “Interim Government of the Interim Government for 365 Days.”

Participants, including bankers, business leaders, and former bureaucrats, highlighted the necessity for the Bangladesh Bank to clarify its plans concerning bank mergers. Mahmuduzzaman Khan Babu, president of BGMEA, pointed out that if there was intent to merge five banks, it should have been publicly announced when the discussions began.

Nurul Amin, chairman of Global Islamic Bank, explained that a meeting would be convened within 15 days following the proposed merger, where weaker banks would be assessed for their viability on their own or willingness to merge. He clarified that not all banks would merge simultaneously.

Amin also mentioned the underlying factors contributing to rising default loans, noting that the Bangladesh Bank had previously struggled to execute its regulatory responsibilities. “While we’re seeing some clarity in terms of merger discussions, there are still concerns related to fair play and corruption,” he remarked.

Former Treasury Secretary Mohammad raised concerns about the government’s plan to inject funds into banks via Bangladesh Bank rather than general revenue, indicating that this could lead to additional complications.

The conversation took place at the Lakeshore Hotel in the capital, featuring Brigadier General Sahawat Hossain (Retd) as the chief guest, while Mustafizur Rahman of CPD chaired the session.

Shma Obeid, secretary of the BNP organization, stressed the importance of revising politics for economic recovery. “Without good governance and accountability, improvement is unlikely. Business leaders should ideally step back from political influences,” she suggested.

AB Party General Secretary Barista Fuad echoed that even the most powerful governments struggle to make certain vital decisions, emphasizing the need for political stability and reliable elections as economic priorities.

Rasheda K Choudhury, a CPD board member, expressed concern about the neglect of education, highlighting issues of inequality, education quality, and healthcare that need urgent attention.

Dr. M Tamim, deputy prime minister at Bangladesh’s Independent University, discussed the missed opportunities in the energy sector, citing a lack of long-term strategic decisions and ongoing issues with gas supply that affect rural areas.

He also pointed out that though the generation capacity is high, much of it remains unused, suggesting that inefficiencies within older power plants risk jeopardizing overall capacity numbers.

Professor Sm Amanullah discussed the education system’s shortcomings, hinting at a disconnect between academic curricula and the needs of the industry. He noted instances of poor management, such as professors conducting exams flippantly, which undermines the seriousness of education.

Tanbil MD Dip, representing small and medium-sized enterprises, noted that anxiety about governmental efficacy is on the rise, with a success rate perceived at around 50%.

Jimmy Amir, from the Media Reform Committee, mentioned the necessity of ensuring job security for journalists amid ongoing reforms.

Rashed Khan, General Secretary of Gono Odhikar Parishad, criticized the government’s inaction against economic misconduct and pointed out the lack of political stability.

Time to Invest in the Textile Sector

Shokat Aziz Russell remarked that following successful negotiations with the United States on mutual tariffs, Bangladesh finds itself in a fortuitous position. He noted an uptick in inquiries from buyers, which suggests a positive outlook for business.

“It’s time to invest in our textile sector,” he stressed, highlighting the sector’s significant role in job creation and economic growth. However, he did express concerns about current challenges, acknowledging that while investment is crucial, government resources are strained.

Russell pointed out that the textile and clothing sector currently holds $75 billion in investments, with exports reaching $41 billion, set to rise to $50 billion shortly.

He urged for an investment-friendly atmosphere, stating, “If you support us, there’s so much we can achieve.” At the same time, he took issue with the government’s recent port policies, suggesting they might inadvertently favor Indian imports over local goods.

Former BTMA president Matin Chowdhury praised the government’s negotiations with US representatives, noting that a reduction to 20% tariffs was a bold achievement. However, he emphasized that success hinges on diversification, urging entrepreneurs to broaden product lines and market reach.

The event also saw participation from Commerce Advisor Sheikh Bashir Uddin and other officials from the Ministry of Commerce.