The Book of Loss | The Daily Star

Bangladesh has turned a new page in its history, its economy is growing again, and the country is still healing from fresh wounds.

A recent three-week student movement finally forced Sheikh Hasina to resign and flee the country, ending her 15-year rule.

The movement began with students demanding reform of the quota system for civil service positions, arguing that it was discriminatory.

The Awami League leadership responded with an iron fist, forming the Bangladesh Chhatra League in an attempt to end the protests.

But tempers flared further in the resulting violence, which left more than 300 people dead before Hasina finally fled on August 5. By August 7, The Daily Star had confirmed at least 551 deaths.

While the number of lives lost is uncountable, the prolonged unrest has dealt a massive blow to Bangladesh’s economy, which is estimated to be worth about $450 billion.

According to official estimates, the country suffered losses of more than $1 billion a day after economic activity ground to a halt due to violence and a government-imposed curfew from mid-July to early August.

This comes as public insecurity and an internet outage forced factories to close for almost a week.

In addition, import and export activities, deliveries of agricultural produce and unloading of goods from ports were disrupted.

Needless to say, most retail outlets, restaurants, e-commerce and other sectors also suffered significant losses.

Ahsan H Mansur, executive director of the Bangladesh Institute of Policy Research, said that if property damage is taken into account, the economic losses could actually be even higher than estimated.

Before the second wave of supply chain disruptions began, the Foreign Investors Chamber of Commerce and Industry (FICCI) estimated Bangladesh’s total losses were more than $10 billion.

While it is clear that losses must have further worsened following the second wave of lockdowns, FICCI is yet to estimate the additional amount.

Likewise, the thousands of people who were injured, as well as hundreds of those who became disabled or lost their eyesight, also suffered huge losses.

The impact of the crisis on the economy of individual sectors is presented below.

CLOTHING SECTOR

The textile sector suffered losses of $58.8 million due to factories being forced to close for four days due to violence and curfews during the first round of protests.

The Bangladesh Textile Mills Association (BTMA) is yet to estimate the losses incurred in the second round of protests, when factories were closed for four days due to another wave of violence.

During the first round of protests, the garment sector lost Taka 64 billion as its factories were closed.

Indirect losses are even higher, SM Mannan Kochi, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told a press conference.

We were unable to collect incoming transfers for five days due to an internet outage, but the flow of transfers returned to normal when broadband internet was made available

— Selim RF Hussain Managing Director BRAC Bank

Apart from being able to continue production, local apparel exporters have also experienced a lack of communication with international retailers and clothing brands due to the internet outage.

Many local suppliers were unable to place orders with retailers and manufacturers during the internet outage, as July, August and September are considered peak ordering months for the following summer and spring.

Both local and international retailers and brands also faced difficulties in shipping goods from Chattogram port due to violence and curfew.

As a result, many clothing suppliers were forced to use expensive air freight, faced order cancellations or offered large discounts to their overseas customers.

ICT SECTOR

The ICT sector suffered heavy losses, especially when the government cut off the internet to quell the protests.

The government blocked mobile internet services on July 17 amid widespread violence related to protests over quota reform. Broadband internet was shut down a day later, severely affecting public life and a wide range of economic activities, including utility bill payments, online banking, international communications, digital trade and the clearance of goods at ports.

Digital traders, software manufacturers, e-commerce entrepreneurs, business process outsourcing companies, telecommunications companies and freelancers have also been significantly affected by the government-imposed internet lockdown.

The government restored broadband internet on a limited scale on July 23.

Meanwhile, social media sites such as Facebook, TikTok, WhatsApp and YouTube have been blocked across the country.

Mobile internet was finally restored on July 28, and social media platforms were unblocked on July 31.

Suddenly, on the morning of August 2, mobile internet users were unable to access their Facebook and Messenger accounts for approximately seven hours.

The next outage occurred on August 5 and lasted only a few hours. By that time, former Prime Minister Sheikh Hasina had fled the country.

These moves seriously damaged the reputation of many export-oriented IT companies, and many Internet-based businesses lost significant revenues.

According to the Ministry of ICT and Telecom, the sector suffered financial losses of Rs 18,000 crore.

However, many in the sector believe that this number is exaggerated.

The biggest blow, according to industry insiders, is the loss of the ICT sector’s image on the international stage.

Meanwhile, the Bangladesh Association of Software and Information Services (BASIS) said its members suffered losses of around Taka 500 million due to the five-day internet outage.

According to the Electronic Commerce Association of Bangladesh (e-CAB), the sector suffered a loss of about 17 billion rupees in 13 days in July when internet services were disrupted.

e-CAB said about 95% of e-commerce transactions remained suspended for various reasons, including a nationwide curfew and security concerns.

e-CAB has launched an investigation to assess the full extent of the damage.

Ride-hailing companies and online courier services have also been hit hard by the internet cutoff.

BANKING SECTOR

Industry insiders said the full extent of the banking sector’s losses could not be measured in monetary terms. In a recent meeting with the central bank, bankers said ATMs had been destroyed and two or three officials had been killed.

Pubali Bank Managing Director Mohammad Ali recently stated that the internet outage has negatively impacted the banking sector and banks’ profitability.

Bankers and mobile financial services (MFS) representatives said that money transfer collection remained suspended from midnight on July 18, when an internet blackout was announced, until July 23, when broadband services were partially restored.

“We were unable to receive remittances for five days due to an internet outage, but the flow of remittances returned to normal once broadband internet was made available,” said Selim RF Hussain, Managing Director of BRAC Bank.

He added that on a normal day, $80 million to $100 million in remittances are sent to Bangladesh, but on this day, an internet outage was unavoidable.

Due to the internet shutdown, people were unable to use online banking. Many ATMs were also closed, and others ran out of cash.

A representative of a leading MFS service provider said that on a normal day, an amount of 5 to 7 million taka is transferred, but due to slow internet, the amount has come down to 80 lakh taka.

STOCK EXCHANGE

Saiful Islam, president of DSE Brokers Association (DBA), said that although trading on the exchange was disrupted due to the nationwide movement, the main problem was the loss of production by listed companies.

“It has a long-term impact.”

Due to the loss of production, their activities will be hampered, so it will be their shareholders who will suffer the most.

On the other hand, financial institutions may suffer huge losses after a regime change, as many influential and large borrowers may flee.

He added that a weakening of banks would be very worrying for the market.

INSURANCE SECTOR

A senior official of a leading insurance company, who is also the chairman of the Bangladesh Insurance Association, said premium revenue in the life insurance sector has fallen by 30 percent in the past three weeks compared to the previous three weeks.

Insurance claims in the life insurance sector have risen by at least 15 per cent as people’s property is vandalised, set on fire and destroyed.

If we take into account the second wave of protests, the losses will be much greater, as acts of vandalism and arson have intensified over the past three days.

Sheikh Kabir Hossain, president of Bangladesh Insurance Association, said the insurance sector has suffered greatly due to the unstable situation.

Many customers did not renew their policies during this period, he said, adding that naturally no one would open a new life insurance policy in such a situation.

Hossain said work was underway to assess how much the insurance sector had been financially affected by this volatile situation.

Md Jalalul Azim, Managing Director, Pragati Life Insurance, said, “Our colleagues could not step out of their homes as the situation was very unpredictable in every respect.”

Whenever there is political unrest in the country, even if people have money in their hands, they will not spend it. It is natural. Overall, business has suffered a lot, he added.

TRADE SECTOR

Retailers have been hit hard because they have not been able to open stores. Sometimes they have opened their doors for short periods. A huge number of people are involved in the retail services sector, so everyone has been affected.

According to Bangladesh-based Dokan Malik Samity, a platform for shopkeepers, the sector has recorded losses of 20 billion taka per day.

PRODUCTION SECTOR

Asif Ibrahim, president of the Chittagong Stock Exchange, said one of the most important tasks for the country now is to ensure that economic activities, especially in the manufacturing and services sectors, return to normal functioning.

“We need to assure the countries we trade with that the Bangladeshi private sector is back in business and will fulfil all obligations to our international customers.”

“We now want to strongly emphasize to the international business community that Bangladesh’s private sector is resilient. It is the engine of growth for the economy and will remain so,” he added.

Zahid Hussain, former chief economist at the World Bank in Dhaka, said the economy was already in crisis and the recent political turmoil had made things worse.

Social equality and justice should be ensured. Internet connection and other means of communication should not be further disrupted, while education should be resumed with full priority.

Such measures would restore people’s confidence and normalize economic activity.

Now everything should be up and running. Dhaka Metro and flyover, as well as railways and all other connections should be up and running as soon as possible, he added.