Law and order and businesses

The investment climate or a conducive environment for the functioning of businesses depend on many factors in a country. Specially, in Bangladesh, the same are dependent on the lending rate, state of infrastructures, macro economic fundamentals, political stability, costs of utilities, etc.
Nonetheless, the growth rate of the economy had been reasonable in the present decade. But experts are of the opinion that the rate could be notably higher if the law and order conditions remained even better. But as it is, the law and order situation in the country remains still a cause of some concern and businesses in particular expect further improvements in the law and order situation.
The government has been taking some satisfaction from the rise in the foreign currency reserve. Certainly a higher reserve is desirable but probably not in the backdrop of an economy not realizing its full potential otherwise. Latest figures show that the rise in the reserve is also linked to less imports of industrial raw materials. This phenomenon is indicative of constrictive production activities in the country and its linkages to less output, employment and income.
The banks are having record surplus liquidity and the same is more reflective of the laggard pace of investment operations because in the absence of a fully developed capital market the banks play the lead role in investment activities in Bangladesh and the surplus liquidity of the banks suggest the less than satisfactory rate of new investments. It is obvious additional investments are at the heart of the economy’s rapidexpansion. Without these investments being made, the economy cannot grow to the optimum level.
But in many cases, existing industrial establishments or service industries are running below their potential. Trading and associated activities are also down. Many reasons can be attributed to this slump specially the on going state of energy insufficiency. But law and order also needs to be recognized as a matter of some concern to businesses. It is no overstatement to say that extortionist activities — directed against businesses — are also playing a role in the dwindling production and trading activities. Some persons with money are simply scared to invest their money in new ventures. There are other major disincentives to investment activities, but business operators have the feeling of not getting a reasonable return on their investment also due to crime activities targeted against them. Therefore, many of them are considering it a prudent step to sit idle with their money in the banks rather than risking enterprises amid such criminality.
Extortionist demands and toll collection from gangsters now afflict many businesses across the country. The gangs are headed by crime czars who have the local name of ‘top terrors’. They are seemingly invincible with their lethal arms, connections with the unscrupulous sections of the police and various political shelters.
Thus, with a sense of immunity, they approach businessmen with their extortionist demands. Many are required to pay every month or on weekly basis to be allowed to conduct their businesses in some peace. But these demands keep on rising and in some cases have become so unbearable for businesses that their operators are heard saying in deep frustration that it is better to pull shutters down on their businesses permanently than to submit to such atrocious demands.
Apart from regular payment of extortion money, cases of sudden unusual demand for a one time big amount are also noted . Businesses cannot flourish fully in a situation like this. Regular payments to gangs bite deep into their profits and inflate their costs of operations. Therefore, many businesses are running well below their capacities. Better policing can be the main antidote against crimes targeting businesses.