Both apparel and remittance sectors are likely to take a huge blow, as a result of which our economy will suffer
Due to the coronavirus outbreak, there has been a massive change in global and local economy. The insurance sector was hit as well.
The Business Standard recently reached out to Syed Moinuddin Ahmed, Managing Director of GD Assist Limited and Additional Managing Director of Green Delta Insurance Company Limited.
In the conversation, Syed Moinuddin shared with us how the coronavirus has impacted in the Banking and insurance sector of Bangladesh. He also shared the story of bringing back stranded Bangladeshis from Thailand and Malaysia during this pandemic.
The Business Standard (TBS): Bangladesh government has declared stimulus loans for different industries. Do you see any chance of liquidity crisis in the banks?
Syed Moinuddin Ahmed (SMA): All stimulus packages have a positive and a negative side. The stimulus package adopted by the prime minister is a pragmatic step at this moment. The most important thing at this moment is to keep the citizens and the business community in a convenient position and to make it clear that the government is on their side.
Additionally, considering the contribution of manufacturing sector, garments sector, SME sector in the economy, it is necessary to ensure a bulk allocation at such a difficult time.
Whether it is USA, Canada or Bangladesh, bulk allocation is rolled out through banking channel. In my opinion, there is no chance of facing liquidity crisis in the banks if the banking sector is used properly and if Bangladesh Bank provides some assistance, like it has already promised to provide half of the TK20,000 crore stimulus package announced by the government for the SME sector.
At the same time, we have to keep another thing in mind that, the whole money is consolidated working capital which is not a long term loan, but a short term one. I think there is definitely going to be a setback in the global economy, but if we can manage the Covid-19 pandemic within a very short time, then it will not take long for our economy to turn around.
TBS: A few days ago, the World Bank said that the pandemic could reduce our GDP to 2-3 percent. Do you agree with that?
SMA: When something is said from an institution like the World Bank, we certainly cannot deny that totally. But at the same time ADB is saying there will be a slump in the economy but not to the extent as World Bank has predicted.
If we take our two major sectors- apparel and remittance- in consideration, both sectors are likely to take a huge blow, as a result of which our economy will suffer. However, it is too early to predict how much damage will be done. The whole thing will really depend on how quickly we can deal with coronavirus and bring back normalcy to public life.
TBS: Has the coronavirus affected our insurance sector?
SMA: Insurance is an integral part of the overall economy. As there is an impact on the overall economy, the insurance industry is certainly suffering as well. The business sector is one of the factors on which the insurance sector depends. Since there is a stagnation in the business sector for the last few months, there has been little business in the insurance sector as well.
Another aspect of the insurance business is the renewal. At this time, those who have come to renew their insurance are also wondering whether they will renew their insurance or get insurance coverage like they used to get. Marine insurance, a major sector of the insurance business has seen a major fall in the last one month. Since the LC has gone down, the insurance business went down as well.
TBS: What kind of pressure are the insurance holders facing right now?
SMA: Those who have newly started a factory must have insurance in order to obtain their LC. Again, those who have a big factory and a lot of value, also like to have insurance as they do not want to take any kind of risk. Because, in case of any accident, they will suffer a huge loss. So they are renewing their insurance. Conscious vehicle drivers also want to renew their insurance, although instructions have come from IDRA (Insurance Development & Regulatory Authority Bangladesh) to extend the term of insurances expiring in April and May for another 45 days. On the other hand, those who are worried about health insurance are constantly contacting us whether there is a policy with coronavirus coverage. However, there is no health insurance package for coronavirus in Bangladesh till now.
TBS: The aviation sector is said to be completely closed. As a result, is the insurance sector getting affected by this?
SMA: We do a lot of aviation insurance. Those who have an aircraft are renewing their insurance even though that is not flying. This is because when airspace will open an airplane cannot operate without insurance. However, due to the increased risk, the aviation insurance rate has risen several times globally. This has become a big challenge for the aviation sector.
Several plane crashes last year caused a great loss. In this situation, the aviation sector may take a few years to turn around. As a result, it can be assumed that the insurance sector will face indirect losses.
TBS: A few days ago, several Bangladeshis were brought back to the country through GD Assist. How did you accomplish this evacuation process?
SMA: Few days back, we brought back stranded Bangladeshis from Thailand and Malaysia. The process was complex and it involved a lot of ministry works. But all went well and we were successful bringing back our countrymen through chartered flights.
TBS: Do you think there should be any national health care policy in Bangladesh?
SMA: We have a national health policy. What we need now is the implementation of it. If we can successfully implement the policy, our health ecosystem will certainly change and everyone will be benefitted.
I think there are two major deficiencies in our health sector. Firstly, there is a need for public-private-foreign investment in the health sector. Secondly, we have a shortage of professional doctor and nurses. There is one doctor for every ten thousand people and one nurse for every twenty thousand people. Thus, without adequate investment and increasing the number of health professionals, the implementation of the national health policy will take a long time.