Creating a congenial business climate

Shahiduzzaman Khan | Published: November 03, 2018 21:50:25


The cover page of the latest World Bank's doing business report.

The government has apparently taken a serious view of the country's dismal performance in the latest World Bank's doing business report. Bangladesh became the worst performer in South Asia, while war-torn Afghanistan saw its ranking climb from the 183rd to the 167th in a year.

Bangladesh advanced just one spot ahead, rising to the 176th place in the World Bank's ranking of the economies for their ease of doing business. Finance minister AMA Muhtih in his instant reaction termed the poor performance of the country 'shameful' and blamed the bureaucracy largely for failing to improve the position.

The World Bank index is based on 10 main pillars or sub-indices. On 'starting a business,' the country's position deteriorated to 138th this year from 131st in the past year. According to the latest report, it takes at least 19.5 days on an average to start a business in the country.

While the country regains position slightly from two years ago, it remains far behind in improving the business climate. Bangladesh had, in fact, targeted securing a respectable place below 100th by 2021 in the index. But the latest position puts a big question mark on achieving the ambitious target in just four years.

As an immediate measure to improve the situation, the government is reported to have formed an inter-ministerial body to lower the number of documents required for exports as a part of easing doing business in line with the standards set by the World Bank.

The body comprises the representatives from the Bangladesh Bank, National Board of Revenue, Export Promotion Bureau, office of the Chief Controller of Import and Export, and other relevant parties. Additional secretary of the Ministry of Commerce has been tasked to head the 10-member committee.

The newly-set committee has been assigned with the tasks of lowering the number of required documents to seven from the current 11 in case of exports. The committee will reportedly examine whether the bill of lading and site draft can be merged as one document, minimising commercial invoice and purchase order packing list in one document, and consolidating letter of credit, bill of exchange, and insurance certificate into one document.

The four other required documents, which will remain independent, are certificate of origin, freight certificate, bank EXP form, and export registration certificate (ERC). The committee will also, according to reports, work on fixing modalities and preparing a policy to simplify using documents in electronic and digital format.

In a recent observation, the finance minister appeared optimistic about the activities of the Bangladesh Investment Development Authority (BIDA). He said the authority has taken some effective steps by signing some memorandam of understanding with relevant entities. It has moved to offer one-stop service to the investors. There will be a quantum jump of Bangladesh in 'Doing Business' index once the one-stop service starts working. However, it remains to be seen how BIDA could implement it as per expectation.

According to analysts, a major re-branding of the country is needed to enhance the image of the country. Its ready-made garment (RMG) sector needs such re-branding very much to improve upon the country's doing business index. The country's shattered image, stemming from poor workplace safety and low payment to workers, has compelled a number of European companies to avoid the 'Made in Bangladesh' label.

There is, however, a need for enhancing better business climate in the country. Ease of doing business, according to analysts, is something the country needs to focus on. There have been recent measures to set up 100 special economic zones or 12 hi-tech parks. But attention should be given to what is already there, they say.

As the second-largest apparel exporter, the country should continue to drive the sustainable supply chain practices given the expected impact of climate change. Impact measurement can help identify supply chain gaps in policy, infrastructure or resources and creatively plug them to maximise social benefits and profits for everyone.

Business people are, indeed, mostly getting discouraged due to huge hidden costs that remain persistent in the country's business arena. They also face difficulties in accessing finance. Policy instability, inadequately educated workforce and crime and theft are some other problems that are being confronted by the business community.

The government thus needs to take extra care for the businesses so that they do not face any problems and harassment. Besides, a number of steps should be taken up to lower extra cost, processing stages and time for improving the business environment. Dialogues between public and private sectors should be arranged in order to expand trade and business activities. In fact, there is no alternative to strengthening the country's overall economy.

Successive governments in Bangladesh claimed substantial progress in reforming business environment in the country. But many of such reform measures could not be implemented due to typical bureaucratic inertia.

The fact remains that as digitisation of many areas is not being done properly and systematically across the country, things are not moving in the right direction. To start a business venture, a number of papers and documents are required. Though there are online facilities available in the country, one has to get works done manually in most cases.

Underhand dealings and bribes are widespread, which increases the cost of doing business. Rent-seeking behaviour at functional level and difficulties in contract enforcement are some of the reasons behind the dismal ranking in doing business index.

In reality, some areas of business are over-regulated while others are less regulated. Only reform can strike a balance between the two factors. A congenial business climate needs to be there to ensure higher economic growth, create more employment opportunities and reduce poverty level. 

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