Findings of homegrown business climate index

The Metropolitan Chamber of Commerce and Industry (MCCI) and the Policy Exchange Bangladesh (PEB) deserve appreciation for producing the Bangladesh Business Climate Index (BBX). The home-grown index would fulfil, to a large extent, the vacuum created by the discontinuation of the Doing Business Index by the World Bank (WB). The WB announced the discontinuation of the publication of the Doing Business Report in September when it detected irregularities in its 2018 and 2020 editions. Governments, policymakers, and international investors found the index helpful in policy formulation and decision-making, as it contained comprehensive data and observations about the business climate in 190 countries.

The content of the maiden BBX, published on Thursday last, could be construed as both positive and negative as far as the business environment in Bangladesh is concerned. In six out of 10 indicators, the situation is not that palatable. Yet with an overall score--- 61 out of 100--- the report noted, the business climate was improving for the better. The BBX that has been prepared through interactions with 351 businesspeople in eight divisions of the country has highlighted the prevailing business climate in the country's largest business hub- Dhaka--- and in other administrative divisions.

The BBX report has reconfirmed some findings, made earlier by the Doing Business reports, from time to time. However, it has pointed out the potentials of a few places to grow as major business centres as they have scored better than both Dhaka and Chittagong in some selected areas. None of the places offers an ideal business climate, as hurdles of various types hinder business activities everywhere. For instance, setting up businesses in Dhaka, the nerve centre of the country's economy, is now almost impossible because of land scarcity. Similarly, Chottogram is ahead of other divisions in four indicators, but it has its limitations. A business person needs 39 government approvals for getting customs clearance at the Chittagong port. The delay at the port, naturally, raises the cost of doing business.

Barriers to doing business are many. Major ones, as listed by the BBX report, include the collection of certificates from various agencies by small businesses, regulatory complexities and poor infrastructure and road connectivity. These are the areas that have come into focus repeatedly in reports prepared by national and international agencies. There is no denying that there have been improvements in business climate over the years. Otherwise, the country would not have made a big stride in economic development in recent years. 

The private sector remains the primary engine of growth. It flourishes when barriers to doing business are brought down to a minimum. Businesses shy away from investing when they find the business climate unfavourable. Besides traditional ones, there are shortcomings relating to trade facilitation, access to finance and technology adoption that need to be urgently addressed by the government. The BBX also has put before the policymakers an issue---encouraging investors to move to other administrative divisions--- to ponder over. Such decentralisation has become even more necessary because making new investments in Dhaka has become almost impossible for a variety of factors. The business climate is now supportive of new investments than before. It needs to be made even better to woo greater investment.