Opinions
5 years ago

Political commitment essential for improving business environment

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The 'Doing Business' report is an annual publication of the World Bank Group since 2003. It publishes the ease of doing business index of a country, after ranking it in the Doing Business ranking of 190 countries around the world.

The 'doing business' index is determined after evaluating the cost of doing business, regulatory requirements for doing business as well as procedures to comply with the regulations. As such, the report is considered as the leading policy advocacy document for private sector development around the world.

Many governments have reviewed respective laws and regulations based on their performance in the doing business index. Similarly Bangladesh government is also considering it as an indicator of internal environment for doing business.

Over the last couple of years, the Bangladesh government has been discussing the issue. Already some measures have been initiated to improve Bangladesh's performance in the doing business index. But due to complex bureaucratic procedures, these initiatives were not implemented or are not getting priority for implementation from respective ministries and agencies. Doing business index is prepared based on the following criteria:

  1. STARTING A BUSINESS: Procedures, time, cost and minimum capital required to open a new business.
  2. DEALING WITH CONSTRUCTION PERMITS: Procedures, time and cost involved with building a warehouse.
  3. GETTING ELECTRICITY: The steps involved with obtaining a permanent electricity connection for a newly-constructed warehouse of a business.
  4. REGISTERING PROPERTY: The processes, time and cost involved with registering a commercial real estate
  5. GETTING CREDIT: Strength of legal rights index and depth of credit information index
  6. PROTECTING INVESTORS: Indices on the extent of disclosure, extent of directors' liability and ease of shareholder suits
  7. PAYING TAXES: Number of tax categories, hours per year spent to prepare tax returns and total tax payable as share of gross profit
  8. TRADING ACROSS BORDERS: Number of documents, cost and time necessary to export and import products and raw materials.
  9. ENFORCING CONTRACTS: Procedures, time and cost involved in order to enforce a debt contract.
  10. RESOLVING INSOLVENCY: The time, cost and recovery rate in percentage under bankruptcy proceedings.

According to the Doing Business Report 2019, Bangladesh ranked 176th out of 190 countries. Among other South Asian countries, Pakistan ranked 136th, Sri Lanka 100th and India 77th in the same report. Bangladesh's performances in individual criteria of doing business are 138th/190 in starting business, 138th/190 in dealing with construction permits, 179th/190 in getting electricity, 183rd/190 in registering property, 161st/190 in getting credit, 89th/190 in protecting investors, 151st/190 in paying taxes, 176th/190 in trading across border, 189th/190 in enforcing contacts, and 153rd/190 in resolving insolvency.

Bangladesh has performed badly in indicators like enforcing contracts, registering property, getting electricity and trading across borders. If enforcement of contracts is too difficult in Bangladesh, then how can foreign investors be motivated to invest in the country?

Similarly, when possession of purchased land especially in Dhaka, Chattogram and other major cities is a difficult task for Bangladeshis, how easy will it be for foreign investors to purchase land for factory and getting possession of it?

Getting electricity and cross-border trade are also very complex. Too many licenses, registrations, permits, NoCs, clearances, audits and surveillance have made the business environment of Bangladesh one of the most expensive, time consuming and complex in the world.

The government and related stakeholders of the private sector have taken a number of initiatives to improve the situation over the years.

The government is fighting with unemployment at every front. It is encouraging self-employment as well as entrepreneurship development that can increase employment in the society. Private sector development is one of the bold political manifestos from all the parties in Bangladesh. A high-powered government agency like Bangladesh Investment Development Authority (BIDA) is trying to attract foreign investors and encourage them to invest in Bangladesh. Different agencies like Bangladesh Small and Cottage Industries Corporation (BSCIC), SME Foundation and others are working to promote local investment and create new women entrepreneurs by providing policy, technical, fiscal and other supports. National Industrial Policy has been declared by identifying a long list of High Priority and Priority sectors. Bangladesh bank is monitoring scheduled banks and encouraging the provision of low cost loan to entrepreneurs. Apex trade bodies like the Federation of Bangladesh Chambers of Commerce & Industries (FBCCI) and its many wings are conducting policy advocacy activities to create and maintain a congenial environment for doing business.

All of the above initiatives have become meaningless as Bangladesh continues to perform miserably among all its south Asian neighbours in the Doing Business report.

The 11th National Parliamentary Election will soon be held in the country. The nation is looking forward to an inclusive, participatory, free, fair and credible election. Political parties are going to declare respective election manifestos soon.

Under such circumstances, all political parties should focus on how the ease of doing business in Bangladesh can be improved. This should be one of the top commitments of all parties. Without clear political commitment, it would be difficult for the nation to get rid of the complex, 'red tape' that binds the different categories related to doing business in Bangladesh. Bureaucracy has made it near to impossible to reduce hidden cost and time of doing business. The long list of permissions and licenses is also not helping. Political activists are also responsible for increasing unofficial cost of doing business in Bangladesh.

If the matter is not addressed through political commitment soon, then the country's products will lose its competitiveness in the global market. Also, without foreign investment coming into Bangladesh, the country will have a hard time at sustaining economic growth and prosperity.  

Md Joynal Abdin is Executive Director, DCCI Business Institute (DBI). Views expressed here are not from the organisation that the author represents.

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