There is no denying the fact that Bangladesh is now confronting some major challenges in steering its economy to a higher growth trajectory. Such challenges include slow implementation of development projects, low investment and sluggish growth of revenue.
The challenges were identified many a times in countless meetings of the country's renowned economists, policymakers and high government officials. Economic analysts say high interest rate is an obstacle to increasing private investment. Shortage of land and lack of electricity and gas connections are main obstacles to investment growth.
Analysts regret that the implementation of the annual development programme (ADP) was always slow. Allocation increases every year but the ministries and divisions are unable to spend the budget. The government will have to find out the reasons behind the slow implementation of the ADP.
According to an International Monetary Fund (IMF) expert, slowdown in exports and weak remittance growth are the new challenges for the economy. Bangladesh should implement the value added tax (VAT) law and boost investment to attain sustainable growth as well as to become a middle income country, he said.
Bangladeshi economy has undergone a major transformation over the past two decades, spearheaded by the rapid expansion of the garment industry, which has helped reduce poverty and acted as a catalyst for women empowerment. This resulted in a significant and sustained increase in per capita income.
In order to move forward, the country's economic institutions and governing practice should to be upgraded to support its transition toward middle-income status and as the country becomes more integrated globally.
There are many problematic factors for doing business in the country. Interestingly, some of these factors such as inadequate infrastructure, corruption, inefficient bureaucracy, limited access to financing and policy instability remained the same for the last several years.
Successive governments did always claim of making substantial progress in reforming business environment in the country. But many of such reform measures could not be implemented due to typical bureaucratic inertia.
Reforms are badly needed for creating congenial business climate to ensure higher economic growth, create more employment opportunities and reduce poverty level. In reality, some areas of business are over-regulated while others are less regulated. Only reforms can strike a balance between the two factors.
In the latest Global Competitive Ranking (GCI) ranking, the country's performance has deteriorated in some major and sub-indices of businesses including institutions, financial market sophistication, goods market efficiency and technological readiness. Overall performance in efficiency enhancers, and innovation and sophistication for competitiveness also declined in the year.
However, a United Nations body has defined competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country which, in turn, sets the level of prosperity that can be earned by an economy. As for Bangladesh, identifying potential markets and buyers, difficulty in meeting quality and quantity requirements of buyers and high cost in domestic transportation still remain as major problems in export.
Local businesses' perception of government's implementation plan for utilising information and communication technology to improve overall competitiveness has significantly improved but availability of latest technology is otherwise unsatisfactory.
The financial sector needs further reforms in order to become more competitive and efficient. In case of foreign trade and investment, export suffers due to a weakness in internal and external connectivity, lack of diversity in products and markets and poor networking of entrepreneurs. However, the impact of the unchanged challenges is now less than before.
Reforms in Bangladesh should, in general, aim at facilitating easy access to loans for small and medium enterprises, improvement of customs clearance process, making tax payment easier, simplifying labour regulations and land issues. Besides, the businesses in the country have to be adequately prepared to confront major challenges like capital scarcity, inflation, labour problems etc.
The situation needs to improve substantially for creating a major stimulus among the investors -- both local and foreign. For the last few years, domestic investment has remarkably slowed down in Bangladesh. Despite official measures to reduce the cost of doing business, domestic investors are not putting in their money in new investments, particularly in the manufacturing sector.
The power supply situation is yet to improve substantially. Most industrial units are keeping their operations unhindered through captive power generators during load-shedding, thus adding to their cost. The power outage, already in operation in the name of load management, is now a routine affair. However, the government has recently started giving electricity connections to a number of new industrial plants at a limited scale.
In fact, country's economy should aim at becoming more and more competitive, especially to promote its external trade. Bangladesh has many things to do for making its economy more and more competitive. A vital requirement is to drastically improve and expand its infrastructure, transportation and solve the related problems.
All modes of transportation need to be developed as soon as possible to keep pace with the country's business and economic development. An integrated strategic plan can develop the country's communication system on an urgent basis.
With such facilities in place, Bangladesh can certainly emerge as a strong regional business hub by reducing cost of doing business substantially.