Mankind has witnessed many wars, crises and even pandemics but it has never ever faced anything of the kind and scale of the covid-19 pandemic. It has infected about 15 million people and killed more than 600,000 in the world including about 150,000 in the USA alone. This has brought the world economy to a standstill with the global and local supply chain totally disrupted and hundreds of millions of people turned jobless.

Severely hitting demand, supply and liquidity at the same time, this pandemic poses serious threats to life and livelihood almost everywhere in the world. It also makes it extremely difficult for the policy makers, especially from the developing countries with limited fiscal space, to make a choice or strike a balance between saving lives and rescuing the economy.

To save lives, many countries including USA, Australia, New Zealand, Bangladesh and India and a number of European and other countries have imposed lockdown and measures for social distancing that have adversely affected the economy. Countries have witnessed unprecedented job losses around the world. FAO has warned of global food shortage especially in the poor countries where famine is looming large with worst possible consequences.

To face the health risks, on the other hand, stringent measures have been adopted around the world to the detriment of the economy. This could not continue for an indefinite period. Such measures had to be relaxed in phases as the condition improved, though temporarily -- testing is made available as necessary, new infection is traced and the situation is brought under reasonable control with downward trend in infection and fatality. This will mark a phase of gradual recovery to what many would like to believe to be a "neo-normal". In fact that will be like "neo-abnormal" and fundamentally different from what we called "normal" and had been familiar with before the Covid-19 pandemic.

Under any circumstances, evaporating demand in the global and local economy has to be revived through consumption and investment. Given the massive fall in income and prevalence of uncertainties surrounding the pandemic, the consumers will experience what we call "liquidity trap" and as such substantial rise in consumption demand is unlikely in the near future. So the focus has to be on boosting investment - both local and foreign.

According to UNCTAD, foreign direct investment (FDI) may fall this year between 30-40 per cent globally. However, we may not experience our share of the global decline if we go forward with appropriate policy responses. There are already good examples of countries like India and Vietnam which are doing well in attracting FDI even during the pandemic through better policies as reflected in Ease of Doing Business (EoDB). Fortunately for Bangladesh, we have undertaken a series of measures and policy changes including those in EoDB which, if pursued vigorously, may help minimise the impact of pandemic on investment and attract both FDI and local investment.

The Government has announced stimulus packages especially for the hardest hit garment sector that had exported more than US$34 billion out of $40.53 billion of merchandise export in the year 2018-19. A part of this stimulus may support the on-going and upcoming investment in the industry which, given the excess capacity, is unlikely to be large enough over the short and medium term. Moreover, liquidity has been an issue for the industries across sectors even before the pandemic which exacerbated the situation.

Stimulus package is necessary but not sufficient, much more is needed to reverse the downturn in almost all sectors of the economy. Judicious policies, proper vigilance and meticulous action by the Bangladesh Securities and Exchange Commission - BSEC may create a sense of trust and confidence for reviving the capital market for equity funding of investment. Given the fact that there are fewer investment opportunities in the real sector, investors may find it worth to be back to the capital market. The BSEC should also seriously work on debt funding as well.

Alternative investment with venture capital, private equity and many of their innovative variants, is a market segment with huge potential for equity funding that an investor may need at all stages of a business. Even though the government formulated a policy in 2015, "Alternative Investment" is yet to pick up in Bangladesh due to gaps and lapses that can be easily addressed to create a better investment ecosystem especially for the equity funding of the new generation of tech and non-tech entrepreneurs.

For debt financing, the central bank and the banking system must allow use of corporate bonds to make additional investible resources available for the corporate sector. Since micro, small and medium enterprises (MSMEs) do not have access to such facilities, the government may have to consider separate schemes for each. More so for the micro and the small enterprises that have very little access to banking sector funding. So, the government has to lend them under some form of 'credit guarantee' scheme and/or subvention for payment of interest on the credit to the MSMEs that generate larger part of employment in the economy.

To attract investment from home and abroad, Bangladesh has to vigorously pursue its agenda for improving Ease of Doing Business (EoDB) in which it made good progress in the year 2018-19. In the World Bank report on EoDB published in Oct 2019, Bangladesh moved 8 notches up and was ranked at 168 out of 190 countries while Sri Lanka, Nepal, Bhutan and India were placed at 99, 94, 89 and 63 respectively. However, as one of the best performing and fast growing economy in the world, especially during the last decade, Bangladesh deserves a much better global rank.

Towards that end, Bangladesh has taken a series of short, medium and long term reform initiatives in EoDB which, if doggedly pursued and meticulously implemented, will invariably improve investors' confidence. The lessons of our experience of work from home and remote locations during the current pandemic  tells us that much of the EoDB reforms can be implemented using digital mode of delivery and the on-line "One Stop Service/Single Window" facilities that are already in place. Such service delivery is possible in almost all aspects of EoDB that include "Starting a Business", "Getting Electricity", "Getting construction permit" "Registering Property", "Getting Credit", "Paying Taxes", "Trading Across Borders", "Protecting minority investors", "resolving Conflict" and "Enforcing contract"

To start, registration is necessary for a business that has to have 'trade licence" and "VAT registration" is a pre-requisites for the licence. In some cases these involve manual processes, need for physical presence and delays which can be easily avoided by issuance of "On-line-only" trade licence and VAT registration without any human contact.

'Getting a construction permit' from RAJUK involved 14 processes. The ministry of Public Works decided in 2019 to do away with ten out of them leading to reduced processes, cost and time involved in getting such permit. To implement the reforms, it was absolutely necessary to issue circulars, publish citizen charter and SOPs, launch campaign, train the concerned officials and staff, inform the people, and put in place a robust grievance address mechanism. These are yet to be done. All these can and must be done now on-line and on the internet.

We made progress in 'getting electricity' by reducing some costs, but still we have redundant processes that we can get rid of and thus reduce not only processes but also time and cost for getting electricity. Much of streamlined processes of getting electricity can also be implemented on-line.

'Registering properties' still follows outdated rules and traditional manual processes and involves longer time and higher costs. According to the World Bank report, registering a property on average takes 271 days in Bangladesh while the global average is 47 days. We can use IT infrastructure for screening, documentation and transfer of land ownership and thus reduce processes, time and costs involved in registering of properties.

Our annual international trade is heading to US$100 billion mark, yet 'trading across borders' remains cumbersome due to use of physical transportation documents and lengthy processes at customs and ports. By a drastic cut in redundant customs procedure, use of electronic documents and adoption of technology and flexible payment regime, we can reduce processes, time and cost and make our 'trade across borders' much easier as it is in countries like Singapore.

'Getting credit' has been a long standing issue, especially for the MSMEs that never get adequate support from the banking system for a number of barriers including "lack of reliable credit information". To enhance credit flows, it is absolutely necessary to increase credit information coverage, collection, storage and utilization of credit data not only for business entities but also for the individuals so that the lenders can know their clients better and take informed decision.

'Resolving conflict' is a very important aspect of EoDB. Unfortunately, we are doing poorly in this area due to a number of deficits in legal and institutional infrastructure. According to the latest World Bank report, OECD average duration for resolving a commercial dispute is 590 days and for Bangladesh it is 1442 days. We can and should make substantial improvement in this area and create a sense of comfort among the investors by enacting an updated law, increasing the number of dedicated benches in the High Court, assigning a court for commercial disputes in every district, training the court officials, using alternate dispute resolution (ADR) and adopting technology and best practices (as in South Korea or Singapore).

"Enforcing Contract" is absolutely necessary for growth of business and it depends on efficient judicial system and updated legal infrastructure.  These are indispensable for attracting investment, improving business climate and fostering innovation. Unfortunately, in relation to enforcing of contracts, we are almost at the rock bottom in EoDB ranking --189th among 190 countries. 

According to the World Bank report, it takes about 10 months to enforce a contract through court system in Singapore and New Zealand and about four years in Bangladesh and India. We must do much better. In order to improve our standing in relation to enforcement of contract, we should improve efficiency of our judiciary and modernise our legal infrastructure with resources, talent, technology and best practices from around the world.

Besides improving EoDB, Bangladesh also needs to avail the opportunities for attracting investment created by tension, trepidation and developments in the global and regional economies and also between and among the big countries. For example, we can reasonably expect an outward movement of investment from China, due to structural shift within the Chinese economy. However, we should steer clear of the highly politicised issues of trade and economic tension between China and some other countries. Instead, we should focus on making our economy more competitive for attracting and retaining investment. We have to make a strategic move, continuously revisit and update our investment regime and make it more competitive relative to all other countries which are potentially competing with Bangladesh.

"Infrastructure deficiency" is a major issue in investment in almost every country and more so in Bangladesh. Therefore we need to continue our focus on infrastructure and ensure availability and access to such facilities as electricity, gas, port and trade logistics and skilled work force.

It is also absolutely necessary to reduce regulatory burden, ease regulatory compliance such as in paying taxes and give due attention to the details in all those areas that have important bearing on investment such as better access to land, made possible through the economic zones. In order to boost investment during the pandemic and in the aftermath, Bangladesh needs a world class investment regime with most of the investment services delivered digitally. Such a regime with improved EoDB clearly makes out a strong business case for investment in Bangladesh and makes it stand out as a better destination for FDI relative to many of its competitors.

This article from IDEA (Innovation and Development Associates) is contributed by  Kazi Aminul Islam (Former Executive Chairman, Bangladesh Investment Development Authority), Abul Kalam Azad (Ex. Principal Secretary and Principal Coordinator), Mohammad Shahidul Haque (Ex. Senior Secretary, Ministry of Law), Shibli Rubayat Ul Islam (Professor and Dean, Business Studies, University of Dhaka), and Hussain Samad (Senior Researcher, World Bank). 

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