Bangladesh business climate fares poorly in 6 out of 10 indicators

First it was the World Bank that said the business climate in Bangladesh was not good, and now a survey run by two local organistations reveal the same scenario. The survey states that it is extremely complicated for businessmen in the country to get bank loans. It is also difficult for an entrepreneur, when beginning a business, to get information regarding legal requirements. Cross border trade facilities are inadequate and the use of technology is not up to the mark.

The Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh carried out the survey, Business Climate Index, on 10 indicators. Six out of these 10 indicators are in a poor state. The remaining four are on a rise.

The indicator doing the best among the 10 is infrastructure facilities. And the one doing worse is cross border trade facilities. Bangladesh scored 61 out of 100. The survey was run from December last year till September this year, on 351 businesspersons in eight divisional towns of the country. The results of the survey were published on 7 September. The two private sector organisations carried out this survey on business climate for the first time.

Earlier, from 2005, the World Bank had been publishing the Ease of Doing Business report on a regular basis. The report was based on findings of 190 countries, but has been discontinued from this year due to certain discrepancies in preparing the reports that came to light. The last report of the World Bank in this regard ranked Bangladesh at 168 among 190 countries, with a score of 45 out of 100.

The event for the virtual launch of the MCCI-Policy Exchange Survey was moderated by MCCI president Nihad Kabir, with the prime minister’s advisor for private industry and investment Salman F Rahman as chief guest.

Also speaking at the event were the Japanese ambassador Ito Naoki, executive chairman of Bangladesh Investment Development Authority (BIDA) Sirajul Islam, Apex Footwear managing director Syed Nasim Manzur, FBCCI president Jasim Uddin, BUILD chairman Abul Kasem Khan, Berger Paints Bangladesh’s managing director Rupali Chowdhury, DCCI president Rezwan Rahman and others. The keynote was present by Policy Exchange Bangladesh’s chief executive officer Masrur Reaz.

Presenting the keynote, Masrur Reaz said that the survey was run on 10 indicators – infrastructure facilities, starting business, tax payment, labour policy, access to legal information, land availability, dispute resolution, use of technology, access to loans and cross border trade facilities.

If the score of any indicator is from 0-20, that means the business climate is extremely difficult. None of the 10 indicators scored so low. The 21-40 score means there are many obstacles to business. None of the indicators had this score either. The score of 41-60 means the business climate is quite complicated. Six of the indicators scored in this category. The lowest, at 49.43, was cross border trade. In access to loans, Bangladesh scored 50.78. The use of technology score was 57.70, dispute resolution 57.48, land availability 58.90 and access to information of legal requirements 59.83.

If any indicator’s score is between 61-80, that means the business climate is on the rise. The remaining four indicators were in this score with infrastructure facilities scoring at 72.2, business starting 68.91, tax payment 68.72 and labour policy 66.35. A score of 81-100 means a business-friendly climate. There were no indicators in this score bracket.

The survey showed that the businesspersons in the 10 indicators have different narratives. For example, for the readymade garment sector businesspersons, land was the biggest problem. Many potential entrepreneurs could not start business due to the unavailability of land. And in the 10 indicators, Dhaka and Chattogram were worse off than the other divisions. Dhaka and Chattogram lagged considerably behind in starting up business, acquiring land and all the other indicators.

Discussing the survey, Salman F Rahman said, "Previously only the World Bank would carry out surveys on business climate. We questioned the method of those surveys. Finally the reports were halted as there was proof of irregularities. However, the method followed by the two local organisations is much better than that of the World Bank. The World Bank would gather data from Dhaka and Chattogram divisions. These two local organisations have collected information on businesspersons of eight divisions. He said that the information from the survey would help in improving the country’s business climate.

Executive chairman of BIDA Sirajul Islam said that an opportunity had emerged before the government with the World Bank’s Ease of Doing Businesses being stopped. The government would carry out the survey itself. This would reveal whether the country’s business climate was improving or falling back.

The Japanese ambassador said that Bangladesh had an enviable GDP growth even during the corona pandemic. Bangladesh was among the fast growing economies. However, if it was to become a developed country by 2041, the business climate needed to improve further. There are problems in the determination of customs duty, there were shortcomings in inter-trade facilities. Improvements needed to be made in these areas.

Syed Nasim Manzur said, if the business climate of the country was to improve, there was need for institutional reforms on a priority basis and in a planned manner. Acquiring land for garment sector was very difficult.

Abul Kasem Khan said to improve the business climate, businesspersons should be offered a complete one-stop service. The harassment that businesspersons go through to get a loan, must be lessened.

Jasim Uddin said so long they would have to wait for the World Bank report to get an idea of the business climate. For the first time this process had started in the country and this was positive. The credibility of the survey needed to be strengthened further.