Unexpected changes in energy prices have been identified as the most serious business risk in Bangladesh, according to a recent report published by the World Economic Forum (WEF).
In the report titled “Regional Risks for Doing Business 2018,” WEF explained that businessmen in Bangladesh are very vulnerable to energy price volatility, adding that this has the potential to seriously disrupt the business climate in the country.
As per the findings of the report, five other risks of doing business in Bangladesh include failure of national governance, cyber-attacks, failure of regional and global governance, and unemployment/underemployment.
Data for the report has been collected from the annual “Executive Opinion Survey 2018” conducted between January and June this year, for the “Global Competitiveness Report 2018.” Survey data from 2017 and 2016 were also used in some cases.
Failure of national governance
In addition to being the second most serious risk of doing business in Bangladesh, failure of national governance also predominates among businesses in South Asia.
Following a particularly busy political period in the region, the election process is being viewed with anxiety in the South Asian region, as it can be accompanied by violence, blockades, and other forms of political tension.
Cyberattacks
On February 4, 2016, Bangladesh’s banking industry suffered a sudden shock when $101 million was stolen from Bangladesh Bank’s account at the New York Federal Reserve, the biggest cyber attack on the banking sector of the country.
The Bangladesh Institute of Bank Management (BIBM) conducted much research on the cybersecurity of banks in Bangladesh, with one research study revealing that 52% of banks in Bangladeshare are at high risk of cyberattacks.
Another BIBM research found that 80% of banks in the country do not have relevant staff skilled and efficient enough to face any such attack, or even as much as a firewall in their data centres.
Only 4% of banks have employees with excellent knowledge about IT and cyber security systems, found another BIBM study, which also revealed that half the bank officials in Bangladesh are unaware of cybersecurity.
The research found that 28% of officials in the banking industry are “very ignorant” about cybersecurity and 22% are “ignorant” about IT security, while 20% of officials have minor knowledge about the matter.
Furthermore, in May, Bangladesh was ranked 73rd among 100 nations in the National Cyber Security Index, published by the Estonia-based e-Governance Academy.
The report also claimed Bangladesh to be at a high risk of cyberattacks since most computers in the country are running Microsoft products that report malware encounters.
Failure of regional and global governance
The failure of regional and global governance has been identified as the third most serious risk of doing business in Bangladesh.
Survey respondents pointed to governance issues above the nation state level, with failure of regional and global governance ranking fourth across the region, and featuring most prominently in Nepal and Bangladesh.
Refugee and migration issues have been considered to be drivers of this, with approximately 700,000 people – mostly Rohingya – having fled from Myanmar to Bangladesh over the past year.
Unemployment and underemployment
According to the report, unemployment and underemployment were ranked as the fifth leading risk in Bangladesh, and the third leading risk in the South Asian region.
While World Bank projections suggest South Asia is set to remain the fastest-growing region in the world – with 7.1% economic growth on average in 2019 – there are concerns that the region will struggle to deliver sufficient job creation to meet the needs of a rapidly expanding population.
Observations of economist AB Mirza Azizul Islam
Former Finance Adviser to a Caretaker government AB Mirza Azizul Islam said the report of the WEF reflected the inner problems the businesses have long been facing in the country.
“By and large, the report results are alright. According to my knowledge, Bangladesh has been consistently doing poorly in the governance indicators set by the World Bank. Cyber-attacks are definitely a distressing risk because our banks are still not prepared enough to fight the threat,” Aziz told the Dhaka Tribune.
In terms of unemployment, he said it can be observed that the rate is higher among graduates.
Firstly, our education system is still not compatible with the job market. Secondly, of the total employment, the informal sector occupies the major percentage while employment in the formal sector is very limited, he added.
