Our rating has been continuously going down since 2006
Bangladesh has been ranked 177th out of 190 countries surveyed by the World Bank in its Ease of Doing Business Index for 2018, setting us a notch down from last year’s ranking. To put that into perspective, our rank is actually worse than the war ravaged countries of Iraq and Syria. It is actually easier to do business in countries that have only recently ended civil wars than in a relatively peaceful Bangladesh!
Moreover, while Bangladesh kept going down in ratings, neighbouring India has achieved an incredible feat by going up 30 notches within one year! This does not come as much of surprise though, since our rating has been continuously going down since 2006, from an initial rank of 65.
However, this unfavorable score is bound to discourage foreign investors from coming to Bangladesh as it is a clear sign of our nation’s hostility towards business organisations.
This means that Bangladesh is unlikely to receive much funding this year in the form of foreign direct investment. The current predicament of our business sector, and its subsequent poor ranking, can be blamed on the host of complicated rules, regulations, charges and fees that often work as deterrents to undertaking new commercial initiatives by both local and foreign and foreign entrepreneurs.
Denial or ignorance of the findings of this study will help nobody in the long-run, since most investors do not take data published by the government or local organisations seriously
The recent increase in the cost of business registration at the Registrar of Joint Stock Companies and Firms is a good example of this. Although the amount by which the charges increased is significant, it does render a lower score in the index compared to that of last year. Based on the effect this arbitrary move has had on investors’ perception, this decision seems rather unnecessary and poorly thought out.
No changes have been recorded in getting credit, protecting minority investors, trading across borders and enforcing contracts, pointing to a lack of concern or effort from the government.
The overall score has gone up, in the distance to frontier (DTF) index, by 0.15 points, a negligible number improvement compared to other nations. DTF shows the distance of each economy to the “frontier,” representing the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005.
The relative simplicity and easy to measure criteria provided by this report gives us a clear idea of our current situation. The government and other concerned authorities should be able to take proper action based on the data provided, instead of criticizing the data.
This index has very significant implications on a country’s economy. Since the World Bank is a highly reputed global agency, it often acts as a trusted source for unbiased reports that foreign investors rely on before considering doing business in a country.
Denial or ignorance of the findings of this study will help nobody in the long-run since most investors do not take data published by the government or local organisations seriously.
They assume citizens of a nation to always speak highly of their country, and consider the World Bank as a more reliable source. Research supports the notion that reforms simplifying business registration lead to more firm creation and that burdensome, poorly functioning regulatory business environments undermine entrepreneurship and economic performance by choking off the growth of firms.
Furthermore, deregulation has been proven to result in favourable economic outcomes by contributing to infrastructural growth and increase in employment rates. Correlation has also been suggested between distance to frontier index and the GDP per capita of a nation.
While people have been celebrating a recent 7.24% increase in the GDP of Bangladesh, the GDP per capita is still pretty appalling at $1,538. Focusing on making Bangladesh a more business friendly country might help in this regard, and the specific sectors that need improvement have already been mentioned in the index.
If this downward trend continues, it will not be long before we reach the lowest position in rankings. It must be kept in mind that other nations, that were previously in much worse conditions, have already surpassed us.
Similarly, the countries currently below us in rankings will soon speed ahead of us, living us in the dust. We are bound to lose our much-needed foreign investment to other countries who are competing for the same limited resources.
Slow or no change will ultimately turn Bangladesh into an even poorer country. Employment will decrease, the standard of living will go down.
Unless we want to be considered as the last place for business, drastic measures must be taken by the government, which will only come about as result of pressure exerted by affected interest groups and supported by vocal discontent of the general public.
SM Abrar Aowsaf is a Staff Sub-editor at the Dhaka Tribune