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Survey: Businesses feel regulations in Bangladesh are inconsistent

  • Published at 12:40 am July 29th, 2018
Businesses say regulatory boards often formulate rules and regulations that are announced without prior notice, consultation, or impact assessment Mehedi Hasan

According to the survey, 68% respondents think that many laws in Bangladesh are inconsistent with each other, and 64% think that for the same law, there are often inconsistencies within the subordinate rules and regulations

According to a survey, businesses are highly concerned about inconsistencies in laws and regulations as well as undue use of discretion by officials, with 68% of business owners identifying these factors as problematic.

The survey was jointly conducted by the International Finance Corporation (IFC) of the World Bank Group, and the Business Initiative Leading Development (BUILD) – a public private dialogue (PPD) platform and presented at a policy dialogue on July 12 at Amari Hotel.

Government initiatives and reforms taken to facilitate the business community have gone in vain due to a lack of incorporation of the opinions of business people in the process, the survey said.  

40% business owners think rules and regulations are often announced without prior notice, consultation, or impact assessment.

BUILD Chief Executive Officer (CEO) Ferdaus Ara Begum told the Dhaka Tribune: “The survey covered businesses operating in Bangladesh to assess their views on regulatory unpredictability and its manifestations and impact. The initial survey was conducted in September and October 2017 to test and refine the survey tool, and a follow-up survey was conducted online in November and December 2017.”

“Around 50 respondents participated in the initial survey in order to test cases, and of the 150 businesses targeted in the second 74 sent back a complete response and a further 47 responded partially; the rest did not. Our analysis was based only on the complete responses,” she added.

Ferdaus also said: “Foreign investors, joint ventures, and local garments, IT, engineering, leather, and food sector companies participated in the survey, which contained 27 questions in six sections.

According to the survey, 68% respondents think that many laws in Bangladesh are inconsistent with each other, and 64% think that for the same law, there are often inconsistencies within the subordinate rules and regulations.

Other information from the survey showed that 50% respondents identify a lack of effective grievance mechanisms as a major obstacle inconducting business, while 47% agree that even if direct or indirect expropriation is unlikely, adverse policy or regulatory changes often make costs and revenue streams uncertain.

The survey also states that 54% business owners agree that finding information on existing rules and regulations is a major obstacle to carrying out business.

According to the survey, 62% respondents think there is a considerable difference in the interpretation of rules and compliance requirements by different officials. A reason for this is the absence of clear criteria for decision-making in many areas,which was acknowledged by 48% of the respondents.

Moreover, 60% of respondents think that even where such criteria exist, these are not followed in the decision-making process.

BUILD also stated that rules and regulations are sometimes being announced without prior notice, and this sudden appearance of even well designed policies cause problems for businesses. These are most difficult to deal with if the rules are to be enforced immediately, as often happens in practice.

In the interim Statutory Regulatory Order (SRO) issued by the National Board of Revenue (NBR), BUILD recommends that before publication, prior notice be given to businesses for feedback.

Kazi Sazedur Rahman, owner of a paper cup manufacturer KPC Industry, said: “The government does not rule out the reality of the businessman. Rules are issued with a short-term in mind, and without discussion with the business owners concerned. As a result, businesses are damaged.”

The platform also urged the authorities to regularly review policies, rules and regulations to update them as per the need of new types of businesses. It also said the government should maintain consistency in its policies for at least five years, so theycan give proper support to the country’s development by allowing businesses to adapt to them.

This regulatory unpredictability hampers economic diversification, productivity improvements, technological development, and progress towards Sustainable Development Goals (SDGs).

BUILD CEO Ferdaus also said:“The research section of the Law Ministry should be strengthened. People of this section who have required expertise should be retained with improved remuneration.

“The private sector would also need to take up some responsibilities in order to put their required opinions forward on time, and advocate their issues with justifications,” she added.

Speaking about the survey, Principal Secretary to the Prime Minister M Nojibur Rahman said the government is actively concerned about extending better policy support to business owners in order to make them competitive. This will help them engage in new and innovative ventures, and with this in mind, the government is also preparing supportive policies in consultation with the private sector.

“Valuable input from the private sector is encouraged,” he said.

He also said: “I am familiar with the tax policy of the country, which needs more streamlining for the benefit of the private sector.  Coordination among the ministries is also important, and we are working in this regard.”

“Regulatory unpredictability is one of the major concerns for the private sector as it can make business costly and investment uncertain. The primary requirement in addressing these issues is regular dialogues” he added.

BUILD Chairman and Chittagong Chamber of Commerce and Industry (CCCI) President  Mahbubul Alam said, “One of the major reasons for the slow growth in private investment is the existing regulatory unpredictability, which has an impact on the cost of doing business for local and foreign investors; thereby causing uncertainty among investors in adopting investment decisions.

“Some important factors that cause regulatory unpredictability have been identified, such as the adoption of rules and regulations by the government without prior consultation with stakeholders, and the discretionary behaviour of regulatory bodies,” he also said.

Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur told the Dhaka Tribune: “Regulatory officials should be professional in their work in order to ensure a positive business environment. This is because the abrupt announcement of rules and regulations is harmful for businesses.”