Even after moving down a notch in the ranking, Bangladesh still remained the most open in South Asia to foreign competition, according to the report
Bangladesh has been ranked 103rd out of 140 countries in terms of doing business in the world, down by one notch from the previous year ranking as competitiveness has been weakened in most of the indicators.
However, Bangladesh’s overall score has marginally improved by 0.7 to 52.1 in 2018 in the doing business.
In the World Economic Forum's Global Competitiveness Report (GCR) 2018 released yesterday, Bangladesh was ranked 103rd out of 140 countries, which was 102nd in the previous year report.
The Centre for Policy Dialogue (CPD), a local think tank released the report on behalf of the WEF at Cirdap auditorium in Dhaka yesterday.
USA ranked top in the 2018 GCI and it is followed by Singapore, Germany and Switzerland without any change.
Among the South Asian countries, India moved up by five notches 58th, while Pakistan 107 and Nepal 109 slipped by one position each and Sri Lanka by four positions to 85.
“Progress made by Bangladesh in doing business in last one year was not enough in uplifting the global competitiveness ranking. While Bangladesh's competitors have done better comparing our performance. As a result, Bangladesh ranking down by one notch,” CPD Research Director Khondaker Golam Moazzem said during his presentation.
The survey was conducted under 12 pillars including institutions, infrastructure, ICT adoption,macroeconomic stability, health, skills, product market, labour market, financial system, marketsize, business dynamism, and innovation capacity.
Bangladesh is behind in most of the pillars of GCI compared to other developing countries of South Asia. Bangladesh is partially better in terms of macroeconomic stability, health and ICT adoption, said the report.
Bangladesh’s poorest ranks are in business dynamism (120th) and product market development. While main issues concerned under these two pillars are: cost of doing business, time to start a business, insolvency regulatory framework, growth of innovative companies, taxes and subsidies, extent of market dominance, tariff and efficiency of clearing processes etc, it added.
Most problematic factors for doing business
Like the previous year, corruption remained at the top of the problematic factors in doing business in Bangladesh. However, the intensity of perception regarding corruption has slightly reduced.
In 2009 and 2014, inadequate supply of infrastructure (23.78) was major problematic factors for doing business but corruption top the chart in 2018.
On top of that, rising concerns are limited access to finance with high rate of interest, policy instability, high tax rates and complexity of tax regulations. And these four problems accounted for about one-third of business concerns.
On the other hand, inadequate infrastructure and inefficient government bureaucracy – remained in top-three; however, their scores have slightly declined.
Poor performance of the financial sector created negative perception among the respondents which caused further deterioration in ranking (102nd in 2018), the report findings showed.
62% respondents perceived that cost of financial services impede business activity, while difficulty in obtaining in bank loans are found to be challenging. 73% opined entrepreneurs found it difficult to obtain start-up equity fund and the situation has deteriorated.
While 55% mentioned that regulations somewhat unable to ensure financial stability.
Despite marginal improvement, Bangladesh is one of the lowest ranked countries in terms of technological readiness, labour market efficiency (86) and higher education and training, said Moazzem.
Besides, businesses are increasingly concerned about problems outside top three--- inadequate infrastructure, inefficient government bureaucracy and limited access to finance. Majority of those problems are related to efficiency enhancing, improvement of institutions through necessary reforms is urgently needed.
In adopting information technology, Bangladesh has witnessed positive changes. While it also seen saw improved performance in market size and business operations.
Exceptionally well performance is observed in case of market size which is ranked close to first quartile group. This is because of rise of per capital income of sizable share of population due to more employment opportunities both at home and abroad helped to raise their disposable income which contributed to rise the market size, the report said.
Meanwhile, technology is one of the areas where entrepreneurs perceived positive development in all selected indicators during 2018. Progress in ICT based activities both in public and private sectors have contributed in this regard. However, overall ranking remains poor (102nd).
Respondent entrepreneurs observed improvement in quality of government services by using ICT, use of virtual social network , use of internet for selling goods and services and business use ICT’s for transaction.
Perception about business operations have experienced marginal improvement during 2018. These are reflected in case of rising accountability of managements to investors ability to differentiated products by marketing, turning ideas into successful businesses, and spaces created for exchange ideas across different professional levels.
Since, open competition between countries based on technology led performance has been taken into consideration; hence advancing any country’s ranking will be difficult. In overcoming the challenges, the report recommended some issues.
Weak institutions and challenges of governance have retarded Bangladesh’s competitiveness significantly. So, reforms in the civil services and other agencies for ensuring transparency, accountability, efficient service delivery as well as proper implementation of various policies and laws, are urgently needed .
Despite huge public and private investment, perception about quality of infrastructure remain in weak- lack of availability of ‘full packaged’ infrastructure need to be addressed.
Technological readiness is slowly making progress – ICT led education, training and businesses are getting popular – it is a good sign. More investment is needed for digital security and better access of ICT services across the country.
In bringing stability and removing the poor performance of the financial sector, the CPD suggested to form a financial sector reform commission.
It also stressed on ensuring financing for SME sector as concentration of business activities to a limited number of group of companies indicate that equal access to all particularly SMEs is getting squeezed.
‘Technology upgrading fund’ needs to be set up to train and educate workforce, management professionals and to use advanced machineries.