Bangladesh ranked 105 out of the 141 countries
Bangladesh slipped two notches in global competitive ranking as competitiveness weakened in most of the indicators, as per the Global Competitiveness Report 2019.
However, Bangladesh’s overall score remained unchanged at 52.1 in 2019 in doing business.
The World Economic Forum (WEF) on Wednesday released the report, with Bangladesh ranking 105th among 141 countries in terms of doing business in the world, which was 103rd in the last report.
Bangladesh’s rank would slip one more step if the same set of countries for 2018 was considered.
Centre for Policy Dialogue (CPD), a local think tank, released the report on behalf of the WEF at Economic Reporter' Forum (ERF) auditorium in Dhaka on Wednesday.
In the report, Singapore ranked top in the 2019 GCI followed by the USA, Hong Kong, the Netherlands, Switzerland, Japan, Germany, Sweden, the UK and Denmark.
India ranked top among the South Asian countries, securing the 68th position scoring 61.4, Sri Lanka ranked 84th scoring 57.1, Nepal 108th scoring 51.6 and Pakistan 110th scoring 51.4.
Problem areas for doing business
As per the report findings, Bangladesh’s competitiveness declined in 10 out of 12 pillars, where significant deterioration in ranks was observed in macroeconomic stability, labor market, ICT adoption and infrastructure.
Main concerns are business dynamism, complex administrative requirements (118th) and weak entrepreneurial culture (114th) and labour market with lack of flexibility (121st).
The report was conducted on 12 pillars including institution, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, financial system, market size, business dynamism and innovation capability.
“Bangladesh got stuck in skills, labour market and business dynamism, while the country's business competitiveness became entangled with traditional and emerging challenges,” said CPD Research Director Khondaker Golam Moazzem in his keynote presentation.
Lack of improvement in governance and institutions, poor infrastructure, financial system and business operations were perennial problems, the report points out.
Institution and governance are the weakest areas in the business competitiveness where majority of indicators were perceived to have deteriorated, it adds.
"When we are talking about infrastructure development, other countries have done more than us," said Moazzem.
On top of that, the weakest point was complex bureaucratic process, which was responsible for weakness in business dynamism, he mentioned, adding that lack of flexibility in labor market was weakening the labour force.
Emerging risks for Bangladesh
Bangladesh economy is increasingly facing new types of risks along with some of the traditional ones. Emerging risks with growing concerns include rise in energy price, failure in urban planning, unemployment or underemployment, failure in climate change adaptation and man-made environmental catastrophes and industrial pollution, the report says.
Risks have significantly increased over the past one year for failure in financial mechanism, profound social instability, illicit trade and asset bubble, while energy price shock, failure in financial mechanism and loss of biodiversity are other risks, it finds.
“Lack of preparedness for Fourth Industrial Revolution (4IR) technologies, absence of necessary regulatory framework and skills, no clear pathways for businesses are emerging concerns for Bangladesh,” said Moazzem.
In future, the weakness in labour marker would be a grave concern for Bangladesh unless the existing or upcoming labour force was made capable with technology and knowledge-based skills, warned the economist.
Besides, emerging market risks posed additional burden for businesses such as rise in energy price, failure in urban planning, unemployment or underemployment, failure in climate change adaptation and industrial pollution, he added.
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In the year 2018, Bangladesh made improvements in two areas such as product market and health sector.
In product market, it moved four notches up to 93rd and in health three notches up to 36th.
"Bangladesh did well in two areas — products market and health. The country has a big market and for the market there is import and new investment considering the market size," said Moazzem.
A “business as usual” approach would not help to improve Bangladesh’s falling competitiveness, Moazzem noted, adding that Bangladesh needed massive regulatory reforms targeting public services, financial sector, public sector enterprises with a view to ensuring efficiency, accountability and transparency.
The think tank stressed development of skills of labour force, which was an advantage for Bangladesh.
Technology sector needed a fresh outlook since a large pool of labour force would become a burden in the long run unless proper initiatives were undertaken, said the think tank.
Budget allocation for education and technology and skills development needed to be gradually increased to 6% of GDP during the end of eighth Five Year Plan (2021-2025) period, it added.
In addition, addressing corruption in public procurement/contract, licensing, registration and services such as electricity, gas and water are highly important.
Despite huge public investment in infrastructure development over the last one decade, its quality and efficiency of services remained a big concern.