• Sunday, Dec 08, 2019
  • Last Update : 12:12 am

A little ease, not to be gloated over

  • Published at 12:15 am October 27th, 2019
Doing-Business

That the country is in the right direction is testified by the World Bank's Doing Business 2020 report, which puts Bangladesh at 168th position, up from 176th, the highest in recent years

Ease it is indeed as more and more foreign direct investment (FDI) pours into in the country, and a higher level of entrepreneurial activities in many sectors is clear to the naked eye. 

That the country is in the right direction is testified by the World Bank's Doing Business 2020 report, which puts Bangladesh at 168th position, up from 176th, the highest in recent years. 

FDI in the country rose by 19.47% to $1.7 billion in the first half of  2019, which businesspeople and experts have attributed to government initiatives to improve ease of doing business.

Three business reforms during the past year have made setting up a new business less expensive with the reduction of registration fees and time. Meanwhile, time to get electricity and credit information has been reduced.

All these speak positively of the country's economy. 

But economists have a different story to tell as they find the regulatory reforms inadequate and cumbersome red tape undermining the potentials.

“The improvement is mostly relevant for small businesses and has little to offer to the big investors,” says Policy Research Institute (PRI) Executive Director Ahsan H Mansur. 

Big issues such as land registration, construction permits, enforcement of contracts and resolving solvency remain untouched, Ahsan finds. 

In registering property, Bangladesh scored 29 points and ranked 184 out of 190 countries, while enforcing contracts ranking is 189 with 22.2 points. 

For foreign investors, it will not be lucrative, who face problem regarding land registration and enforcement of contracts, the economist mentions. 

For property registration, it takes 271 days and 1,442 days for enforcing contracts.

"There is electricity but the government cannot make it available for the people due to bureaucratic complexity," says Ahsan. 

As per the report findings, it takes 125 days to get electricity connection.

Another key issue is better performance of other South Asian nations, who are competing in receiving foreign direct investment.   

“Changes and improvement in ease of doing business are in the bottom and small, which contribute nominally to investment. However, any improvement is positive and it gives a good impression,” Centre for Policy Dialogue Research Director Khondaker Golam Moazzem tells Dhaka Triune.

On the WB doing business index, Bangladesh scored 45 points, up by 2.5 points. Starting business saw a jump by 1.6 points to 82.4 points, while the score for getting electricity rose by 4.1 points to 34.9.  

"The 168th position means there are 167 other countries who are ahead of us and offering a better business environment," Moazzem points out. 

India jumped by 14 notches to 63, while Nepal improved by 16 notches to and Pakistan up by 28 spots to 108.

There are lots of other issues such as infrastructure, corruption, skilled workforce, which matter for investment, he says, noting that the change is positive but not enough for wooing investment. 

Foreign investors will want to see continuation of improvement and sustaining it, he adds.  

Businesspeople are of the opinion that it will send a positive message to the investors but maintain that the improvement should continue.  

“An eight-notch jump in ease of doing business gives a message that Bangladesh has started regulatory reforms to make business easier,” former Dhaka Chamber of Commerce and Industry (DCCI) president Abul Kasem Khan says.  

"In short term, it has a positive impacts on investment. But we did not perform well if compared with the regional players. We have done better in terms of our previous performance," observes the business leader. 

Process of starting business as well as costing have improved but the impact on investment will depend on how it improves in next year rankings, Kasem adds.  

In reaping the benefits of improvement, he suggests, Bangladesh has to retain the improvement and follow the competing countries' reforms. 

Emphasis should be given on execution of reforms with quicker implementation, he adds. 

“The improvement is a major, mentionable achievement by Bangladesh. This will certainly attract investors and put Bangladesh is a much more positive projection in the international landscape,” Bangladesh Garment Manufacturers and Exporters Association President Ruban Huq thinks. 

However, other things including resolving insolvency still remain to be addressed as there are no exit policies for businesses, she adds.

Other businesspeople stress improving the financial sector status, which is going through vulnerability. They also call for concentrating on other issues which have either remained unchanged or deteriorated.

“Ranking improved by reducing some costs related to regulatory or utility services such as getting credit, electricity and starting a business," Bangladesh Chamber of Industry (BCI) President Anwar-Ul-Alam Chowdhury Parvez says.

But the access to finance is still very tough for an investor due to liquidity crisis, while  interest rate is still high, he notes, adding that cost of doing business is higher due to rise in gas and electricity prices. 

If the financial issues are not addressed properly and cost of doing business is reduced by policy support, investor will not encouraged to invest here, he warns.

As per the “Global Competitiveness Report 2019” of World Economic Forum, Bangladesh scored 38.3 out of 100 and ranked 130th out 141 countries in soundness of banks, the lowest among the South Asian countries.