Businesses surveyed said corruption has once again been the greatest impediment to recovery, according to the Centre for Policy Dialogue (CPD).
CPD conducted a survey and reported on the situation of Bangladesh's business competitiveness in 2021, against the backdrop of the Covid-19 pandemic, and to compare the changes to evaluate the level of recovery in the business environment.
A whopping 68% of respondents complained about the high level of corruption as the major problematic factor in doing business.
This data was revealed in an executive opinion survey report released by the Center for Policy Dialogue (CPD) titled “Bangladesh Business Environment 2021: Findings from Entrepreneurs’ Perception Survey”.
According to Transparency International’s (TI) corruption index published recently, Bangladesh ranked 147th position globally (13th from the below) in 2021.
Presenting the keynote, Dr Khondaler Golam Moazzem, research director, CPD said apart from corruption being the main obstacle, 67% of respondents complained about inefficient bureaucracy as the second most problematic factor and 55% mentioned limited access to financing as the third most problematic factor.
Compared with the previous years, this researcher also said: “This time there is a big difference with the previous years. Earlier we saw that corruption was very high and others were very low. This time corruption and bureaucracy are almost equal and in addition to those, limited funding has become an important obstacle as well. If you notice, these three challenges are all associated with increasing business costs as well.”
However, the level of severity of problems is different for different categories of enterprises, as the severity is high for micro and small enterprises compared to that of medium and large-scale enterprises.
The research focused on large, medium, small, and micro-sized factories in four industries--agriculture, manufacturing, non-manufacturing and the service sector.
As per CPD’s survey, 100% of micro and 83% of small enterprises have considered corruption as the most problematic factor while 69% of medium and 53% of large enterprises have considered the same.
And the similar level of differences in severity is observed in the case of poor government bureaucracy, access to finance and inadequate policymaking.
One of the top corporate lawyers in Bangladesh, Saqeb Mahbub from Mahbub and Company said: “Every business in Bangladesh, foreign-owned or homegrown, accepts corruption as an inevitable cost of doing business. Take that cost away, and you have money that could theoretically have been reinvested to do more business and create more employment but sometimes, businesses cannot afford the cost and have to shut down or focus somewhere else.”
“Corruption is particularly harmful when it is used to distort the level playing field and I believe the corruption problem is a by-product of a bigger problem of lack of transparency at most levels of bureaucracy. For example, one needs a particular approval or license from a regulator to do a particular business. It is very hard to find any concrete guidelines about eligibility criteria and the principles behind the decision-making in granting it. This lack of transparency in decision-making is what then creates scope for corruption and undue influence,” he added.
The Executive Opinion Survey (EOS) covered ten issues-- Infrastructure, Institutions, Safety and Security, Financial System, Trade and Investment, Competition, Business Operations, Governance and Innovation, Building Human Capital, Working and Employment, and Managing the Economic Recovery and Risks.
The CPD analysis found that businessmen over the years positively acknowledged the government's long-term vision for economic development (0.64; 53.4% in 2021), which includes automation and digitalization of trade and tax payment systems, strengthening the public procurement system.
Dr Khondaler Golam Moazzem Business leaders agreed with the issues and data revealed in the CPD's report.
Abdus Salam Murshedy, MP, president of Exporters Association of Bangladesh (EAB) and a former president of Bangladesh Garment Manufacturers and Exporters' Association (BGMEA) said: "Before the Covid-19 pandemic, the business environment in Bangladesh was on the right track. I think it has been a bit slower after the pandemic shock. However, harassment by government officials and bribery in various sectors are nothing new for businesses. Last year a lot of work in various government offices and NBR had to be done at a slower pace, which greatly increased our operation cost.”
“But I think the problem is slowly disappearing.”
“In particular, the stimulus package of the Prime Minister has come in handy. At the same time, various loan policies of Bangladesh Bank are also cooperating with us. In this case, I agree with the CPD's recommendation and these benefits should be maintained for at least three years,” he added.
According to the study, improvements have been reported in corporate ethics (-0.59; 61.6%); less use of bribes during tax payment (-0.9; 58.9%) and awarding the public contract (-0.93; 63%).
However, bribes in export and import trade (-1.27; 74.6%) remained almost unchanged.
Some new indicators have been added to this year’s EOS, but the performance in most of the indicators is below the minimum standards, says CPD.
Businesses performed poorly to serve people equally (-0.49; 51.4%) while taxes could not address the inequality gap (-0.67; 57.1%) and tax obligations were difficult to comply with (-0.65; 59.7%).
Moreover, addressing environmental degradation (-1.09; 69.1%), the statistics were also disappointing.
Some 58.9% mentioned that protection of personal data held by the public companies is somewhat absent (-0.53).
Better performance in business operations was observed in the case of - companies giving equal workforce opportunities to women (0.05; 39.7%).
As per the latest Global Gender Gap Index 2021 published by the World Economic Forum (WEF), Bangladesh has ranked 65th of 156 countries slipping 15 places from last year, however, it has retained its position as the best performing South Asian country for seven consecutive years.
