We do not get a second chance to make a first impression
To the outsider, what is marvellous about Bangladesh is that it seems to do the difficult things really well, and the apparently easy things, less well.
Its annual GDP growth rate has exceeded 7% in the last four years. If this sustains, it will translate into a doubling of income every 10 years. Moreover, Bangladesh outperforms its perceived peer-group when it comes to progress in health, gender, and inclusivity, having earned a reputation for resilience and frugal innovation.
In recent years, it has made tremendous progress in digital connectivity and adoption. Its demographic profile (80 million people below the age of 30) and population density (which allows for scale and network benefits) are unique drivers of potential growth.
Bangladesh also enjoys a favourable geo-location at the intersection of India, China, and other ASEAN countries, poised to benefit from geopolitical courtship when it comes to investment interests or supply-chains from around the globe.
In terms of foundational strengths, visible potential, and strategic direction, Bangladesh enjoys a more favourable setting than virtually any other country. It already has all the difficult things “in the bag.” So, what are the apparently easy things that can be done better?
Two areas of immediate focus
Firstly, there has to be a dramatic shift of focus away from policy and legislation to execution and implementation. There is ample clarity on what needs to be done; slightly less so on how it should be done, by whom and by when. As the economy gets larger, raising the speed of growth demands execution at a finer level of granularity with a reduced margin of error. Grand directives must be broken into a series of small steps, and ministers must demand accountability against those small steps.
Secondly, while real reforms continue apace, Bangladesh can do much better at marketing itself as-is right now. There needs to be an overhaul in the style, content, energy, creativity, experimentation, and persistence with which Bangladesh presents itself internationally.
Progress can be made on both of these fronts by focusing on improving Bangladesh’s ranking in Ease of Doing Business (EoDB), and attracting foreign direct investment (FDI).
Ease of Doing Business (EoDB): Indonesia and Georgia
How can Bangladesh bring about a dramatic improvement in its bottom-decile ranking in EoDB? Every country has a unique political economy and it is not wise to transplant pre-packaged solutions from elsewhere. However, some observations may help design a tailored approach.
It is important to note that Bangladesh did improve its score, if not its rank, in the past year. However, Vietnam’s score improved by twice as much, and India’s score improved by six times as much. This underscores how intense the race is at an international level.
It is useful to unpack the EoDB index into its 11 components, such as the time taken to start a business, complexity of registering property, enforcing contracts, and resolving defaults. Instead of seeking improvement in all of these at once, it might be judicious to identify two or three that will command disproportionate attention.Indonesia improved its ranking from 106th to 72nd in two years. In the immediate months after elections, a sense of urgency was created at the highest level of government, including the president himself. The head of their Investment Coordinating Board (equivalent to BIDA), Thomas Lembong, was previously minister for trade, and prior to that, an international investment banker. His predecessor Gita Wirjawan was also a former minister for trade, and prior to that, an international investment banker.
Indonesia focused on a limited number of criteria - for example the “resolving insolvency” indicator - and ensured that execution was monitored closely. A high-ranking Supreme Court judge took it on himself to be accountable for this indicator. As a result, on this measure, their ranking jumped from 74th to 38th in one year.
They also made good use of digital tools, for example in electronic licensing, renewal, and even e-court services. Bangladesh has the digital infrastructure to power its drive for better governance and processes. There should be a DHL-type tracker for every file that goes through the system followed by a TripAdvisor style rating for every service provided.
Amongst the ten highest ranking countries in EoDB, there is only one developing country, and that is the former Soviet republic of Georgia. While its scale and context are very different from Bangladesh, its story is nonetheless inspiring.
Dhaka Tribune's Editor Zafar Sobhan sits down with Lutfey Siddiqi, adjunct professor at National University of Singapore, for some Straight Talk
Georgia jumped up 63 places in one year, accompanied by GDP growth of 12%. Amongst a series of shock-and-awe measures, two examples of de-bureaucratization stand out. These helped change the mindset of managers in the public service.
One is the rule that says “silence is consent.” In other words, if you apply for a license or a permit and do not hear back from the government within 30 days, the application is considered officially approved.
Secondly, they implemented a “one-government rule” which states that one branch of government cannot ask the applicant to provide documents that were issued by another part of government. It is the bureaucrat’s (not the applicant’s) responsibility to obtain that information from the other department.
The impact was tremendous. For example, the process for registering property dropped from 39 days to just one day, making Georgia the number one country on this measure.
Both Indonesia and Georgia have approached the challenge of improving business conditions in the same way that Bangladesh has approached the game of cricket. For example, Bangladesh feels no compunction in hiring a foreign coach for its national cricket team if that is what is required to get favourable results.
The economy minister of Georgia in those pivotal years was a young Canadian-Georgian, Ms Vera Kobalia. It is noteworthy that Vera was subsequently hired as a “Doing Business Advisor” by the government of Indonesia -- analogous to that foreign cricket coach.
One-stop service and attracting investment
A hallmark of almost all countries that have improved their business climate is the concept of one-stop service. It is logical that the streamlining of touch-points, removal of duplications, and the parallel movement of tasks will add to efficiency and enhance the customer experience. However, the operative word is “service.” Without a material change in the service mentality of officials involved, one-stop service could run the risk of becoming a one-stop chokepoint.
This emphasis on customer service is vital for attracting FDI. There is no justifiable reason for Bangladesh to settle for FDI of under $3 billion (half of which is apparently re-investment from existing investors) at a time when slower-growing countries in Asia have attracted multiples of that. It is also a surprise given that Bangladesh is hitting record highs in attracting remittances: January 2019 saw $200m more in inward remittance than any other month in the country’s history.
As Singapore has shown over the years, what attracts investments is not that dissimilar to what attracts one person to another. Much depends on personal chemistry and emotional experience. Policies and regulations on paper are not sufficient if they do not correspond to people’s felt experience. A useful microcosm is the experience of passengers at Dhaka international airport. We do not get a second chance to make a first impression.
Studies show that moving from the lowest to the highest quartile in ease of doing business could add two extra percentage points to annual GDP growth. This in turn would translate into billions of extra dollars in private investment (domestic and foreign) and hundreds of thousands of additional jobs.
Bangladesh has never had such a clear line of sight to achieving its economic ambitions. There is no ambiguity in the vision. Everything depends on execution and it is within our gift to drive that execution with a singular focus on effectiveness. This will be achieved by an unwavering tone at the top, accountability for specific time-bound action, and coordinated effort across departmental silos -- all powered by digital.
Lutfey Siddiqi is an Adjunct Professor at National University of Singapore and a Distinguished Fellow at Policy Research Institute, Bangladesh.