Difficulty in getting access to finance and land, policy unpredictability and taxes emerge as most business-hurting areas in Bangladesh, chambers and investors said Thursday while unveiling an index suggesting a feel-good economic environment.
Bangladesh Business Climate Index (BBX) 2022, the country's lone homegrown index, has been prepared by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and the Policy Exchange, Bangladesh, a private think-tank. It was launched at the chamber's Motijheel office.
The second edition of the BBX, which is developed to assess the business atmosphere here, was made with surveyed 518 qualified responses in July-September period 2022 on 10 major pillars or categories. The pillars are: starting a business, access to land, availability of regulatory information, infrastructure, labour, dispute resolution, trade facilitation, paying taxes, technology adoption, and access to finance.
The country's aggregate composite BBX score in 2022 is 61.95 points out of 100, which is marginally higher than previous edition's 61.01 points. The latest score falls under category of an 'Improving Business Climate: Progress Made but Significant Efforts Required'.
The index suggests forms to import, port congestion, financial intermediation, excessive administrative paperwork, legal framework, tax regulations and institutional governance.
In terms of performance, access to finance emerged as the most hurting business factor with 35.22 points followed by access to land (53.07 points) and paying taxes (55.21 points). The points of these three areas were 50.78, 58.90 and 68.72 respectively in the BBX previous edition's scoring.
On the other hand, infrastructure with 74.49 points topped the list followed by labour (74.40), availability of regulatory information (72.85), starting a business (70.78), dispute resolution (64.24), technology adoption (60.60) and trade facilitation (58.61).
Sharing outcomes of the survey that made up the index, Chairman of Policy Exchange of Bangladesh Dr M. Masrur Reaz said seven out of 10 areas made progress but three others experienced large drop.
Based on the business perception, he said Mymensingh topped among the divisions and the most important part is that Dhaka and Chattogram continue to be not in the first two spots.
That means the country starts growing beyond the growth centre of Dhaka and Chattogram, in what comes out as a change from centripetal development matrix.
"So the urbanisation process which, at the moment, slow and disorganised started paying dividend. Other centres are coming up. If they are backed by right policy, they can really come up and share the burden of Dhaka and Chattogram," he told the business function.
President of Dhaka Chamber of Commerce and Industry (DCCI) Md. Sameer Sattar pointed out that the country scored the lowest in the area of access to finance.
"I think this is correct as I received a lot of complaints from the CMSMEs of getting the formal credit. They don't get the finance because they don't have adequate collateral. They don't get the funds because they have to meet too many documentary requirements, which even larger companies don't comply with," he said.
Citing the available credit-guarantee scheme introduced by the Bangladesh Bank (BB) for CMSMEs, the DCCI president said they recently met with the BB governor. In that meeting he saw the records checklists where documents like environmental clearance, a year-long business plan and financial statement are required. "These are to certain extent okay for medium and large enterprises, not for the smaller ones," he said to mention the business barriers facing the minnows.
Former MCCI president Nihad Kabir pointed out that it takes some 1,463 days to get first level of judgment in a commercial case whereas it takes only 79 days in Singapore. "We need to give serious attention to this."
She adds: "It is not the land, now foreign investors keep asking how long it takes to solve a dispute."
President of Foreign Investors' Chamber of Commerce and Industry (FICCI) Mohammad Naser Ezaz Bijoy said fiscal policy unpredictability remains a serious concern for the overseas investors. He was suggesting separation of the National Board of Revenue (NBR) from tax-policymaking activities.
Speaking as the special guest, executive chairman of Bangladesh Investment Development Authority (BIDA) Lokman Hossain Miah said the state-owned investment-promotion agency has been working hard to make it a major gateway for the investors.
He said they are now providing 152 types of services of 23 agencies from their OSS (one-stop service). "We want to reach the level of Vietnam by three months of time. Give us the time. We can do it like the way we tackled the Covid-19 pandemic."
Speaking as the chief guest, Commerce Minister Tipu Munshi said the country needs to assess the condition of the existing overseas investors here instead of focusing more on the fresh ones.
"If the existing global investors are happy with the climate, their happiness will automatically encourage others to come in here," he told his business audience.
Secretary for the Ministry of Foreign Affair's Masud Bin Momen said they asked the 81 overseas missions in 60 countries to be more engaged in economic diplomacy.
"We keep saying the foreign investors that don't take decision seeing the current state of Bangladesh. Look at mid-term and long-term planning of the country because Bangladesh is executing many mega projects that will surely change the economic landscape of the country."
MCCI president Md. Saiful Islam and MCCI vice-president Kamran T. Rahman, among others, also spoke at the event.