When the country's economy appears to be going through a positive track, domestic and foreign investments are not showing the dynamism which are needed to accelerate its growth to 8.0 per cent.
High cost of doing business is, in fact, posing as hindrance to easing doing business in Bangladesh. As such, economic growth is being stunted. Business leaders are worried over the lack of improvement and the sluggish progress in implementation of reform measures.
Analysts say lack of willingness among civil servants is also responsible for the process of doing business to become lengthy. However, low skilled workforce is also affecting businesses to grow further. In the latest World Bank's (WB's) doing business rankings, the country fared badly in enforcing contracts, registering property, getting electricity and trading across the borders.
These suggest that the investment climate challenges are broad-based and require fundamental reforms over a long period of time. Sadly enough, an action plan prepared by the Bangladesh Investment Development Authority (BIDA) for eight indicators of doing business through consultation with the stakeholders awaits implementation.
For that matter, the National Committee for Monitoring Implementation of Doing Business Reforms of the government needs to go into operation for stronger oversight of the reforms. With the country's national elections fast approaching, swift efforts are deemed necessary to show progress in the next few months, according to analysts.
As an immediate task, the problems faced by the banking sector should be addressed. There is a risk that some of the gains that the country had achieved might be lost if the problems in the banking sector and on the balance of payments and the credit side are not resolved quickly.
As has been said, BIDA's detailed action plan awaits implementation. During the preparation stage, concerned government agencies were discussed. Now the authority should take steps to receive feedback from the private sector about possible reforms and play a proactive role in implementing the plan. Mention may be made, reforms have helped India improve its doing business ranking. Strong political will was the driving force there.
Bangladesh has gone, to mention, one notch down in the WB's doing business ranking last year due mainly to the hurdles businesses face here at the start of their operations. Starting business here is difficult, particularly because initial spending for getting licence, permits is very high, according to the report. Other countries moved much faster than Bangladesh.
Meantime, there is also a need for bringing immediate reform in the existing Companies Act to create a better climate for businesses in the country. Businesses say the existing Companies Act is 'not suitable' for the changing business context. Henceforth, the government should update the Act to ensure ease in doing business in the investment-starved country.
For ensuring a business-friendly atmosphere, there is a demand for inclusion of provisions like streamlining registration process of companies, and forming special tribunal or raising the number of benches to settle company disputes.
Relating to the activities of the government agencies, it is necessary to ensure proper coordination among the regulatory bodies like Bangladesh Bank (BB), National Board of Revenue (NBR) and Bangladesh Securities and Exchange Commission (BSEC).
Colossal backlog of cases in the High Court (HC) Division is also a serious concern for doing business in the country. Only one bench in the HC deals with the company matters. But the bench has power to deal with a host of other matters. As such, disposal of cases face serious delays. The problems can be solved by increasing the number of benches or forming special tribunals which can help reduce the load from the HC.
The country showed commendable progress in many development indicators such as poverty, inequality, life expectancy, infant mortality and access to water and sanitation. Good progress was made in financial inclusion too. However, it needs to boost private investment to boost the country's growth.
Reforms are badly needed for creating congenial business climate to ensure higher economic growth, create more employment opportunities and reduce poverty. In reality, some areas of business are over-regulated while others are less regulated. Only reforms can strike a balance between the two factors.
In the latest Global Competitive Ranking (GCI), Bangladesh's performance has deteriorated in some major sectors, and sub-indices of businesses including institutions, financial market sophistication, goods market efficiency and technological readiness. Overall performance in efficiency enhancers, and innovation and sophistication for competitiveness also declined in the year.
Local businesses' perception of government's implementation plan for utilising information and communication technology to improve overall competitiveness has significantly improved but availability of the latest technology is otherwise unsatisfactory.
The financial sector needs further reforms in order to become more competitive and efficient. In case of foreign trade and investment, export suffers due to a weakness in internal and external connectivity, lack of diversity in products and markets and poor networking of entrepreneurs.
However, the situation needs to improve substantially for creating a major stimulus among the investors -- both local and foreign. For the last few years, domestic investment has remarkably slowed down. Despite official measures to reduce the cost of doing business, domestic investors are not putting in their money in new investments, particularly in the manufacturing sector. The shortage of power and gas did otherwise emerge as major obstacle to new investments.
All said and done, the country's bid to win more overseas investment calls for reducing the cost of doing business. The economy should aim at becoming more and more competitive, especially to promote its external trade.