Bangladesh slipped by 111 notches in the past 13 years in the World Bank's 'Ease of Doing Business' index, according to reports. Such poor ranking among global economies is undeniably frustrating, particularly in respect of the country's investment growth.
In the latest 2019 World Bank (WB) ranking in 'Ease of Doing Business' index, the country is positioned in the 'below average' class, at 176th position among 190 economies. The country scored 65th position in 2006 -- the first year of assessing such status of world economies.
The government has set a target to bring the country's position in the doing business index below 100 by 2021 from the existing ranking. There are, however, some sporadic initiatives to improve the business environment. Yet many say they do not see any possibility of improving the country's position in line with the target in the next two years.
As reasons for the poor ranking in the latest assessment, the WB has mentioned bad performance in five core areas: protecting minority investors, paying taxes, trading across borders, and enforcing contracts out of 10 categories.
However, the country has improved its standing in the 'getting electricity' category and slightly upgraded it in four other classes -- starting a business, dealing with construction permits, registering properties, and resolving insolvency.
The WB, in its latest update, said there is sufficient room for Bangladesh to improve its position in the ease of doing business index. The most pressing are concerns about inconsistencies in laws and regulations, and undue use of discretion by officials.
Analysts say the government has taken up some initiatives to improve the country's position, but those are so weak and slow that it is hard to achieve the target. Political commitment and administrative action should work simultaneously for mending weaknesses in the business climate.
Bangladesh is still lagging behind in areas like property rights, electricity, transportation, credit and land, and security for businesses. Doubts persists whether the efforts would yield results to ensure the country's rank below 100th in the doing business index by 2021.
South Asia continues on a strong reform agenda, thanks to political commitment and hard work in improving the domestic investment climate. This is particularly commendable in the case of Afghanistan, where conflict and insecurity make the work so much more challenging.
In order to do better in the ranking, Bangladesh should take preparations to face the impacts of the US-China trade war, which worsened in recent times when the two economic powerhouses imposed new tariffs on products of each other.
In a globalised world, all countries are integrated through export, import, foreign investment and remittance. So, the trade war will surely leave an impact on gross domestic product (GDP), employment generation, investment and overall global economy.
In Bangladesh, there is a need for immediate introduction of one-stop services to improve the ease of doing business. In order to plug the investment shortfall for its infrastructure needs, the country has to explore alternative sources of funding. Desired investment is not flowing into the country because of the absence of an appropriate investment environment caused by insufficient infrastructure, port congestion and poor transportation facilities.
The country, according to reports, is going to become the 26th largest economy in the world. The brand value of Bangladesh is also rising as the country has ranked 39th in the global brand value index 2018 reflecting its socio-economic vibrancy. Bangladesh has a brand value of $257 billion, up 24 per cent from last year.
For about a decade, private investment-to-GDP ratio has been stuck at 21-23 per cent. But according to the country's growth ambitions, the ratio has to be about 35 per cent. A number of neighbouring countries have achieved higher GDP as their investment-to-GDP ratio has been in the range of 35-45 per cent.
The electricity scenario has really improved a lot in Bangladesh alongside physical infrastructures like roads and bridges, although there was a lot of room for improvement. Besides, there is the barrier of bureaucratic tangles causing longer time to set up a business.
The situation needs to improve far more for creating a major stimulus among the investors -- both local and foreign. For the last few years, domestic investment has drastically 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 existing state of corruption is also encouraging the country's financial delinquency. However, other reasons such as black money, tax dodging and poor scope for investment are also responsible for worsening the condition of the economy. Financial auditing and reporting standards have still remained weak.
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.
All said and done, improvement in the key areas is a must-not only to give a positive signal to overseas investors, but also to render businesses far easier to spur national economic developments