The ease of doing business index/ranking is probably one of the World Bank's most powerful reports as it has gained the attention of most of the governments around the world. Based on the findings of the annual report, private sectors of different countries pressure their respective governments to plan and implement required reforms so that better rankings can be achieved in the next ease of doing business index. Based on the index, entrepreneurs and investors often decide to invest in a country. In the past, countries like Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Côte d'Ivoire, Turkey, Rwanda and others had taken the index seriously. They introduced a remarkable number of reforms to facilitate businesses. As a result these countries performed better in the 2019 Doing Business Ranking. It is worth mentioning that, the BRIC economies, namely Brazil, Russian Federation, India and China, introduced a total of 21 reforms. Increasing power connections and ease cross-border trade are some of the most common areas of improvement by these countries.
Bangladesh government has deputed Bangladesh Investment Development Authority (BIDA) to coordinate ease of doing business reforms while a very high-level committee at the Honourable Prime Minister's Office is working to propose and monitor reforms required to ensure ease of doing business in the country. But can prompt steps by the government really bring about any positive results in the business sector? Before getting into that question, we should analyse what the Doing Business Report is really revealing.
Doing Business Report presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies around the world. Each year, it has a different theme. For example, the slogan of the first Doing Business Report in 2004 was 'Understanding Regulation'. Similarly slogans of the other editions were 'Removing obstacles to growth' in 2005, 'Creating jobs' in 2006, 'How to reform' in 2007, 'Comparing Regulation in 178 Economies' in 2008, 'Comparing Regulation in 181 Economies' in 2009, 'Reforming through difficult times' in 2010, 'Making a difference for entrepreneurs' in 2011, 'Doing Business in a More Transparent World' in 2012, 'Smarter Regulations for Small and Medium-Size Enterprises' in 2013, 'Understanding Regulations for Small and Medium-Size Enterprises' in 2014, 'Going Beyond Efficiency' 2015, 'Measuring Regulatory Quality and Efficiency' in 2016, 'Equal Opportunity for All' in 2017, 'Reforming to create jobs' in 2018 and finally it was 'Training for Reform' in the Doing Business Report of 2019.
It started off with 'Understanding Regulation' in 2004 as usually before selecting a particular country, sector, or products, an entrepreneur needs to understand applicable regulations of that particular country or sector or products. In absence of a congenial regulatory environment, running a business becomes very difficult and failure could be the ultimate destination. Over the next few years, themes like 'Removing obstacles to growth', 'Creating Jobs', 'how to reform' etc were very justified and torch-bearing. Very recent slogans like Reforms to create jobs, Training for reform, were more indicative and timely.
Doing Business Report analyses 11 indicators that affect the life of a business. These are starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and features of labour market regulation.
According to the Doing Business Report 2019, Bangladesh ranked 176th among 190 countries. Indicator wise, Bangladesh's position in starting a business is 138, dealing with construction permits 138, getting electricity 179, registering property is 183, getting credits is 161, protecting minority investors is 89 (only single digit performance), paying taxes is 151, trading across borders is 176, enforcing contracts is 189 (worst performing indicators), and resolving insolvency is 153.
From the above rankings it is quite clear that, enforcement of contracts is quite difficult here in Bangladesh. It is because the country has a long history of case backlog in every sector of the judiciary. Suspects usually get leeway based on his/her nationality, race, political faith, economic power, muscle power, so on and so forth. The legal procedures should be enforced equally for local and foreign investors so that enforcement of contracts becomes 100 per cent transparent, quicker, effective and less costly. Without an even playing field for local and foreign investors, foreign investment will not be coming into the country.
Registering property, getting electricity, trading across border etc. are issues that should get the highest priority to improve the ranking in ease of doing business index. The bureaucracy in the country have a tendency to make the report controversial by asking about the number of respondents, sample size determination process, sample selection criteria and other methodology relevant issues. But it is worth mentioning that getting an electricity connection for a small rice/oil mill in a village is still a very difficult process. It may take a long time until and unless the entrepreneur makes some illegal payments at the different tables of the department. Similarly, trading across border needs a long list of documents, licenses and No Objection Certificates (NoCs). Legal and procedural compliance and too many documentary requirements make it difficult for many small and medium-sized entrepreneurs to think about exporting their products. The access and speed of these processes need a major overhaul for the sake of private sector development, job creation, and inclusive development of the society.
The toughest and most complex laws cannot ensure inclusive development as these are not easily adaptable by the general population. It can be hoped that the current government will look after the ease of doing business issues with efforts through respective ministries.
Ease of Doing Business Report is essential in order to grow a dynamic private sector in any economy. Without a dynamic private sector, creating jobs, maintaining economic growth, ensuring inclusive development will become impossible. Without inclusiveness, development will not be sustainable in any society. Therefore Doing Business captured a record 314 regulatory reforms around the world between June 2, 2017, and May 1, 2018. Worldwide, 128 economies introduced substantial regulatory reforms in all areas measured by Doing Business. Bangladesh needs to follow suit.
Without reforms, a long list of fiscal and non-fiscal incentives to the local and foreign investors will do little to attract and encourage investment. This is because rent-seekers will charge a substantial amount to provide all these fiscal and non-fiscal incentives to the applicants. If stakeholders cannot avail the benefits without a hassle, they are forced to entertain the demand of rent-seekers. It is high time that these processes were digitalised, thus ensuring ease and transparency.
Md Joynal Abdin is Executive Director, DCCI Business Institute (DBI). Views expressed here are not from the organisation that the author represents.