The government is set to constitute a taskforce to ease doing business and facilitate trade through addressing the multiple problems being faced by the country's businesses.
Announcing the decision at a government-business consultation, Commerce Minister Tofail Ahmed said the objective of forming the task force is to make ways for taking the economy further forward. Every ministry will constitute taskforce to ease doing business and for trade facilitation across the country. Concerned trade bodies would be drawn into the taskforce. Activities to ease doing business in the country will continue throughout the year, he said.
There is no denying that the country's business environment is being hampered due to bureaucratic complexities, and lack of coordination among different state agencies. There is a need for changing the mindset and attitude to improve overall economy of the country.
There are numerous problems with bank loans. On the other hand, big loans are creating gigantic problems for the banking sector. On the other, there are many preconditions of the Bangladesh Bank (BB) for which businesses are making slow advances. Investment is not thus picking up. The country needs big local and foreign investments in future to lift the GDP size to US$3.0 trillion.
Meantime, the trade facilitation agreement (TFA) under the World Trade Organisation (WTO) will come into force once six more countries ratify the deal meant for reducing the cost of doing business globally. A total of 104 countries have already ratified the agreement that was adopted by the member countries at the ninth ministerial conference of the WTO in December 2013 in Bali.
The agreement will come into force automatically once it is ratified by 110 countries. Ghana is the last country that ratified the TFA, while Bangladesh gave its approval in October last year.
In fact, TFA is deemed essential for Bangladesh, both for raising export competitiveness worldwide and ensuring efficient import of goods. As the TFA is set to reduce the cost of doing business, analysts say, it will have a positive impact on the prices of goods.
The agreement will mainly boost digitisation of customs clearance and documentation both in export and import business. The TFA contains provisions for expediting the movement, release and clearance of products, including goods in transit. It sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues. The treaty also contains provisions for technical assistance and capacity building in this area.
According to a recent study conducted by the World Trade Organisation (WTO), full implementation of the TFA is expected to reduce trade costs of the member countries by an average of 14.3 per cent, with the developing nations to benefit most.
The deal is also meant to reduce the time to import goods by over a day and a half while also bring down the time to export by almost two days, representing a reduction of time lag by 47 per cent and 91 per cent respectively over the current average. One of the major commitments of the TFA is the introduction of paperless business worldwide, which is expected to slash the cost of doing business by 10-15 per cent.
The cost of doing business, particularly in the LDCs, is higher as importers and exporters have to pay extra money as bribe at various stages. Developing countries will benefit significantly from the TFA, capturing more than half of the available gains.
The fuller and faster implementation of the TFA is estimated to boost the overall world export growth by up to 2.7 per cent and global gross domestic product (GDP) growth by 0.5 per cent. The agreement is expected to help the developing countries diversify their exports as well.
If the TFA is fully implemented, developing countries could increase the number of new products being exported by as much as 20 per cent. The least developed countries (LDCs) are likely to see a much bigger hike of up to 35 per cent. Bangladesh should start doing homework on how to implement the rules of the TFA. The country needs to improve the roads and highways and infrastructure as part of it.
Unlike many other South Asian countries, a survey says, Bangladesh has one of the worst business environments in the region. Restrictive trade policy characterised by poor infrastructure, red tape and so on still pose as big hurdles in the way of foreign direct investment.
In fact, the scenario in the whole South Asia is by and large the same. Inter-regional trade is only 2.0 per cent of gross domestic product (GDP) in South Asia as compared to 20 per cent in East Asia. None of the countries in South Asia is in the list of 50 countries where it is easy to do business.
Successive governments in Bangladesh claimed substantial progress in reforming business environment in the country. But many of such reform measures could not be implemented due to typical bureaucratic inertia.
There are, however, some key areas of business where reforms are badly needed. The focus of such reforms should also be on easy access to loans for small and medium enterprises, improvement of customs clearance process, simplification of tax payment procedures, encouraging more business competition, simplifying labour regulations and land issues. Reforms are also needed for creating a 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.