Inefficient government bureaucracy has become the top roadblock for the improvement of the country’s business competitiveness, according to the Bangladesh Business Environment Study released yesterday.
The Centre for Policy Dialogue (CPD) carried out the study as part of the executive opinion survey for the preparation of World Economic Forum’s Global Competitiveness Report.
The CPD conducted the survey and released the Bangladesh version of the Global Competitiveness Report 2020 on behalf of the WEF.
The weakness in bureaucracy has turned into a major problem for the first time to improve the competitiveness, sidestepping corruption and infrastructure.
Corruption and limited access to finance, however, still exist as the major challenges to develop the business environment, according to the report.
The country’s position slipped two notches to 105th last year.
The government should give attention immediately to improve the issues of the business competitiveness, or else the recovery process from the ongoing economic hardship will get delayed.
The report highlighted 11 issues while the WEF carried out the executive opinion survey in the country’s business sector.
The survey covered governance, infrastructure, technology, human capital, financial environment, business operations and innovation, domestic competition, foreign trade and competition and security and risks.
Some 55 privately-owned companies based in Dhaka, Chattogram, Gazipur, Bogura and Cumilla responded to the survey, which was conducted between February and May this year.
As much as 72 per cent of respondents opined that inefficient government bureaucracy was the most problematic factor in doing business in Bangladesh last year.
Moazzem said businesses were unable to get their desired services in time from the bureaucratic system, fuelling the cost of doing business.
“This has had an adverse impact on the competitiveness of doing business,” he said.
Some 68 per cent of participants in the survey thought that corruption was the second top-most barrier to improve the competitiveness.
In addition, bribes in connection with tax payments and settling exports and imports had been on the rise last year.
Poor corporate ethics, illegal diversion of public funds and an inefficient judicial system for settling disputes were deteriorated further, according to the survey.
Limited access to finance is the third major problem as 66 per cent participants of the survey opined to this end.
Access to finance is largely targeted to large scale enterprises where small and medium enterprises (SMEs) and startups find it difficult to get necessary credit support.
The banking sector has played a major role during the ongoing pandemic by financing subsidised credit to different categories of enterprises and businesses but SMEs are largely unable to get their expected fund.
There has been a discussion that banks now sit on the excess liquidity, but SMEs are deprived of enjoying the fund, Moazzem said.
The banking sector deteriorated further last year as 75 per cent of entrepreneurs indicated the central bank’s poor quality in monitoring and supervision of banks.
Some 60.7 per cent of respondents expressed that soundness of banks is below the normal level and this deteriorated in 2019 compared to the previous year.
The government earlier announced forming an independent banking commission, which did not make progress during the pandemic. The government should take up an initiative to form the commission immediately.
The capital market also weakened last year and as much as 80 per cent of respondents thought that the Bangladesh Securities and Exchange Commission’s weak monitoring and supervision was largely responsible for this.
The report also detected that financial auditing and reporting standard was feeble and the level of weakness worsened further.
Along with the problems, businesses faced crisis in doing their businesses due to a lack of adequate infrastructures.
However, improvements were observed in most of the infrastructure related facilities in the field of transport sector last year.
A significant level of public investment on infrastructure development over the last decade helped to improve the performance.
The level of improvement in perception, however, did not match with the level of investment made in infrastructure development.
Over expenditure is a major area of concern in case of different infrastructure related projects, which is related with faulty planning, unintended and intended delay, over-budgeting and corruption.
Bangladesh’s major technological progress was observed in case of online digital economy in providing transport services.
Various types of online based transport services such as Pathao and Uber made important contributions in the backdrop of weak public transport service facilities.
But performance in other gig economy related indicators is below average.
The digital divide has been further intensified during the pandemic period as a portion of well-off people now enjoy the output from the digital transformation.
A significant rise in investment is required on digital technologies in order to avail the new opportunities as well as making them inclusive during the post-Covid period.
A major dearth in the education system is poor quality of education against growing demand for skill-oriented education system, according to the report.
In some cases, the situation deteriorated in 2019 compared to the previous year.
Graduates from both secondary and university levels do not possess the required skills.
Besides, active people do not have sufficient digital skills, which rather worsened last year.
Risks concerning the number of issues for doing business in next one decade rose in 2019.
These include failure of national governance, failure of climate-change adaptation, extreme weather events, illicit trade, food crisis, failure of regional global governance and so on.
Risks have significantly increased in following issues — spread of infectious diseases, asset bubble, unmanageable inflation, fiscal crisis and misuse of technologies.
The coronavirus pandemic has been a major setback for individual company level performances in terms of production, export, import and employment, according to the report.
About 40-50 per cent of businesspeople indicated that the Covid-19 has caused a significant decline in the performances of their enterprises.
Fahmida Khatun, executive director of the CPD, said the government should take steps to resolve the problems as businesses would try to invest more funds in the days to come when the economy would get a pickup sweeping aside the ongoing slowdown.
“Probable recovery will not be possible in due time if the problems continued,” she said.
Mustafizur Rahman, a distinguished fellow of the CPD, also addressed the event.
