Business Report
Replacing difficulty to easy access to power and credit, political instability has become the most dreaded challenge to the private sector growth which is now dominating the wheels of the nation’s economic prosperity.
But at any one’s surprise, the capacity utilization of Bangladesh industries and their export proportion are at the highest in comparison to countries at similar level of development according to a WB study.
The study titled ‘enterprise survey’ and released last week in the capital, said Bangladesh’s private sector sees political instability as the biggest obstacle to business environment.
Among 15 areas that came under the study electricity, access to finance, and corruption are the other big challenges to the daily operations of businesses, the survey report said conducted by International Finance Corporation (IFC) which is the private sector window of the global lending agency.
Compared to 2007 when non-political factors were the main impediments, now deepening political uncertainties has overtaken problems like electricity and access to finance as the main concern to private sector. “This result is a reflection of how business perceptions are affected by surges in civil unrest,” the report said.
The major areas affecting business include political instability, electricity shortage, access to finance, corruption, poorly educated workers, access to land, tax rates, customs and trade regulations, informal competitors, crime, theft and disorder, transport, tax administration, licensing and permits, labour regulations, and courts.
Problems with poor electricity supply remain a major obstacle for firms to run businesses as shown by the fact that 28 per cent of business still considers this as their top concern. The WB study was based on sample survey in four of the most active economic regions in Bangladesh. The sample consisted of 1,442 business establishments and surveyed from April 2013 through September the same year.
The report said although less than 10 per cent of the businesses identify corruption as their biggest obstacle, almost 60 per cent indicated that an informal gift or payment was requested when obtaining an operating licence.
Similarly, almost 50 per cent firms experienced at least one bribe payment request among six possible regulatory or utility transactions. “This bribery incidence is much larger than in most other countries,” the report said.
In fact, 77 per cent of the firms report a bribe solicitation when obtaining an import licence, which is the highest percentage among all countries. However, the picture does not cover the entire gloomy face which is much larger, it said. It said Bangladeshi manufacturing firms report very high levels of capacity utilisation.
On an average, manufacturing firms here outperform firms worldwide in terms of capacity utilisation, measured as the establishment’s output produced as a proportion of the maximum output possible when using all available resources.
The average capacity utilisation for Bangladesh is 84 per cent whereas the average percentage for 122 countries with the survey data is 73 per cent. The average capacity utilisation for small firms is the lowest among all categories in Bangladesh, but at 79 per cent it is still higher than the world average.
Local firms also export at higher levels compared to their peers in neighbouring and similar income countries. More than 22 per cent of Bangladeshi firms export, directly or indirectly, at least 1 per cent of their sales whereas this rate is 16 per cent in all countries and 11 per cent in low income countries.
Source: Weekly Holiday
