• Saturday, August 02, 2014

Political instability biggest obstacle

WB study lists challenges of the private sector

Star Business Report

The private sector sees political instability as the biggest obstacle for the country's business environment, according to a new study of the World Bank.   
Among 15 areas of the business environment, electricity, access to finance, and corruption are the other big challenges to the daily operations of businesses, said the 'enterprise survey' of the WB and International Finance Corporation.
Compared to 2007, uncertainty stemming from political rivalry is deepening, as political instability has overtaken electricity and access to finance as the main concern for the private sector. "This result is a reflection of how perceptions are affected by surges in civil unrest," the report said.

The 15 areas are: political instability, electricity, 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 electricity remain a major obstacle for firms' operations as shown by the fact that 28 percent still consider this element of the business environment as their top obstacle.
The WB interviewed a representative sample of the private sector in four of the most active economic regions in Bangladesh.
The sample consisted of 1,442 business establishments surveyed from April 2013 through September the same year.
The report said although less than 10 percent of the businesses identify corruption as their biggest obstacle, almost 60 percent indicated that an informal gift or payment was requested when obtaining an operating licence.
Similarly, almost 50 percent of the 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 percent of the firms report a bribe solicitation when obtaining an import licence, which is the highest percentage among all countries.
However, the picture painted in the survey is not all gloomy.
It said the Bangladeshi manufacturing firms report very high levels of capacity utilisation.
On average, manufacturing firms in the country 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 percent whereas the average percentage for 122 countries with the survey data is 73 percent. The average capacity utilisation for small firms is the lowest among all categories in Bangladesh, but at 79 percent 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 percent of Bangladeshi firms export, directly or indirectly, at least 1 percent of sales whereas this rate is 16 percent in all countries and 11 percent in low income countries.
However, women's inclusion in the economic activities depicts a dismal picture, with their participation in management, firms' ownership, and employment lagging behind most countries.
The share of women participating in the workforce is higher at 16 percent, but still considerably lower than the average for all countries, at 34 percent, and for low income countries, at 25 percent.

Published: 12:01 am Thursday, May 15, 2014

Last modified: 8:58 pm Thursday, May 15, 2014

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