Businesses yesterday expressed frustration over the lack of improvement in the processes for doing business and the sluggish progress in implementation of reform measures.
The economy is buoyant, the macroeconomy, on balance, is positive; yet the private domestic and foreign investment are not showing the dynamism that is needed to accelerate growth to 8 percent, said Sadiq Ahmed, vice-chairman of the Policy Research Institute of Bangladesh.
“A big part of the answer is the continued high cost of doing business as suggested by the ease of doing business rankings.”
Ahmed's comments came at a roundtable on doing business in Bangladesh, organised by the PRI at its office in Dhaka.
Businesses and analysts also talked on the lack of willingness among civil servants to ease the process of doing business, which is badly needed to take the economy to the next level.
Some stressed on ensuring the accountability of civil servants and expressed dissatisfaction over the quality of education and the low skills of workforce.
In the World Bank's ranking of Doing Business, Bangladesh was ranked 177 out of 189 economies in 2018, down one notch from 2017.
“Bangladesh's ranking is at the lower end of the rankings in 9 out of the 10 categories,” said Ahmed.
It fared the worst in enforcing contracts, registering property, getting electricity and trading across the borders.
“These suggest that the investment climate challenges are broad-based and will require fundamental reforms over a long period of time.”
The Bangladesh Investment Development Authority has prepared an action plan for eight indicators of doing business through stakeholder consultations earlier, according to Ahmed.
But the implementation of the developed action plan is yet to be initiated, he said, adding that the National Committee for Monitoring Implementation of Doing Business Reforms needs to be operationalised for stronger oversight of the reforms.
“With the national election cycle fast approaching, swift efforts are needed to show progress in the next few months.”
As an immediate task, he suggested addressing the problems faced by the banking sector.
“If the banking sector problems that we are facing, if the pressure that we see on the balance of payments and on the credit side are not resolved quickly, there is a risk that some of the gains that we have made on the economy might be lost.”
He also suggested reducing the corporate tax rate as well as simplifying and streamlining the tax laws and administration.
“Two easy things are e-filing and e-payment. That will reduce a lot of harassment,” he added.
Problems related to processes for doing business are quite well known, said Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry.
“We need practically-orientated, time-bound, measurable and implementation-capable plans. And the government and the private sector must sit together and do it. We have run out of time.”
Citing Samsung's desire to invest in Bangladesh and subsequently shifting to Vietnam, Farooq Sobhan, president of the Bangladesh Enterprise Institute, said: “Success stories are important and understanding failure is also important.”
Sobhan, also a former ambassador of Bangladesh, said foreigners are hired in industries because of a shortage of skilled workforce.
This result in the drain of foreign currencies out of the country, he said, citing that $4 billion of remittance was sent to India from Bangladesh through the official channel.
The total amount will be double if the transfers through the unofficial channels are taken into account, he added.
“Building human resources is important and yet nobody is putting attention to that,” said Anwar-Ul-Alam Chowdhury, former president of the Bangladesh Garment Manufacturers and Exporters Association.
He went on to cite the case of Japan, which was once dependent on its garment industry. But the country invested on research and education to cut the dependence on the sector and diversify its industrial base.
“We are still dependent on the garment although 30-40 years have gone by. It is unfortunate.”
In order to expand the industrial base, the mindset needs to be change, safety, energy and infrastructure ensured, and investment made on education, he added.
“Nothing will be possible unless we can ensure quality education,” said Sohel Ahmed Chowdhury, a former commerce secretary.
Asif Ibrahim, former president of the Dhaka Chamber of Commerce and Industry, said 400 reform proposals were made from Business Initiative Leading Development for private sector development.
“The window of opportunity is very short,” he added.
BIDA Executive Chairman Kazi M Aminul Islam said a detailed plan of action has been prepared and this has been shared with the agencies for implementation.
Islam, while replying to comments from some discussants on the penalty and incentives for civil servants to ensure accountability, said: “Incentive is needed; not penalty.”
PRI Executive Director Ahsan H Mansur said regulatory reforms are the key.
He also suggested the BIDA to take steps to receive feedbacks from the private sector about reforms and take a proactive role in resolving the problems.
“As this is the election year, difficult reforms cannot be done. But the government can take areas where win-win reforms are possible,” Mansur added.
Reforms have helped India improve its doing business ranking, said M Masur Reaz, senior economist and programme manager of the World Bank Group in Dhaka.
“Political ownership was the most important part there.”