Bangladesh has been ranked the 99th most competitive economy in the world, up seven notches from last year's ranking, on the World Economic Forum's Global Competitiveness Report 2017-18.
This is the highest ranking for Bangladesh since the index was introduced in its current format in 2004.
“We have been talking about the potential of Bangladesh to achieve double digit ranking. And for the first time, Bangladesh has entered the club of top 100 competitive countries,” said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, while unveiling the report.
CPD, as a partner of WEF, unveiled the latest report in Bangladesh at a press briefing held at the CIRDAP auditorium.
The WEF measures competitiveness by considering 12 factors that would determine the level of productivity in a country, including institutions, infrastructure, macroeconomic environment, health, education, labour market efficiency, financial market development, technological readiness, market size and innovation.
While Bangladesh's scores improved across all 12 pillars of competitiveness, it trailed behind all its South Asian peers -- India (40), Bhutan (85), Sri Lanka (85) and Nepal (88) -- save for Pakistan (115).
“The country has done better in infrastructure and institutions and this is one of the main reasons behind the improvement in overall score and rankings,” Moazzem said.
Bangladesh's ranking and score in the institutions pillar shot up from 125 to 107 this year. While the improvement is encouraging, Bangladesh still scores low in the rankings, he said.
In fact, the report identified inadequate supply of infrastructure as the most problematic factor for doing business in Bangladesh -- second only to corruption.
“Inefficient government bureaucracy is becoming a growing tension,” Moazzem said, citing that it was the third most problematic factor this year, up from last year's fourth spot.
Little change has been discerned in financial market sophistication, technological readiness, higher education and training, and labour market efficiency, this year, he said.
Inadequately educated workforce and poor work ethic at workplaces are the other two pertinent problems.
“Surprisingly, poor work ethic has emerged as a new form of constraint. Lack of dedication, hard work and commitment among a large section of the new entrants to the young labour put constraints on businesses to grow.”
The Bangladesh chapter of the report has been prepared based on executive opinion survey among 85 companies, mostly local. The survey was carried out between February and May, according to CPD.
In the survey, businesses noted progress in infrastructure thanks to the improvement in the quality of electricity and road infrastructure. But entrepreneurs were unhappy about the seaport infrastructure.
“High congestion at Chittagong sea port caused long turnaround time, extra time for unloading and re-loading, delays in shipment and extra shipment charges,” Moazzem said.
Subsequently, he suggested development of multi-modal infrastructural facilities connected with major inland and outbound trade routes to facilitate trade.
The report also found that Bangladesh has been a laggard in technological readiness even though its position has improved.
The use of ICT as a business tool is yet to get popularity. “Rather, the perception shows some deceleration.”
“Bangladesh is still at the nascent stage in case of creating IT-enabled business environment. The way we do business, that will become obsolete in the coming days.”
Besides, the country has not made any strides in financial market development.
“Bangladesh's financial market was once regarded as good as that of middle-income economies. But that has been degraded over the years and is now at the same level as that of the least competitive economies.”
The financial sector needs to confront the failure to control the rise of classified loans, particularly in state banks, the further weakening of banking sector governance thanks to the amendment of the Banking Company law in favour of the board, and the concentration of loans to a few large groups.
There was also deterioration in the competitive environment in the domestic market in 2016. The scope for monopoly is being created in some sectors.
“The lack of domestic competitive environment is a major area of concern for creating equal opportunity for all,” Moazzem said, citing the growing concentration of businesses and the lack of effectiveness of anti-monopoly policy.
Subsequently, he called for the implementation of the competition law.
Lack of efficient human resources and terror threats were also major concerns for businesses.
CPD Executive Director Fahmida Khatun suggested reforms to improve competiveness.
“The necessity for reform will intensify,” said Mustafizur Rahman, distinguished fellow of CPD.
“We have to increase efficiency and the ease doing business. Otherwise, we cannot go a long way,” he added.
Moazzem said Bangladesh should gradually put focus on the competitiveness requirement of an 'efficiency driven' economy from the existing factor-driven economy.
The report ranked a total of 137 countries and Switzerland came first, followed by the US and Singapore.