Bangladesh’s competitiveness is eroding owing to weakening macroeconomic stability, deterioration of labour market conditions, lack of ICT adoption and inadequate progress in infrastructure, according to the World Economic Forum’s Global Competitiveness Index (GCI) 2019.
The country’s position slipped two notches to 105th in this year, according to the GCI, which was unveiled yesterday by the Centre for Policy Dialogue (CPD), a partner of the WEF.
The index maps the competitiveness landscape of 141 economies through 103 indicators organised into 12 themes.
Each indicator, using a scale from 0 to 100, shows how close an economy is to the ideal state or “frontier” of competitiveness, with 100 representing an optimal situation.
The pillars, which cover broad socio-economic elements, are: institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, the financial system, market size, business dynamism and innovation capability.
The report showed that Bangladesh’s competiveness declined in 10 out of 12 pillars.
Significant deterioration in ranks was observed in case of macroeconomic stability, labour market, ICT adoption, and infrastructure, said CPD Research Director Khondaker Golam Moazzem while presenting the report at the Economic Reporters Forum.
The country was ahead of its South Asian peers Nepal and Pakistan in terms of ranking but lagged behind India and Sri Lanka.
Save for Nepal and Sri Lanka, the other Saarc countries’ ranking declined in GCI 2019 from a year earlier. Afghanistan, Bhutan and Maldives did not take part in the competiveness survey.
Bangladesh ranked among the top 50 countries only in one pillar: market size. Its weakest positions are in business dynamism, labour market, product market and skills, said the report.
Complex administrative requirements and weak entrepreneurial culture have weakened business dynamism.
Inadequate skills of current work force and lack of preparedness of workforce to face future challenges of technologies are the other weaknesses, according to the GCI 2019.
“The report gives indication that a large number of labour force can turn into burden in future for lack of preparedness for fourth Industrial Revolution (4IR) technologies. The notion of availability of cheap labour will be seen from the perspective of skills,” Moazzem said.
Bangladesh is confronting four-pronged challenges in terms of competitiveness.
The lack of improvement in governance and institutions, poor infrastructure, financial system and business operations are traditional perennial problems, Moazzem said.
But the lack of preparedness for 4IR technologies, absence of necessary regulatory framework and skills, no clear pathways for businesses are emerging concerns.
And then there are emerging market risks: rise in energy price, failure in urban planning, underemployment, failure in climate change adaptation and industrial pollution.
“Neither we can get out of traditional challenge nor are our policymakers and businesses ready to face new challenges.”
Addressing those four-pronged challenges through unidirectional approach would not work.
“A business-as-usual approach would not help to improve Bangladesh’s falling competitiveness.”
The GCI 2019, which has been prepared based on secondary data and survey among businesses, said institution and governance are the weakest areas in business competiveness and businesses perceived that the majority of the indicators had deteriorated.
Some 77 entrepreneurs took part in the survey.
As many as 78 percent of the participants said bribe is somewhat a usual practice to get public contracts, said Moazzem, adding that 76 percent of the entrepreneurs said the use of bribe is somewhat common in export and import.
A high percentage of them complained of expectations of bribe in connection with tax payments and low ethical standards of politicians.
“The extent of corruption has further increased. This has squeezed the scope for doing business particularly for the new entrants and micro, small and medium enterprises.”
Corruption has become a major burden for businesses, which reduce competitiveness both in local and global markets.
The GCI 2019 said entrepreneurs’ perception has deteriorated in 11 out of 19 indicators. Businesses also complained of ‘illegal’ diversion of public fund and distorting fiscal measures for competition, according to the GCI.
The report, however, said entrepreneurs’ perception improved in a number of indicators, namely effective changes in public policies and ensuring stable policy.
The GCI also said entrepreneurs’ perception regarding infrastructure has improved but the level of improvement was still inadequate to ensure the accepted level of quality.
Bangladesh is lagging behind in using the other 4IR technologies and the related legal framework is poor.
The report said 59 percent of the respondents expressed their dissatisfaction about weak soundness of banks.
“Entrepreneurs’ expressed their concern about domination of few business groups in major corporate activities,” said Moazzem, citing that 75 percent of the respondents mentioned that the situation has deteriorated.
The report said entrepreneurs’ perception has somewhat deteriorated in a number of cases.
“The rise in crime and violence caused higher business costs,” Moazzem added.
At the event, the CPD also shared its findings on Bangladesh Business Environment in 2019.
It said 78 percent of the participants feared that problems in the banking sector would have significant adverse impact in domestic businesses.
And 80 percent of the respondents mentioned about further deteriorating situation in money laundering through various channels.
CPD Executive Director Fahmida Khatun said reform is a must to sustain the high rate of economic growth.
“We also have to focus on human resource development and life-long learning and training to enhance skills.”
Khatun said corruption is a curse on an economy and it eats up a portion of the GDP.
The crackdown against corruption should be a continuous process, she added.
At the event, CPD Senior Research Fellow Towfiqul Islam Khan also spoke.
The GCI 2019 ranked Singapore as the most competitive economy, followed by the US and Hong Kong. Chad has been ranked as the least competitive economy among the 141 countries surveyed.