Is business sliding into oblivion?
Meeting Jan Karel Bout of the Dutch Employers Cooperation Programme (DECP) last week at the Bangladesh Employers Federation was an eye opener on business in Bangladesh. DECP, a Dutch public-private partnership programme, works in 40 developing countries to bolster the business environments in those countries through removing archaic rules and regulations that stifle business and innovation.
Mr Bout shared the anecdotes of privatising state-owned enterprises in his country (the Netherlands) in the seventies as well as deregulation works in some other countries to drive home the point that cutting the regulatory flab is never easy no matter what the country is. Every rule, every procedure has a person behind it who will defend his/her turf unrelentingly. That is why tough political will is a singular requirement for all regulatory reforms everywhere every time.
Reforms have been a clarion call of the trade and industry lobbies of the country for many years now. For Bangladesh pruning archaic business regulations is a matter of survival in this era of global free market regime. However, the empirical evidence is increasingly stacked against us on this front.
The World Economic Forum (WEF) annually puts out a global competitiveness index computed from 12 indicators ranging from institutions and infrastructure to education and business sophistication. The index called The Global Competitiveness Report, ranked Bangladesh at 111 out of 134 countries in 2008-2009. The only South Asian country that fared worse than us is Nepal, a land-locked mountainous country with few resources. The story gets even worse when you consider the fact that in WEF's 2007-2008 rankings Bangladesh was at 107, meaning that our competitiveness is going south while India, Pakistan, the Philippines, Sri Lanka and even Vietnam remained steady in their places.
The World Bank (WB) on the other hand publishes an annual report on the ease of doing business in countries around the world. The report called Doing Business ranks countries on the basis of rankings under 11 procedural categories ranging from 'starting a business' and 'registering property' to 'enforcing contracts' and 'closing a business'. Bangladesh comes in at 110 out of 181 countries ranked in the latest report published in 2009. What is worse again is that Bangladesh slid down 3 places from its 2008 rankings. The only consolation for now could be that only Pakistan and Sri Lanka fared better than us in these rankings out of all South Asian nations. But then again considering the political volatility in those two countries we should have done better. India, for instance, moved up two notches in the current rankings.
While sharing anecdotes Mr Jan Karel Bout said a certain African country ranked very poorly in the 'ease of doing business' index primarily because their long-gone European colonial rulers had a law that required personal authorisation of the crown before opening any new business. The law had been there obviously to protect the business interests of the colonial masters but even though the colonial rulers left many years ago the citizens of the African nation are still choking under the yoke of colonial-era laws. You may chuckle but wait till you look at our own predicament.
Both the global competitiveness and ease of doing business indices are symptomatic of the deep-rooted institutional and procedural flaws in the ways we conduct business in this country. Very often leaders of both business and political shades get into tirades over how the archaic laws and procedures left behind by the colonial rulers are to blame for all the ills in our business environment. For goodness' sake, the country has been independent of the colonial masters for more than sixty years now. We have even dislodged an uneven union with a far-flung country, solely based on religion, nearly forty years ago. We are our own arbiters of fate and have been for many years. We cannot escape our responsibility of making our economy more sustainable and our lives more comfortable through updating the laws and procedures of the land. We cannot blame any ghosts of the past for our current misfortunes; we cannot take refuge, for our inactions, in the draconian measures of our past foreign rulers; we cannot hide our heads in the sand and feel sorry for ourselves while the rest of the world pushes on.
We would like to see our lawmakers, policy makers and business leaders work shoulder to shoulder in overcoming the unrealistic and artificial barriers to competitiveness and doing business. We would like to be able to regale Mr Bout on our exploits in getting rid of anachronistic laws and procedures for doing business by the time he visits us next time.