Business climate improves slightly

The Bangladesh Business Climate Index (BBX) reported a slight improvement in the country’s business climate in 2022 compared to the previous year. This is attributed to advancements in starting a business, infrastructure and labor regulations.

The index was jointly prepared by the Metropolitan Chamber of Commerce and Industry (MCCI) in Dhaka and the Policy Exchange of Bangladesh, a private think-tank. This was the first time the index was launched after the World Bank discontinued publishing its Ease of Doing Business Index in 2021.

The assessment of the overall business environment by the index is based on 10 pillars, which include: establishment of a business, acquiring land, acquiring regulatory information, infrastructure, labor laws, settling disputes, facilitating trade, paying taxes, technology integration, and obtaining financing.

Download Here: Bangladesh Business Climate Index 2021 Report Step compressed.pdf

In Bangladesh, the score for three pillars, namely access to land, tax payments, and financial access, decreased due to bureaucratic challenges and the economic impact of the Russia-Ukraine conflict on the value of the dollar.

According to the BBX report, the overall score did not experience a substantial improvement. The country received a score of 61.95 out of 100, which is a slight increase from 61.01 in 2021. The report emphasized that the lack of significant reforms in the past year was the reason for the minimal improvement.

The report highlighted that Bangladesh still has a long way to go in order to become a desirable emerging market. To achieve this goal, reforms are crucial in areas such as port congestion, financial intermediation, excessive paperwork, legal framework, tax regulations, and institutional governance. These reforms will play a critical role in ensuring the country’s progress and attracting investment.

Yesterday, the MCCI and the Policy Exchange released their report during a gathering at the MCCI’s Dhaka office. The report was based on a survey of 518 participants, conducted from July to September.

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In terms of divisional performance, Mymensingh emerged as the top performer with a score of 65.23. Sylhet was ranked second and Chattogram placed third.

Interestingly, despite being the primary drivers of economic growth in Bangladesh, Dhaka and Chattogram scored relatively low in the index.

According to Masrur Reaz, the chairman of the Policy Exchange, businessmen in both divisions had a negative response due to the challenges they are facing.

As the keynote speaker, Commerce Minister Tipu Munshi emphasized the need to expand the country’s businesses and provide further support for small and medium enterprises. He also stressed the importance of promoting women entrepreneurship.

Md Saiful Islam, the President of MCCI, stated that the BBX aims to provide local and national government agencies with data-driven information that could improve their service delivery and develop practical policy plans that benefit small local businesses.

The report highlights that trade facilitation is still facing several challenges and requires significant efforts to improve. The chairperson of the Business Initiative Leading Development, Nihad Kabir, stated that Chattogram port ranks 341st out of 370 ports in the World Bank’s Container Port Performing Index.

Ms. Kabir pointed out that the lack of efficiency and automation at the Chattogram port leads to delays and negatively impacts the shipping industry. For example, the average ship turnaround time at Chattogram port is much longer, at 3.23 days, compared to Colombo port, which is at 0.86 days.

Ms. Kabir emphasized the need for improvement, stating, “This is not acceptable. We should improve from this point.” The BBX report also revealed that an investor must navigate through 23 government agencies to obtain 150 regulatory services, which are required for starting and operating a business.

The results of the survey indicated that a majority of 86% of participants faced challenges when dealing with government agencies during land procurement in Bangladesh. This was reflected in the declining score for the access to land pillar, which fell from 58.90 in 2021 to 53.07 in 2022.

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Despite the awareness of the numerous registrations and renewals among over 95% of respondents, they expressed difficulty in finding information online.

Bangladesh showed exceptional results in the infrastructure accessibility sector, with a majority of 90% of respondents reporting that it was relatively straightforward to obtain utility connections for water, electricity, and sewerage.

However, the recent power outages have impacted the businesses of over 90% of the respondents, with power failures lasting anywhere from two to nine hours daily.

60% of the respondents reported significant obstacles in filing and paying income tax and VAT, and 76% stated that the current tax system had a negative impact on their businesses.

The access to finance pillar in Bangladesh faced significant issues, with 87% of survey respondents indicating difficulty in securing bank loans and financing. Despite this, the executive chairman of the Bangladesh Investment Development Authority, Lokman Hossain Miah, assured the business community that the business processes would improve to reach the level of Vietnam in the next quarter.

Additionally, the senior secretary of the foreign affairs ministry, Masud Bin Momen, gave a speech on the matter.