Doing business gets tougher in Bangladesh

Global survey shows ranking down by 18 steps to 107th position
Daily Star reports

Bangladesh slid down 18 steps to the 107th position among 178 countries in terms of ease of doing business in a country, said a global survey report jointly prepared by International Finance Corporation (IFC) and the World Bank (WB).In 2006 the country ranked 88th in the same survey.The survey titled 'Doing Business-2008' reveals that Bangladesh fell behind in nine indicators among ten, improving only in cross-border trading. Economists termed the survey result for Bangladesh as a reflection of bad governance by the immediate past elected government in both economic and administrative areas.However, the overall business environment will improve following the reform measures taken by the present caretaker government, they said adding that the survey incorporated the reflection of the development brought to Chittagong Port by the present caretaker government.

The survey shows that the cost of export in Bangladesh is 23 percent lower compared to the average cost of exporting goods from the region of South Asia, while in the case of import the cost is 13 percent lower than the regional average.The survey is based on the figures gathered from the last fiscal on ten categories to ascertain a country's business competitiveness, which are: starting a business, dealing with licenses, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across border, enforcing contracts, and closing a business.

According to the study, Bangladesh is the fourth easiest country in South Asia for doing business in. The top ranking countries in the region are The Maldives with a global raking of 60, Pakistan with a global ranking of 76, and Sri Lanka with a global ranking of 101. Bangladesh is ahead of Nepal which has a global ranking of 111, Bhutan with a global ranking of 119, and India with a ranking of 120. A joint news release by WB and IFC said last year South Asia had ranked the last in the world in terms of the rate of reforms while this year two-thirds of its countries had at least one reform. The pickup in reforms was led by India, which climbed 12 notches in the index by making reform of business regulations a policy objective. India has been the top reformer worldwide in cross border trading during the survey period, the news release said. Bhutan and Sri Lanka are the other top reformers in South Asia this year. Bhutan introduced the country's first fundamental labour rights protection while Sri Lanka made it easier to start a business and cross border trading, the release added.In terms of the standing in ease of starting a business, Bangladesh slid down 17 steps ranking 92nd in this year's survey report, while it had ranked the 75th in 2006.

Bangladesh requires going through eight different procedures for starting a business, while the regional average is 8.8 for the same purpose. The number of days needed to start a business in Bangladesh is 74 while the regional average is 42.6.The cost of starting a business in Bangladesh, as a percentage of the per capita income, is 46.2 percent, while the regional average is 37.2 percent. Bangladesh ranked 116th in the category of dealing with licenses, where its ranking had been 113th in the previous year. In Bangladesh one has to go through 14 procedures to obtain a license, while the regional average number is 18. Businesses in Bangladesh need 252 days to obtain a license, while it takes 238 days on an average in the region, the survey says.Licensing cost in Bangladesh, as a percentage of the per capita income, is 751 percent, while the regional average is 2,871 percent of the per capita income, according to the survey. In terms of how easily properties can be registered in Bangladesh the country ranked 171st in the current survey while it had ranked 113th in the same category in 2006. Property registration cost in Bangladesh, as a percentage of property value, is 10.3 percent, while the regional average is 6 percent. A total of 425 days are needed to register a property in Bangladesh, while it takes 134 days on an average in the region.

The survey says in terms of getting credit for doing business, Bangladesh ranked 48th in the current survey, the ranking of which in the category had been 45th in 2006.In the categories of employing workers, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business, Bangladesh ranked 129th, 15th, 81st, 112th, 175th and 102nd respectively in the current survey, in the same categories its ranking had been 117th, 15th, 76th, 139th, 175th, and 93rd respectively in 2006.Entrepreneurs require 400 hours to pay taxes in Bangladesh, while the average time required for paying taxes in the region is only 287.6 hours. Going through a total of 41 procedures is required for enforcing a business contract in Bangladesh, while the average required procedures for the purpose in the region is 45.1. Entrepreneurs have to spend 1,442 days for enforcing business contracts in Bangladesh, while the average requirement in the region is 990 days. Bangladesh has improved in cross-border trading in 2007. The country requires only 7 documents for exports, while the average regional requirement is 8.3 documents.

Bangladesh is also ahead in the region in terms of time required for export. It needs 28 days to export goods, while the average required time in the region is 32 days.In Bangladesh the cost of exporting a container of goods is $844, while the regional average is $1,106. The cost of importing a container of goods in Bangladesh is $1,148, while the regional average is $1325. Worldwide the top 10 reformers in order are: Egypt, Croatia, Ghana, Former Yugoslav Republic of Macedonia, Georgia, Colombia, Saudi Arabia, Kenya, China, and Bulgaria. The reformers made it simpler to start a business, strengthened property rights, enhanced investor protections, increased access to credit, eased tax burdens, and expedited trade while reducing costs. In all, 200 reforms in 98 economies were introduced between April 2006 and June 2007.The top 25 countries in order, in which doing business is the easiest, are: Singapore, New Zealand, the United States, Hong Kong (China), Denmark, the United Kingdom, Canada, Ireland, Australia, Iceland, Norway, Japan, Finland, Sweden, Thailand, Switzerland, Estonia, Georgia, Belgium, Germany, the Netherlands, Latvia, Saudi Arabia, Malaysia, and Austria.

Dr Zaid Bakht, research director of the Bangladesh Institute of Development Studies (BIDS), said the report reflects the result of the damages done to the economic and administrative sectors by the immediate past partisan government.He said just before handing over power, the immediate past elected government packed the administration with partisan people destroying business environment violating laws and regulations of the country. The first caretaker government in the recent series of two found the country with an economic uncertainty looming large over it. But the present caretaker government initiated reform measures including a massive anti-corruption drive and the development of Chittagong Port, the result of which has yet to make an impact on the national economy, he said adding, if the government's ongoing efforts manage to sustain, it will bring much good to the country.A large number of top corruptionists were detained under the present government's anti-corruption drive, but the massage of the drive has yet to reach the mid and lower levels of the administration, Bakht said adding, when the message will reach every level of the society, the overall business environment will improve.