Corruption, inefficient bureaucracy and limited access to finance have been identified by the local business community as the main hurdles to doing business in Bangladesh.
The issue was highlighted in Bangladesh Business Environment 2021 report published by the Centre for Policy Dialogue (CPD) on Wednesday. The findings are from the Entrepreneurs’ Perception Survey.
The highest 68 per cent of businesspeople surveyed said that corruption is a major business challenge. They said they have to pay while taking business licence, paying taxes or taking different services.
Some 67 per cent of business persons complained of inept bureaucracy and 55 per cent mentioned the problem of access to credit. Insufficient infrastructure and frequent changes in policies are the other key problematic areas.
However, the perception of infrastructure has improved. It is now ranked fourth important factor (45 per cent) which was earlier ranked top or second most problematic factor.
Significant public and private investments in road, bridge, port, electricity, gas, rail, water supply have contributed to improvement in infrastructure to some extent, according to the report.
Fast track projects for large scale infrastructure development could contribute to improving the business environment further.
The public sector needs to invest in soft infrastructure development in the coming years to ensure the supply of skilled workforce, better tax regulations and lowering tax rates, CPD suggested.
Some 28 per cent of businesses surveyed said they had to go for cost-cutting and firing staff amid the corona pandemic.
CPD carried out the ‘Executive Opinion Survey (EOS)’ during April-July, 2021 among 73 business institutions of Dhaka, Chattogram, Narayanganj, Gazipur and Faridpur, whose capital was over Tk 100 million.
The businesses in the country will take 3 years to recover from the impacts of the pandemic, according to nearly half of the business persons who took part in the survey.
“So, it can’t be said at this moment that the country’s businesses has fully recovered from the pandemic,” Dr Moazzem commented while presenting the report highlights.
Some 42 per cent of responders said the country's economy is still under pressure while 63 per cent of the traders feel that the distribution of incentive packages was "disproportionate" for the SMEs during the peak of the Covid-19 pandemic.
Despite the 'build back better approach in the post-Covid period, businesses continue to face structural challenges, added with new challenges, that ends up questioning the competitiveness of the business environment, the study concluded.
CPD suggested that NBR and Tariff Commission should jointly review the fiscal expenditure incurred for providing financial incentives and subsidies to different categories of enterprises and activities.
Although safety and security issues did not make progress in 2021 compared to that in 2020, the financial sector and trade and investment-related issues have either somewhat recovered or are at the recovery phase.
Meanwhile, the capital market has been struggling in building confidence among investors. Major challenges here included poor-quality IPOs (56 per cent), weak regulatory enforcement role of SEC (53 per cent), anomalies in financial reporting (50 per cent) and suspicious trading in the secondary market (50 per cent).
Other issues are lack of transparency in BO accounts and failure to ensure due diligence of DSE or CSE, SEC, CDBL etc.
Regarding the faster recovery in the trade and investment sector, the report recommended attracting more foreign visitors could improve the image of the country.
The domestic business environment has also somewhat improved and passed the level pre-covid level but the overall competitive environment is still below the minimum average level.
The survey also gave an idea of the emerging business sectors in the next 10 years. Digital financial service came up at the top position of these sectors, followed by skilled manpower sector and data management.
CPD expressed concern over the US taking a hard position on the human rights situation in Bangladesh.
It said the economic recovery is visible in the country but that recovery is not being inclusive.
The think tank suggested that the government consider the “discriminatory recovery” in its policy framework.
Moazzem said the top three issues hindering businesses are not a problem for large businessmen, but it is a big problem for SMEs and marginal businesses.