Tuesday, 21 March, 2023

Graft major obstacle to business: CPD study

  • Staff Correspondent
  • 30 January, 2023 12:00 AM
  • Print news

Corruption is the biggest hurdle to doing business for most of the enterprises in Bangladesh, said a new study report of the Centre for Policy Dialogue (CPD).

The independent think tank on Sunday revealed the results of a survey titled: "Bangladesh Business Environment 2022: Findings from the Executive Opinion Survey.”

It showed that 64.6 percent of the survey respondents view the graft as the biggest obstacle to doing business in Bangladesh.

Other major problematic factors include inadequate infrastructure, limited access to finance and inefficient bureaucracy.

The CPD report suggested major overhauling of Bangladesh's financial sector.

The think tank said that the business environment in the country did not show any considerable progress during fiscal year 2021-22, while the competitive business environment further deteriorated due to the lack of proper practices.

"The current situation is unstable. We have the pressure of inflation on one side, then there is the crisis caused by the Ukraine-Russia war, also there are geopolitical factors for which even big economies are going through recessions," said CPD Executive Director Fahmida Khatun.

 "Many international organisations like the World Bank and the IMF have forecast that it will linger till 2024. Many big economies will enter recessions,” she said.

“The whole world is struggling and people in Bangladesh are also struggling with food price, fuel inflation. Individuals as well as businesses are facing pressure due to this," Dr. Fahmida Khatun said.

CPD Research Director Dr. Khondaker Golam Moazzem said, “The severity of its impact has been gradually shared with other structural and newly emergent problematic factors.”

The CPD identified that there are some challenges for the country’s economy including inflation, foreign currency instability and policy instability, which have been multiplied through new factors.

The body carried out the "Executive Opinion Survey (EOS)" from April to July 2022 in partnership with the World Economic Forum (WEF).

The objective of the survey was to evaluate the perception of entrepreneurs and businessmen on the state of business competitiveness and factors and institutions responsible for long-term growth, especially during the post-pandemic period.

According to the report, the business environment in the country did not show any considerable progress during 2021-22 – either it stagnated, or it deteriorated compared to the previous year.

"Institutional inefficiencies and weaknesses have further worsened though some improvement has taken place sporadically," the report noted.

Financial sector needs major overhauling which could be initiated as part of complying with the International Monetary Fund's (IMF) loan conditionality – amendment of bank company act, lifting the cap on lending rate to ensure better access of SMEs, transparency in outstanding loans, the effective oversight role of the central bank, Security and Exchange Commission (SEC) and Insurance Development and Regulatory Authority (IDRA), suggested the CPD report.

 The report said that the competitive environment in businesses further deteriorated due to the lack of proper practices of corporate governance, weak regulatory oversight and lack of corporate ethics.

"The Competition Commission, the Consumer Rights Protection Division of MoC, Central Bank, the NBR and Ministry of Finance should play their due role in ensuring competition in the market," it said.

It added, "Companies playing the role of ‘dominant market player’ need to be regularly monitored in their operations in different segments of markets and supply chains."

The study observed that an inclusive supply chain in major sectors needs to be developed with the assured presence of SMEs in each segment of the supply chain.

According to the report, the business-related information needs to be disclosed in an integrated information and data system to review the operations of players in the supply chains.