Inefficient bureaucracy now top roadblock: CPD
Inefficient government bureaucracy is among the most top roadblock for the improvement of the country's business competitiveness, according to the Bangladesh Business Environment Study released yesterday.
The Centre for Policy Dialogue (CPD) completed the study as part of the executive judgment survey for the preparation of World Economic Forum's Global Competitiveness Report.
The CPD conducted the survey and released the Bangladesh version of the Global Competitiveness Report 2020 on behalf of the WEF.
The weakness in bureaucracy has developed into major problem for the first time to increase the competitiveness, sidestepping corruption and infrastructure.
Corruption and limited usage of finance, however, still exist as the major challenges to develop the business environment, in line with the report.
Although the global competitiveness index ranking has been paused in 2020 as a result of dire situation stemming from the coronavirus pandemic, the country's state of affairs of the major competitiveness had either deteriorated or stagnated this past year, said CPD Research Director Khondaker Golam Moazzem while presenting the report.
The country's position slipped two notches to 105th this past year.
The federal government should give attention immediately to increase the issues of the business enterprise competitiveness, if not the recovery process from the ongoing economical hardship are certain to get delayed.
The report highlighted 11 problems while the WEF completed the executive judgment survey in the country's business sector.
The survey covered governance, infrastructure, technology, human capital, financial environment, business procedures and innovation, domestic competition, foreign trade and competition and security and risks.
Some 55 privately-owned companies based in Dhaka, Chattogram, Gazipur, Bogura and Cumilla taken care of immediately the survey, that was conducted between February and May this season.
Around 72 per cent of respondents opined that inefficient government bureaucracy was the most problematic element in doing business in Bangladesh last year.
Moazzem said businesses were not able to obtain desired services with time from the bureaucratic system, fuelling the price tag on doing business.
"This has had a detrimental impact on the competitiveness to do business," he said.
Some 68 % of participants in the survey thought that corruption was the second top-most barrier to improve the competitiveness.
In addition, bribes regarding the tax payments and settling exports and imports have been on the rise this past year.
Poor corporate ethics, illegal diversion of public funds and an inefficient judicial system for settling disputes were deteriorated further, in line with the survey.
Limited access to finance may be the third major problem as 66 % participants of the survey opined to this end.
Access to finance is largely geared to large scale enterprises where small and medium enterprises (SMEs) and startups find it hard to get necessary credit support.
The banking sector has played a significant role through the ongoing pandemic by financing subsidised credit to different types of enterprises and businesses but SMEs are largely unable to get their expected fund.
There has been a discussion that banks now take a seat on the surplus liquidity, but SMEs are deprived of enjoying the fund, Moazzem said.
The banking sector deteriorated further last year as 75 % of entrepreneurs indicated the central bank's poor quality in monitoring and supervision of banks.
Some 60.7 % of respondents expressed that soundness of banks is below the normal level and this deteriorated in 2019 compared to the previous year.
The government earlier announced forming an unbiased banking commission, which did not make progress through the pandemic. The government should take up an initiative to create the commission immediately.
The administrative centre market also weakened this past year and as much as 80 % of respondents thought that the Bangladesh Securities and Exchange Commission's weak monitoring and supervision was largely in charge of this.
The report also detected that financial auditing and reporting standard was feeble and the amount of weakness worsened further.
Together with the problems, businesses faced crisis in doing their businesses because of a lack of satisfactory infrastructures.
However, improvements were seen in almost all of the infrastructure related facilities in the field of transport sector this past year.
A significant degree of public investment on infrastructure development during the last decade helped to increase the performance.
The level of improvement in perception, however, didn't match with the amount of investment made in infrastructure development.
Over expenditure is a significant area of concern in the event of different infrastructure related projects, which is related to faulty planning, unintended and intended delay, over-budgeting and corruption.
Bangladesh's major technological progress was seen in case of online digital economy in providing transport services.
Numerous kinds of online based transport services such as Pathao and Uber made important contributions in the background of weak public transport service facilities.
But performance in other gig economy related indicators is below average.
The digital divide has been further intensified through the pandemic period as some of well-off persons now benefit from the output from the digital transformation.
A substantial rise in investment is required on digital technologies so that you can avail the brand new opportunities as well as making them inclusive during the post-Covid period.
A significant dearth in the training system is poor quality of education against growing demand for skill-oriented education system, in line with the report.
In some cases, the problem deteriorated in 2019 when compared to previous year.
Graduates from both secondary and university levels usually do not possess the mandatory skills.
Besides, active people do not have sufficient digital skills, which rather worsened this past year.
Risks regarding the number of issues for conducting business in next one decade rose in 2019.
Included in these are failure of national governance, failure of climate-change adaptation, extreme weather events, illicit trade, food crisis, failure of regional global governance etc.
Risks have drastically increased in following issues -- spread of infectious diseases, asset bubble, unmanageable inflation, fiscal crisis and misuse of technologies.
The coronavirus pandemic has been a major setback for individual company level performances with regards to production, export, import and employment, in line with the report.
About 40-50 % of businesspeople indicated that the Covid-19 has caused a significant decline in the performances of their enterprises.
Fahmida Khatun, executive director of the CPD, said the federal government should take steps to solve the problems as businesses would make an effort to invest more funds in the times to come when the economy would get yourself a pickup sweeping aside the ongoing slowdown.
"Probable recovery will not be possible in due time if the problems continued," she said.
Mustafizur Rahman, a distinguished fellow of the CPD, also addressed the event.
