WB’s ease of doing business index underscores for accelerating regulatory reform efforts to continue to improve the business climate
Bangladesh has made moderate improvement in the World Bank’s Ease of Doing Business ranking, advancing by eight notches but lagging behind the other South Asian economies except Afghanistan.
The country is now placed at 168th out of 190 countries, up from 176th last year, thanks to business reforms in three key areas—starting a business, getting electricity, and getting credit--, says the World Bank’s Ease of Doing Business 2020 report released on Thursday.
“Bangladesh carried out three business reforms during the past year, the most in a decade, and would need to accelerate the reform pace to further improve its regional and global competitiveness,” adds the report.
“The country rose to a rank of 168th in the global ease of doing business rankings this year from 176th in the previous year.”
According to the Washington-based lender report, Bangladesh has scored 45 out of 100, up by 2.5 points from last year. In 2018, Bangladesh ranked at 176th.
Among the South Asian countries, Nepal improved by 16 notches and ranked at 94, while India improved by 14 notches and placed at 63. Bhutan ranked at 89, followed by Sri Lanka 99, Pakistan 108 and Afghanistan at 173.
New Zealand topped the chart with 86.8 points, while Singapore scored 86.2, the second highest in the list followed by Hong Kong and Denmark jointly scoring 85.3 points .
Push factor for the jump
Focusing on Bangladesh, the WB says setting up a new business became less expensive with the reduction of registration and name clearance fees and removal of the certifying fee for digital certificates.
In Dhaka, obtaining an electrical connection was made more efficient as the city invested in digitization and human capital. At the same time, the country reduced the amount of the security deposit required for a new connection, it adds.
Access to credit information was improved thanks to expanded coverage by the credit information bureau. This reform delivered Bangladesh’s most significant improvement, states the WB.
Bangladesh has seen improvement in starting a business, scoring 82.4 points, 45 points on getting credit criteria, and getting electricity with 34.9 points, the report elaborates.
Issues still are challenging
Bangladesh scores 34.9 points in registering property, gaining 4.1 points from last year. The ranking is now 184th.
On the other hand, enforcing contracts and resolving insolvency are still underperforming. Bangladesh's rankings in enforcing contracts and resolving insolvency are 189 and 154, respectively.
The WB’s enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system.
ON the other hand, cost and outcome of insolvency proceedings involve domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings.
“There are some issues, which are important in counting the ranking. These issues have been identified and works are in progress to address the shortcomings carefully,” Md Abul Kalam Azad, Chief Coordinator on SDGs Affairs of Prime Minister Office (PMO), says.
We are working on 10 specific issues such as action plan, policy formulation and law amendment, which would bring improvement in future ranking, says Azad.
The report also points out that transferring a property title in Bangladesh takes on average 271 days, almost six times longer than the global average of 47 days.
Resolving a commercial dispute through a local first-instance court takes on average 1,442 days, almost three times more than the 590 days average among OECD high-income economies, it adds.
To connect a new building to an electrical grid, a business needs to complete nine procedures, the most not only in the region, but also globally. Only two other economies in the world require nine steps to obtain a connection, the global lender says further.
Bangladesh sets target to bring double digit ranking by 2022
“This year, we moved from 176th to 168th, an eight point jump. This is the first time we have made such a big leap. But I shall not consider this as a big achievement as still we are at 168th out of 190 countries,” Salman F Rahman, Prime Minister’s Adviser on Private Industry and Investment Affairs, says at a press conference at the Prime Minister’s Office on Thursday.
“For next year, we have set a target to attain substantial gain in the rankings and double digit ranking improvement target by 2022.”
Recently, the World Bank has named Bangladesh among the top 2o improvers in reforms initiatives, which is a good achievement of the government, Rahman adds.
World Bank wants more reforms
“Improving the business environment is essential for Bangladesh to support private sector development, which will create more jobs and foster sustainable economic growth,” says Mercy Miyang Tembon, World Bank Country Director for Bangladesh in a statement.
It will be important for Bangladesh to build on the recent achievement and further accelerate regulatory reform efforts to continue to improve the business climate, adds Tembon.
As per the report findings, it takes 9.5 days to start a business in Bangladesh and 125 days in getting electricity connection. For property registration, it takes 271 days and 1,442 days for enforcing contracts. To pay taxes, a company has to spend 435 hours per year.