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Bureaucratic lethargy making doing business difficult

  • Published at 12:41 am December 18th, 2020
CPD ease of doing business 2019 2020

Finds a CPD study

For the first time, inefficiency in government administration has been identified as the topmost problematic factor by entrepreneurs for doing business in Bangladesh in 2019, said the Centre for Policy Dialogue on Thursday.

Administrative inefficiency refers to institutional incapability to deliver services on time, corruption in providing services, unethically awarding the contracts to someone and failure of officials to understand government policy.

As many as 72 per cent of the entrepreneurs in Bangladesh identified it as the major roadblock to doing business.

On the other hand, 73 per cent said that further deterioration of the banking sector crisis may affect local businesses.  

The CPD presented the findings of the Bangladesh Business Environment Study 2020, conducted in line with the World Economic Forum's Global Competitiveness Report (GCR) 2020, through a virtual press briefing. The WEF had globally released the GCR 2020 on Wednesday. 

This year there was no ranking of countries due to the Covid-19 pandemic.

Apart from inefficient government bureaucracy, 68 per cent and 66 per cent reported corruption and limited access to finance respectively as two other major barriers, said Khondaler Golam Moazzem, research director at CPD, in his keynote presentation.

Lack of proper government policy and lack of officials’ capacity and knowledge led to inefficient administration. 

Another issue is the absence of accountability among the service providers, Abul Kasem Khan, former president of the Dhaka Chamber of Commerce, told Dhaka Tribune.

To overcome the barriers, interaction with the business community, as well as training and adopting technology to provide the services are necessary.

In improving efficiency and capacity, the government has to set a benchmark and/or timeframe for providing services and making them accountable in case of failure to deliver on time, he added.

“It matters whether the financial institution can work independently or have the capacity to deliver services on time,” said Mustafizur Rahman, a distinguished fellow at the CPD.

The government and the regulator should focus on how to allow them to work without interference or influence and increase their capacity to perform well.

Although there is some infrastructure improvement, the Bangladesh economy will remain stuck and may deteriorate in 2021.

About 49 per cent of the entrepreneurs found it difficult to challenge the government or legal system, while 84.3 per cent said unofficial transactions for awarding public contracts have increased.  

As many as 78.8 per cent, 73.1 per cent and 70 per cent enterprises reported bribes in connection with tax payments, bribes for export-import and a non-objective judicial system respectively.

Lack of skilled professionals at the local level forced companies to recruit an increasing number of foreign professionals that further squeezed opportunities for local professionals, the CPD said.

About 75 per cent of the entrepreneurs indicated the central bank’s poor quality in monitoring and supervision of banks, which deteriorated in 2019, the survey said.

Of the respondents, 60.7 per cent said soundness of banks as below the normal level compared with 2018.

The weak state of the banking sector has been widely discussed during the pre-Covid period, which mainly happened due to failure to address wilful default culture, weak corporate governance, poor application of regulatory framework and prevalence of money laundering through banking channels, the CPD said. 

As many as 84 per cent of the respondents believe that it is largely difficult for start-up entrepreneurs to obtain equity funding, while 62 per cent of the respondents mentioned poor financial access for SMEs.

Weak public service delivery due to lack of efficiency, transparency and accountability is the major factor responsible for the poor condition of governance, Moazzem said.

Some 41.1 per cent respondent said noticeable progress is observed in case of air-transport facilities

As per the report findings, Bangladesh’s score is below 50 in most of the cases. It scored 57.1 out of 100 in the area that the government has a long-term vision in place to some extent, while in case of the impact of the online gig economy on working conditions it is 59.3.

The lowest score of 29.9 was in finding people with the skills required to fill vacancies by a company.

As per the survey findings, about 40-50 per cent of the business people indicated that the pandemic has caused a significant decline in the performances of their enterprises, while 46.7 per cent said a major adverse impact was on company productions. 

About 41 per cent exporter-respondents indicated that their companies confronted ‘high’ level of deterioration in export during the pandemic. 

The disruptions in the domestic and international supply chains caused squeezing of business operations, closing down of factories and laying off workers. 

Taking the lessons from the world, Bangladesh needs to undertake major initiatives for a sustainable recovery in the post-pandemic period through four targeted measures such as transforming the enabling environment, transforming human capital, transforming markets and the innovation ecosystem, the CPD added.