Graft’s biggest obstacle to doing business

More than 16 percent of Bangladeshi companies cite corruption as the biggest obstacle to their business operations, according to a survey conducted between April and July this year.

“Corruption, which companies face regardless of size, remains the main obstacle to doing business in Bangladesh,” said Khondaker Golam Moazzem, research director at local think tank Center for Policy Dialogue (CPD), which conducted the study.

Presenting the findings at a dialogue at the BRAC Center Inn in Dhaka yesterday, he said foreign currency instability, inefficient bureaucracy, inflation and limited access to finance are other major barriers to doing business in Bangladesh.

“During the tenure of the previous regime, the overall business environment in Bangladesh saw limited progress as business activities remained concentrated within a few dominant groups,” Moazzem said.

The dialogue, titled ‘Reforming Bangladesh’s Business Environment and Processes: Agenda for the Interim Government’, also highlighted several other challenges faced by businesses such as inadequate infrastructure, poor public health, crime and theft and lack of work ethic among the working population. .

Speaking at the event, Fazlee Shamim Ehsan, executive chairman of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said corruption is the mother of all their problems.

Sharing his bitter experiences with graft, the BKMEA top leader said they often have to pay bribes to get work done, which causes Tk 20 to Tk 25 lakh to disappear from their corporate books every year without traceable evidence.

As a result, bribes must once again be paid when filing taxes to cover up accounting mismatches, he added.

“Curbing corruption must be the top priority of ongoing reform initiatives,” Ehsan stressed.

Remove red tape to improve ease of doing business

Business leaders also discussed how red tape, which was identified as one of the biggest business obstacles, is costing entrepreneurs a lot of money.

AKM Fahim Masroor, former president of the Bangladesh Association of Software and Information Services, said the cost of entering a business is much higher than the cost of doing business, mainly due to red tape.

“Using nearly 30 types of licenses and completing the associated formalities has become a major problem for young entrepreneurs,” he said.

As they overcome these barriers, it becomes difficult for new entrepreneurs to decide whether to comply or continue in business, he said.

Other speakers at the event also shared similar experiences regarding red tape slowing down businesses.

For example, fast-moving consumer goods giant Unilever Bangladesh took 30 months to complete the simple task of acquiring land, said chairman and managing director Zaved Akhtar.

Akhtar, who is also chairman of the Foreign Investors Chamber of Commerce and Industry, called for policy continuity and the elimination of red tape.

He also called for a reduction in the effective tax rate and an immediate restoration of law and order.

Ashraf Ahmed, chairman of the Dhaka Chamber of Commerce and Industry (DCCI), said automation can be an effective solution to minimize the cost of doing business and eradicate corruption.

Businessmen critical of BB’s role in ailing banks and inflation

The CPD survey also flagged inflation as a key risk factor for the economy over the next two years.

Former FBCCI president Abdul Awal Mintoo criticized the central bank’s approach of pursuing tightening monetary policy to cool stubbornly high inflation.

He said there are almost 18 factors that can cause inflation to rise.

“If the central bank takes on the responsibility of curbing inflation through monetary policy alone, they are living in a fool’s paradise.”

Mintoo also criticized the proposal to close weak banks and asked economists and business leaders to refrain from making general comments on such topics.

“I founded a bank that became one of the top banks in the country in 2008. Now it has become the worst bank,” Mintoo, currently chairman of the National Bank, added.

Instead, he wondered why the banks’ situation had deteriorated, who did it and who allowed it.

“The central bank has distorted the commercial banks and has become the most dictatorial institution in Bangladesh,” said Mintoo, calling for immediate restructuring of the central bank to end its “dictatorial approach”.

Offering a different perspective, DCCI President Ahmed said, “If a bank is about to fail, why let it fail? If a bank is going to fail, it must die.”

“Call it bankrupt and let it die.”

Can this government deliver the full measure of reform?

CPD research director Moazzem said the lack of substantive reforms in policies, laws, institutions and activities hinders the development of a participatory and competitive business environment.

The newspaper stated that businesses faced prolonged uncertainty during the student-led protests against the previous regime, the consequences of which continued even after the country moved to a new phase.

Lutfey Siddiqi, the Chief Adviser’s Special Envoy for International Affairs, said the government must further enhance its efforts to facilitate ease of doing business.

“But there is also a connection – a devil’s pact – between a small number of large companies that don’t want business processes to become simpler because they have created shortcuts,” he said.

According to business leader Mintoo, reforms are a continuous process and entrepreneurs should not expect that all reforms will be implemented by this interim government.

“If we really want reforms to create a better country, the first reforms must take place in politics,” he said.

He added that the country’s political scene has been criminalized over the past 20 to 30 years. Criminalized politics has been created for vested interest groups in every sector, such as power, energy and banking.

Mintoo added that there are two groups in society: one that creates money and wealth, and another that loots the money.

Bida shares reform plans

Chowdhury Ashik Mahmud Bin Harun, executive chairman of the Bangladesh Investment Development Authority (Bida), the country’s apex investment promotion agency, said the current Bida office sometimes functions as a ‘post office’, with many checkpoints hampering progress.

He shared plans to redesign the institute into a streamlined, customer-centric model, similar to an “Apple Store.”

Under this model, investors will be greeted upon entry by customer relationship managers, who will guide them and provide the necessary services.

He said officials from the National Board of Revenue, the Ministry of Environment and other government agencies may need to be co-located in Bida to ensure smooth and efficient service delivery.

According to the CPD survey, some business indicators, including reliance on professional management, including workforce levels and recruitment and dismissal practices, were found to be improving and positive.

Most of these improvements came from the private sector.

On the other hand, the main indicators where performance declined included the independence of the judiciary and the quality of tertiary education.