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BD ranks 121st economically freest country

FE Report | February 10, 2019 00:00:00

Bangladesh has become 121st economically freest country in the world with a score of 55.6, according to the economic freedom index of Heritage Foundation.

The country's overall score has risen by 0.5 points, with higher scores on factors like property rights and government integrity countering declines in investment freedom and fiscal health.

The 2019 index also ranked Bangladesh 27th among 43 countries in the Asia-Pacific region.

The country's overall score is below the regional and world averages of 60.6 and 60.8 respectively.

Approximately 6.0 per cent robust growth annually for two decades has been driven by a rapid rise in private consumption and fixed investment, revealed the report.

Nevertheless, it said, the nation still grapples with poor infrastructure, endemic corruption, insufficient power supplies and slow economic reforms.

The fragile rule of law continues to undermine economic development. Corruption and weak enforcement of property rights force workers and small businesses into the informal economy.

Entrepreneurial activity is also hampered by an uncertain regulatory environment.

Regarding rule of law, the report said property laws are antiquated and land disputes are common. The judiciary is slow and lacks independence.

Contract enforcement and dispute settlement procedures are inefficient, the report reads.

It said corruption and criminality, weak rule of law, limited bureaucratic transparency and political polarisation have undermined government accountability.

High-profile corruption cases are common. Two recent cases involved a chief justice and a former prime minister.

It said the top income tax rate is 25 per cent, and the top corporate tax rate is 45 per cent. Other taxes include a value-added tax.

The overall tax burden equals 8.8 per cent of total domestic income.

Over the past three years, government spending has amounted to 13.6 per cent of the country's output (GDP) and budget deficits have averaged 3.6 percent of GDP.

Public debt is equivalent to 32.4 per cent of GDP.

It said despite some progress in streamlining business regulations, entrepreneurial activity is hampered by an uncertain regulatory environment and the absence of effective long-term institutional support for private-sector development.

A well-functioning labour market has not been fully developed, but labour productivity growth has been slightly higher than wage hikes.

The state continues its extensive subsidizing of food, fuel, electricity and agriculture.

The combined value of exports and imports is equal to 35.3 per cent of GDP. The average applied tariff rate is 10.7 per cent.

The government has taken steps to reduce bureaucratic barriers to investment, but overall progress has been slow.

State ownership and interference in the financial sector remain considerable.

About 54 per cent of adult Bangladeshis have access to an account with a formal banking institution, the report said.


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