Corruption, low tax-GDP ratio and unnecessary regulations are major impediments to improving business climate in Bangladesh, said US ambassador Marcia Bernicat on Wednesday.
She underlined the need for creating enabling environment for attracting foreign direct investment.
The US envoy noted that along with the government the business community themselves should take pro-active role in this regard by removing the barriers, which could threaten the desired growth.
Ms Bernicat was addressing the annual general meeting (AGM) of the International Business Forum of Bangladesh (IBFB) held in the city.
She said that despite making significant progress towards becoming a middle income country, the state of doing business in this country is still not up to the mark.
According to the World Bank's ease of doing business report, Bangladesh ranks 177th among 190 countries.
There is more room for improvement, she mentioned.
The US envoy said that governance and building of democratic institutions were crucial to creating a corruption-free and conducive business environment.
She said that Bangladesh should also concentrate on how to improve its tax-GDP (gross domestic product) ratio, which is one of the lowest in the region.
To attract foreign investment, she said zero tolerance to corruption and ensuring rule of law is a must.
However, she noted that the US government was keen to provide help in institution building so that business climate in the country could be made more conducive.
The United States Agency for International Development (USAID) is providing assistance to the National Board of Revenue (NBR) for improving the trade facilitation mechanism so that Bangladesh would be more efficient in complying with the World Trade Organisation (WTO) guidelines, she said.
About US -Bangladesh trade relations, she said the US is the single-largest foreign investor in Bangladesh, contributing 23 per cent of the total FDI inflow to the country.
The US exports to Bangladesh also increased by 61 per cent to $ 1.47 billion last year, she noted.
Ms Bernicat said Bangladesh's exports to the US are also increasing and it reached $ 6.0 billion in the last fiscal.
The US envoy said as a "true friend" of Bangladesh, the USA was committed to promoting business-friendly environment in the country as it was very crucial to attracting more FDI.
Earlier, in his speech, president of the IBFB Hafizur Rahman Khan said there is a significant opportunity for entrepreneurs in Bangladesh as consumption has increased remarkably.
He lauded the government for allowing Bangladeshi companies to invest abroad.
"IBFB has highly appreciated such initiatives and we earnestly request the government to make a specific policy for allowing overseas investment by Bangladeshi entrepreneurs," he added.