The results of the latest survey jointly carried out by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and the Policy Exchange Bangladesh (PEB) on the country's prevailing business climate are disconcerting. Business Climate, according to the survey, in the financial year 2023-24 has worsened, much to the disappointment of the country's business community. The survey is conducted and scored based on a matrix of 11 key indicators that measure the health of the business environment of the country. The areas covered include initiation of business, land availability, access to legal information, infrastructure, labour regulations, dispute resolution, trade facilitation, tax payment, technology adoption, credit availability and environmental regulations and standards.
Compared to last year, the business environment has suffered in the current fiscal. The overall score has slipped down to 58.75 in 2023-24 from 61.95 in the previous fiscal. While there have been improvements in some indicators, the negatives outweighed the positives disproportionately. Issues that dragged down the overall index had much to do with greater difficulty in accessing credit, longer time required to start businesses, infrastructure bottlenecks, labour regulation, dispute resolution, tax payment, etc. Of great concern, at least from the perspective of conducting business, was the fact that the country scored dismally in credit availability. This has come about because securing bank loans is much harder as the banks are amid liquidity shortages and extra cautious because of their high burden of non-performing loans (NPLs).
A conducive business environment is enabled by acting on policies rather than sitting on them. Reforms have been talked about for decades and only recently are some of them being implemented. And that has been due more to the insistence of foreign institutions like the IMF than any new-found enthusiasm to get things in order voluntarily. While a lot of hope has been placed on the Bangladesh Investment Development Authority (BIDA) to rally foreign direct investment, it is alarming to see domestic private sector investment not rebounding. Understandably, the survey reflects the reality of the business environment prevailing in the country. Instead of sugar-coating issues and why they are not working, it would be more pragmatic to take these insights into cognizance, so that they may serve as a reference point for policymakers to act on, and not sit on. These are not areas of contention rather they are bottlenecks that need to be resolved. The survey needs to be heeded primarily because it is conducted by entities that have credibility in the business community.
The problem areas identified need serious efforts at the policymakers' level to be resolved. Unless they are treated with the seriousness they deserve, it will be increasingly impossible to unlock the nation's economic potential. While significant milestones have been set in the country's infrastructure development, much remains to be done in terms of improving logistics. Equally important, but less acted upon remains the Achilles heel in national policymaking, i.e. strengthening of financial systems that involve the enhancement of legal and regulatory frameworks, boosting institutional governance, etc. These are sticky issues and unless good governance can be re-established, many key indices will keep slipping.
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