Business performance tails trade confidence

One may feel buoyed. According to the latest HSBC's Trade Confidence Index survey, Bangladesh's trade confidence has risen by 38 points in six months, the second highest among 23 countries globally. It is a survey-based assessment of how the business community looks at the prospects of doing business in a country at a given time. The survey results show that Bangladesh's score increased to 141 in the first half of 2014 from 103 in the second half of 2013. Only Egypt is ahead of Bangladesh.
That survey results do not often tend to reflect the actual state of things is true. Because there is the dichotomy between expectation and reality -- a phenomenon that often gets reflected not only in individual thinking but in the macro level stocktaking of an economy. The current survey comprises views of 5,200 exporters, importers and traders from small and mid-market enterprises over a period of six months.
The key areas on which their responses were recorded and analysed include trade volumes, buyer and supplier risks, trade finance, foreign exchange fluctuations and their impact on businesses. One of the highlights in the report is that shipments from Bangladesh rose 11.9 per cent in 2013 and was able to maintain the momentum in the Jan-May period of 2014. More than 70 per cent of the survey respondents were optimistic that over the following six months trade volumes would increase. Nearly 80 per cent of them believe that the impact of the US dollar on business growth will be increasingly favourable during this period. About 40 per cent of the respondents said that Europe, Bangladesh's biggest trading partner, offers the best opportunity for business growth over the next six months, while one-third of the respondents point to Asia and 17 per cent to North America. More than a third of the respondents expect demand in key markets to be higher during the next six months.
There were, however, pessimistic responses too, as 40 per cent of the respondents expressed their frustration mentioning high costs of logistics, shipping and storage as potential constraints to doing business in the country. The survey report concludes on an overall positive note with the expectation of increased investment in infrastructure to facilitate business in the days ahead.
Now, these, being what the target respondents thought about business climate in the country, do not, as hinted above, necessarily reflect the prevailing reality. For example, the World Bank Group's Doing Business Index 2014 has ranked Bangladesh at the 173th position among 189 countries. The country did not perform well in most areas of Doing Business Index, according to the report. The result, obviously, is a downslide in the country's own ranking as well as among the countries surveyed. This is due to Bangladesh's poor performance on the one hand and on the other, improved performance of other countries that helped them score higher points. Some of the sectors and sub-sectors where Bangladesh's performance is a matter of constant worry include credit financing across the board, particularly in the real estate sub-sector. Registering of property (land or built houses and apartment) has also experienced a slide vis-à-vis that of the previous year. The scenario pertaining to the payment of income tax and tax administration, despite reforms, is also far worse compared to that of the countries in the South Asian region.
According to the WB report, it takes around 19.5 days now to open a new business, whereas the number of days was 10.5 in the previous year. The South Asian average is 16 days. As for infrastructure, especially access to electricity, although there has been some improvement, the comparative picture in the countries taken into consideration shows that Bangladesh lags far behind in creating a congenial environment for its manufacturing industries, reliant largely on highly cost-consuming electricity generation on their own. There are a few tiny blips of hope in the WB Group's Doing Business Index. One such is the progress in cross-border trading in the region which, according to the report, is being facilitated by increased collaboration through regional and bilateral trading arrangements.
Looking at the Trade Confidence Index survey and the WB Group's Doing Business Index survey, one has reasons to feel dismayed by the conflicting scenarios of perception and reality. This goes to suggest that however bad or unfriendly the business environment, people in this country keep on hoping for things to be in place so that business gains the desired momentum.
wasiahmed.bd@hotmail.com