Businesses face toughest conditions since Covid-19 pandemic

Bangladesh's score on the Business Climate Index has dipped below 60 for the first time since its launch during the Covid-19 pandemic, according to a survey, painting a worrying picture for the local businesses.
The country's score in the fiscal year of 2023-24 slipped to 58.75 -- down from a more comfortable 61.95 in FY 2022-23, according to the survey. In the first year of the introduction of the index in FY 2021-22, the score was 61.01 out of a total 100.
For the third year in a row, the Metropolitan Chamber of Commerce and Industry (MCCI) and the Policy Exchange Bangladesh (PEB) have jointly conducted the survey this year. The findings were revealed at an event at MCCI Gulshan office on Thursday.
The event elaborated on persistent issues in tax policies, land access, financing and the uneven distribution of resources as throwing sand in the gears of the business climate.
The survey assessed companies across 11 key areas, acting as a pulse check on the health of the business environment.
These areas included business startup, land availability, access to legal information, infrastructure, labour regulations, dispute resolution, trade facilitation, tax payment, technology adoption, credit availability and environmental regulations and standards.
This year's survey incorporated a new environmental control and quality index.
Among these indicators, Bangladesh scored the lowest in credit availability, receiving a meagre 28.11. Last year's survey said that securing bank loans for businessmen had become complicated, while this year's survey also showed almost no improvement of the issue.
In contrast, Bangladesh continued to shine in the infrastructure sector, achieving a score of 71.08.
Scores for the remaining indicators are: business startup 62.74, land availability 53.11, access to information 68.04, labour regulation 70.04, dispute resolution 62.38, trade facilitation 60.87, tax payment 54.74, technology adoption 63.50 and environmental control 51.59.
Prime Minister's Private Industry and Investment Adviser Salman F Rahman acknowledged the challenging business climate but noted that the overall situation is "stable".
He talked about the dollar crisis, claiming that the situation has been brought under control with the Bangladesh Bank allowing a market-driven exchange rate, leading to the dollar rate jumping to Tk117.
He was hopeful that inflation would start to decline from July due to central bank policies.
Salman F Rahman emphasised that the capital market must play a pivotal role in the country's economy.
He argued that the current market needs significant improvement to keep pace with the growing national economy. Discussions are already underway with Bangladesh Bank, the National Board of Revenue (NBR) and the Securities and Exchange Commission to address this.
The PM's adviser also advocated for tax reform to boost revenue collection, saying the revenue board still poses significant challenges to improving the business climate.
He reiterated the concept of lowering tax rates while broadening the tax base, arguing that this will ultimately increase revenue.
He mentioned the ongoing pressure on taxpayers and stressed on expanding the tax net to include everyone.
Mr Rahman said the upcoming budget would introduce new reforms focused on expanding the tax base rather than increasing tax rates. This is in response to the concerning decline in the current tax-GDP ratio compared to last year.
He emphasised the importance of both domestic and foreign investment, noting that the Bangladesh Investment Development Authority (BIDA) is working to create a conducive environment for business.
He affirmed the government's business-friendly stance and the need for coordinated efforts to improve the business climate. To avoid complexities, he suggested that these initiatives be undertaken under the Prime Minister's Office (PMO).
MCCI President Kamran T Rahman, who presided over the event, emphasised that the survey aims to provide valuable insights for policymakers across different sectors. These findings will guide informed decisions to improve the business climate in Bangladesh for both policymakers and investors.
In his keynote presentation, Dr M Masrur Reaz, chairman and CEO of the Policy Exchange Bangladesh, said that significant efforts are needed to address business environment challenges.
To unlock the country's potential, he emphasised improving infrastructure and logistics, strengthening financial systems, enhancing legal and regulatory frameworks, bolstering institutional governance, etc.
Special Guest Lokman Hossain Miah, executive chairman (Senior Secretary) of BIDA said BIDA has always remained committed to improving Bangladesh's investment landscape and open to suggestions from the business community.
He appreciated the organisers for launching this report and believed it would help BIDA chart its next course of actions
Zaved Akhtar, President, FICCI emphasised the credibility, capability, and consistency of policies and simplification of customs, tax, and VAT frameworks in Bangladesh.
Yuji Ando, country representative of JETRO, pointed out that 62 per cent of Japanese companies operating in Bangladesh were expecting to expand as per a survey.

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