Doing business in a bizarre system

That Bangladeshi investors and entrepreneurs are facing trouble or face trouble when doing business is not a secret. That the cost of doing business in Bangladesh is high is well known and the situation has been so for ages. While it's true that the pre-1971 situation was hobbled by lack of politically-induced structural facilities and a state policy that discriminated against the people, that argument died with independence. However, that hasn't improved the general health of the landscape for doing business in Bangladesh.
Many studies and reports have been made about the difficulties faced by would-be investors but that has not really changed the situation on the ground. This is not surprising since the decision makers and the investors are not a part of the same world. A lot has to do with the nature of the economic structure that prevails in Bangladesh.
A recent study has remarked that doing business in Bangladesh faces not just incidental hassles including paying as high as six times the actual costs required as cited by the government but the system itself is not business-friendly. This includes regulatory barriers that means the structure makes entrepreneurship a task that discourages doing business. As expected, reforming the system comes readily to our mind but the problem is the reformers and policy makers have been claiming to be doing the same for decades.
Most seem to think that all one needs is to identify the flaws, detect obstacles, pass orders for removal of the same and the environment will automatically improve. That has never been the case which means that the problems are systemic, structural and not dependent on goodwill. It's not in the best interest of the ruling class since 1972 to have an open market rational transaction- based economy because that would go against the dominant economic system prevalent in Bangladesh, which is crony capitalism.
The missing investment infrastructure is what the problem is about. Primarily infrastructure means the built environment to do business is good for doing the same. It's as simple as that. Point is, such a system can't be ordered into immediate being and nor can it happen in even a decade. And that has not happened in Bangladesh in many decades. The problem is that we assume that the larger ruling class wants open market profits and not any other system. This is where we are going wrong. There is no evidence to suggest that Bangladesh's formal system of governance is obligated to host an open, transparent and rational system of profit making based on ethical supply and demand.
It's a fact that the country has never seen transparent politics and therefore a transparent economy. This begins with the immediate days after independence when the Pakistani ruling class including large businesses who had left leaving their discarded homes and establishments behind. What happened to them, who benefitted from them and how is no secret. It cuts across every socio-economic segment and the get-rich syndrome, marked by the lack of social and economic efficiency, was established.
Perhaps the best way is to read economic policy making through the journey of political policies and function. Fifty five years after 1971 independence, the political system is not established, the constitution exists on paper only and the rule by policies is not taken seriously at all. Bangladesh has had every kind of rule and regime from multi-party to one party to martial law and mixed variety. Essentially it means that the political system has not grown hence the policy framework can't either. If political parties who have both been in power refuse to believe in any elections held under each other, we should not call the development of the political system as functional. Given that scenario, it's not fair to expect functional economic policies either.
The cost of doing business as noticed by researchers but more importantly by the investors themselves. This involves paying a variety of people up and down the ladder of the regulatory and permission giving world. Of course to this are added the "regulators" who are both political and socially powerful. Their profession is to extract money from those who wish to initiate a project or continue a project or pay regularly just to keep the system going. It's so endemic that this is considered normal.
The fact that one has to pay six/seven times more than the estimated cost for starting a business and a factory owner has to obtain as many as 20 licenses to kick off production should not be read as extractionary but normal terms of business here. After all this is done, we have the next hurdle of getting loans and the cycle goes on and on.
We are not ready to face this Bangladesh "normal". Normal policy making doesn't happen here, normal functioning not either. There are many obstacles that shock experts that it exists at all and given them, how normal business can function. But in Bangladesh, this is the "normal." It basically means that in the absence of a market or demand-supply driven economy of some sorts, the current crony capitalism model will prevail. The obstacles that exist are pre-conditions for entry into the charmed circle so the payments are part of the entry ticket price.
The system that exists is bizarre, corrosive and in the long run not in sync with modern business practices but, as anyone familiar with the banking business knows it has taken years to build this crony-based economic structure that benefits quite a few. And they are indeed beneficiaries who have created a new system which is why discussing the reforms aimed at reducing the cost of doing business really makes less sense.

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