IFC suggests measures to improve 'doing business' indicator ranking
Monday, 11 February 2008
Doulot Akter Mala
The International Finance Corporation (IFC), a World Bank (WB) arm, has suggested that the government reduce time, cost and procedures of launching any new business to improve the 'doing business indicator' of Bangladesh.
The formal starting cost of a business in Dhaka could be reduced to US$ 46 from $223 as per the short-term reform suggestion of the IFC, said a recent doing business reform memo of the corporation.
For starting a business, the number of procedures should be reduced from eight to four, days from 74 to 66 and cost from 46.2 per cent to 9.6 per cent GNI (gross national income) per capita, it said.
The IFC recently placed a set of reform proposals, both short and long terms, to the Regulatory Reform Commission (RRC) of the government to improve the doing business indicator of Bangladesh in its next report for 2009.
The WB Group's report on doing business in 2008, Bangladesh has been ranked 107 among 178 economies covered by the report, down from the 102nd place of the previous year.
In its reform memo, the WB wing identified some short-term measures as 'quick win reform' to be implemented within six to eight months. The IFC keeps simplification of the business company registration procedures at top of the priority list of the short-term reform memo.
"Doing business counts the procedures, time and cost necessary to start and formally operate a business," the IFC reform memo said.
The IFC also pointed out the miscellaneous costs like bribing, high official costs of starting up a company in Bangladesh.
"The government should simplify measures to reduce time and cost of business company registration with a view to encouraging small companies to register with the Registrar of Joint Stock Companies and Firms (RJSC)," Senior Programme Manager of IFC's Bangladesh Investment Climate Fund Syed Akhtar Mahmood said.
Small companies will come under the net of the RJSC if the government reduces registration fees, he said adding that it could be reduced to one-fourth of the existing ones.
It has also suggested keeping a provision for combined registration for taxes and value added tax to upgrade Bangladesh's ranking in the 'doing business indicator'.
Akhter Mahmood laid emphasis on simplification of customs procedures and income tax payment, reduction of land registration time, strengthening the Credit Information Bureau.
The IFC has prepared the 'doing business reform memo' to help the government carry out necessary reforms as part of its ongoing advisory support to the RRC.
The IFC team, that prepared the report, arrived here Sunday for a three-day visit to discuss the memo and help the government draw an action plan.
The WB mission, led by Stefka Slavova, senior economist of the Foreign Investment Advisory Services (FIAS) of the WB Group, are scheduled to meet with RRC chairman Akbar Ali Khan today (Monday).
"Bangladesh has the potentiality to lift its ranking in the doing business indicator by 20 points by carrying out reforms in four areas out of 10 sectors, which are the basis of the WB ranking," Mahmood mentioned.
The government could simplify measures relating to doing business by cutting the procedural delays, reducing fees and utilising automation, he added.
The next WB report will follow the performance of the government up to June this year. So the country has to reap benefit of its reform activities by this time to improve its ranking in the indicator, he said.
Following the suggestions, the government could improve its performance, which will place the country among the best 10 reform implementing countries, he said.
He expressed his optimism over improving the country's ranking from the three-digit mark to two digits doing the reform activities.
Chief Adviser Fakhruddin Ahmed recently also expressed his desire to carry out such reforms to improve the country's performance, he added.
Recently, the CA spoke of the government's commitment to improving Bangladesh's ranking by 15 places in the next doing business report.
The IFC has prepared the report following the government's request regarding achieving this target. The report identified a set of reform actions in several areas covered by the doing business indicator.
In the doing business report 2008, Bangladesh scored particularly low in terms of trading across borders and paying taxes. Bangladesh ranked 112 globally in terms of trading across borders.
The IFC memo has identified a number of actions to help improve Bangladesh's ranking in these two areas.
"Improving Bangladesh's performance in these areas is critical to achieving the target set by the Chief Adviser to improve Bangladesh's overall ranking in the doing business indicator," the memo said.
Other reform proposals include abolishing the trade licence provision, cutting the requirement of company seals, eliminating the requirement of two lawyers to review the Memorandum of Association and the Articles of Association.
In the WB Group's report 2008, Bangladesh ranks fourth among the economies in the South Asian region, behind the Maldives, Pakistan and Sri Lanka.
The International Finance Corporation (IFC), a World Bank (WB) arm, has suggested that the government reduce time, cost and procedures of launching any new business to improve the 'doing business indicator' of Bangladesh.
The formal starting cost of a business in Dhaka could be reduced to US$ 46 from $223 as per the short-term reform suggestion of the IFC, said a recent doing business reform memo of the corporation.
For starting a business, the number of procedures should be reduced from eight to four, days from 74 to 66 and cost from 46.2 per cent to 9.6 per cent GNI (gross national income) per capita, it said.
The IFC recently placed a set of reform proposals, both short and long terms, to the Regulatory Reform Commission (RRC) of the government to improve the doing business indicator of Bangladesh in its next report for 2009.
The WB Group's report on doing business in 2008, Bangladesh has been ranked 107 among 178 economies covered by the report, down from the 102nd place of the previous year.
In its reform memo, the WB wing identified some short-term measures as 'quick win reform' to be implemented within six to eight months. The IFC keeps simplification of the business company registration procedures at top of the priority list of the short-term reform memo.
"Doing business counts the procedures, time and cost necessary to start and formally operate a business," the IFC reform memo said.
The IFC also pointed out the miscellaneous costs like bribing, high official costs of starting up a company in Bangladesh.
"The government should simplify measures to reduce time and cost of business company registration with a view to encouraging small companies to register with the Registrar of Joint Stock Companies and Firms (RJSC)," Senior Programme Manager of IFC's Bangladesh Investment Climate Fund Syed Akhtar Mahmood said.
Small companies will come under the net of the RJSC if the government reduces registration fees, he said adding that it could be reduced to one-fourth of the existing ones.
It has also suggested keeping a provision for combined registration for taxes and value added tax to upgrade Bangladesh's ranking in the 'doing business indicator'.
Akhter Mahmood laid emphasis on simplification of customs procedures and income tax payment, reduction of land registration time, strengthening the Credit Information Bureau.
The IFC has prepared the 'doing business reform memo' to help the government carry out necessary reforms as part of its ongoing advisory support to the RRC.
The IFC team, that prepared the report, arrived here Sunday for a three-day visit to discuss the memo and help the government draw an action plan.
The WB mission, led by Stefka Slavova, senior economist of the Foreign Investment Advisory Services (FIAS) of the WB Group, are scheduled to meet with RRC chairman Akbar Ali Khan today (Monday).
"Bangladesh has the potentiality to lift its ranking in the doing business indicator by 20 points by carrying out reforms in four areas out of 10 sectors, which are the basis of the WB ranking," Mahmood mentioned.
The government could simplify measures relating to doing business by cutting the procedural delays, reducing fees and utilising automation, he added.
The next WB report will follow the performance of the government up to June this year. So the country has to reap benefit of its reform activities by this time to improve its ranking in the indicator, he said.
Following the suggestions, the government could improve its performance, which will place the country among the best 10 reform implementing countries, he said.
He expressed his optimism over improving the country's ranking from the three-digit mark to two digits doing the reform activities.
Chief Adviser Fakhruddin Ahmed recently also expressed his desire to carry out such reforms to improve the country's performance, he added.
Recently, the CA spoke of the government's commitment to improving Bangladesh's ranking by 15 places in the next doing business report.
The IFC has prepared the report following the government's request regarding achieving this target. The report identified a set of reform actions in several areas covered by the doing business indicator.
In the doing business report 2008, Bangladesh scored particularly low in terms of trading across borders and paying taxes. Bangladesh ranked 112 globally in terms of trading across borders.
The IFC memo has identified a number of actions to help improve Bangladesh's ranking in these two areas.
"Improving Bangladesh's performance in these areas is critical to achieving the target set by the Chief Adviser to improve Bangladesh's overall ranking in the doing business indicator," the memo said.
Other reform proposals include abolishing the trade licence provision, cutting the requirement of company seals, eliminating the requirement of two lawyers to review the Memorandum of Association and the Articles of Association.
In the WB Group's report 2008, Bangladesh ranks fourth among the economies in the South Asian region, behind the Maldives, Pakistan and Sri Lanka.