Making conditions of doing business better
Saturday, 16 February 2008
DOING business is a costly affair in Bangladesh. The first hurdle that any intending entrepreneur faces before starting a business in Bangladesh is the tiresome and protracted procedure of getting permission for it. Investors, whether of domestic or foreign origin, have to face a lot of hassles at the inception of their business ventures. Since all the intending investors are not equally gifted with the rare qualities required for getting over the snags strewn all over on the way to business in Bangladesh, is it any surprise that many prospective investors have meanwhile switched to other destinations? However, the official hassles an entrepreneur have to run into at the inception of any venture are also not the end of the story. The real trouble begins after one has finally passed all these tests of nerve and patience. But there is still no cause for complacency after one has sailed through these initial hurdles before starting a business in Bangladesh.
There is no reason to be shocked at the aforementioned narrative on the difficulties an entrepreneur willing to invest has to face in Bangladesh. It is a fact of life that our development partners are also well aware of. The International Finance Corporation (IFC), an arm of the World Bank (WB), has even quantified the hassles any starter of business has to go through in the form official procedures and formalities and other difficulties. It is worthwhile to mention here that the cost of launching business in a country is a serious issue the foreign investors take into account before deciding on any particular investment in an overseas destination. And to facilitate their assessment of a country in this respect, the WB group has also developed what it calls 'doing business indicator (DBI).' Obviously, it cannot be expected that Bangladesh's ranking according to this indicators is very high. The WB group's 2008 report shows that the country's DBI ranking has slid down from what it was in the previous year. Whatever are the reasons for this downside in the DBI index, it has also come up with a package of proposals, both in the long and short terms, to improve the conditions on this score.
It has been calculated that the cost of starting a business in Bangladesh is around US $223, which in our local currency comes to around Tk.15600. Though this is not a big deal for big investors, for business operators on a smaller scale, this certainly puts a damper on their spirit. However, for the general investors, it is really not the cost, but the time and the various steps it takes for official processing of the papers that is of ultimate concern. For it is due to this delay tactics used by some people in the government offices, that corruption has made such inroads into the administration.
However, the IFC has even calculated the average time and the number of steps one has to cross over before starting a business. Accordingly, as a short term measure to get past these difficulties, it has suggested that the cost of processing the papers before starting a business should be brought down to US$46 or around Tk3200, the number of procedural steps to four from its present count at eight and the average number of days required to complete the whole process from 74 to 66. The IFC has already placed its suggestions in the form of reform proposals to the Regulatory Reform Commission (RRC) so that Bangladesh might improve its DBI ranking in the WB group's 2009 report. The IFC, as part of its advisory support to the RRC, has recommended both short term and long term reform measures in its recent memo. The aim is to smooth away the bottlenecks as well as streamline the procedures for creating better business environment in the country.
There is no reason to be shocked at the aforementioned narrative on the difficulties an entrepreneur willing to invest has to face in Bangladesh. It is a fact of life that our development partners are also well aware of. The International Finance Corporation (IFC), an arm of the World Bank (WB), has even quantified the hassles any starter of business has to go through in the form official procedures and formalities and other difficulties. It is worthwhile to mention here that the cost of launching business in a country is a serious issue the foreign investors take into account before deciding on any particular investment in an overseas destination. And to facilitate their assessment of a country in this respect, the WB group has also developed what it calls 'doing business indicator (DBI).' Obviously, it cannot be expected that Bangladesh's ranking according to this indicators is very high. The WB group's 2008 report shows that the country's DBI ranking has slid down from what it was in the previous year. Whatever are the reasons for this downside in the DBI index, it has also come up with a package of proposals, both in the long and short terms, to improve the conditions on this score.
It has been calculated that the cost of starting a business in Bangladesh is around US $223, which in our local currency comes to around Tk.15600. Though this is not a big deal for big investors, for business operators on a smaller scale, this certainly puts a damper on their spirit. However, for the general investors, it is really not the cost, but the time and the various steps it takes for official processing of the papers that is of ultimate concern. For it is due to this delay tactics used by some people in the government offices, that corruption has made such inroads into the administration.
However, the IFC has even calculated the average time and the number of steps one has to cross over before starting a business. Accordingly, as a short term measure to get past these difficulties, it has suggested that the cost of processing the papers before starting a business should be brought down to US$46 or around Tk3200, the number of procedural steps to four from its present count at eight and the average number of days required to complete the whole process from 74 to 66. The IFC has already placed its suggestions in the form of reform proposals to the Regulatory Reform Commission (RRC) so that Bangladesh might improve its DBI ranking in the WB group's 2009 report. The IFC, as part of its advisory support to the RRC, has recommended both short term and long term reform measures in its recent memo. The aim is to smooth away the bottlenecks as well as streamline the procedures for creating better business environment in the country.