WB rating of country's business performance
Saturday, 19 July 2008
THE various international research organisations and watchdog bodies from time to time conduct researches and studies on different countries of the world based on certain criteria. The criteria of these studies vary, so do the results. There are some studies that focus on the problem of governance and the various hurdles that have their bearing on the overall performance in this respect. On the other hand, there are some studies that aim to evaluate the performance of the economies in question on the basis of a set of relevant factors. But leaving aside some rare exceptions, the results for the countries with the common denominator of 'underdevelopment' are predictably more or less the same.
Recently the World Bank (WB) carried out one such study on 125 nations. The report titled 'World Trade Indicators 2008' and prepared by the WB Institute found that restrictive trade policy, characterised by what the report said poor infrastructure, red tapism and so on, was still a big hurdle to the progress of Bangladesh's economy. And according to this assessment, Bangladesh was placed in the 113th position so far as its trade policy was concerned, while it fared a little better in terms of what it said 'institutional environment.'
The South Asian region, in the same report, was also found to be one of the worst places in Asia where one could do business with ease. As for example, compared to East Asia where the inter-regional trade was 20 per cent of their GDP, it was only 2.0 per cent in South Asia. And none of the countries in South Asia was in the list of 50 countries where it is easy to do business.
According to this standard, though it is the largest economy in South Asia by dint of its sheer size, India is placed at the 120th position, whereas Bangladesh is ranked 107th. Interestingly, even Pakistan, with its not-so-excellent record on the law and order front still enjoys the 76th position, which means, it is easier to do business there than in India or Bangladesh. The Maldives is ranked 60th, that is, it is also the best one for business among the whole South Asian lot.
So, like its many other South Asian sisters, Bangladesh, so far as the WB report goes, does also have one of the worst business environments in Asia. Of the many factors attributable to the restrictive business policy of Bangladesh, the WB study identified customs duty as one. But economists disagreed with the WB assessment on the ground that Bangladesh, since the 1990s, have reduced its customs duty by 350 per cent and that this duty is also one of the major sources of the country's revenue income. In sharp contrast to this, India has lowered its customs duty only by 150 per cent, whereas it has, in addition to it, the restrictions on the entry of the neighbouring country's products into its market in the form of para- and non-tariff barriers as well as value added taxes charged on them. From the perspective of this World Bank study, the advanced nations of Europe and North America should fare best as they have low tariff structures. Even then, the four per cent tariff of the US, for example, does not help the low income countries much because ultimately its duty comes to 15 per cent when applied to the export of apparels from Bangladesh.
The anomalies between the high and the low income countries remain even with respect to the outcomes of the studies conducted to assess their worth on the basis of various criteria. All that notwithstanding, Bangladesh needs to do more to ease its business policy and environment so that the local as well as foreign investors may find it as a welcome place for doing business.
Recently the World Bank (WB) carried out one such study on 125 nations. The report titled 'World Trade Indicators 2008' and prepared by the WB Institute found that restrictive trade policy, characterised by what the report said poor infrastructure, red tapism and so on, was still a big hurdle to the progress of Bangladesh's economy. And according to this assessment, Bangladesh was placed in the 113th position so far as its trade policy was concerned, while it fared a little better in terms of what it said 'institutional environment.'
The South Asian region, in the same report, was also found to be one of the worst places in Asia where one could do business with ease. As for example, compared to East Asia where the inter-regional trade was 20 per cent of their GDP, it was only 2.0 per cent in South Asia. And none of the countries in South Asia was in the list of 50 countries where it is easy to do business.
According to this standard, though it is the largest economy in South Asia by dint of its sheer size, India is placed at the 120th position, whereas Bangladesh is ranked 107th. Interestingly, even Pakistan, with its not-so-excellent record on the law and order front still enjoys the 76th position, which means, it is easier to do business there than in India or Bangladesh. The Maldives is ranked 60th, that is, it is also the best one for business among the whole South Asian lot.
So, like its many other South Asian sisters, Bangladesh, so far as the WB report goes, does also have one of the worst business environments in Asia. Of the many factors attributable to the restrictive business policy of Bangladesh, the WB study identified customs duty as one. But economists disagreed with the WB assessment on the ground that Bangladesh, since the 1990s, have reduced its customs duty by 350 per cent and that this duty is also one of the major sources of the country's revenue income. In sharp contrast to this, India has lowered its customs duty only by 150 per cent, whereas it has, in addition to it, the restrictions on the entry of the neighbouring country's products into its market in the form of para- and non-tariff barriers as well as value added taxes charged on them. From the perspective of this World Bank study, the advanced nations of Europe and North America should fare best as they have low tariff structures. Even then, the four per cent tariff of the US, for example, does not help the low income countries much because ultimately its duty comes to 15 per cent when applied to the export of apparels from Bangladesh.
The anomalies between the high and the low income countries remain even with respect to the outcomes of the studies conducted to assess their worth on the basis of various criteria. All that notwithstanding, Bangladesh needs to do more to ease its business policy and environment so that the local as well as foreign investors may find it as a welcome place for doing business.