News Published: Wednesday, Jan 21, 2015
A trio of hassles stymies BD business, investment growth
Experts seek deeper economic reforms
Contract enforcement, getting electricity and registering property are unduly complex and expensive in Bangladesh and the hurdles in these three areas caused the downgrading of the country in the doing-business rankings.
A study report issued Tuesday revealed the problems that trouble the ease of doing business here and thus make investors shy away.
The paper on findings, prepared by Policy Research Institute of Bangladesh (PRI) vice-chairman Dr Sadiq Ahmed, says these three dampers were the reasons behind the relatively low flow of foreign direct investment into the country.
The PRI presented the paper, styled 'Regulatory Framework for Private Investment', at a seminar titled "Regulatory challenges for trade and investment" held at its city office.
Executive chairman of the Board of Investment (BoI) Dr SA Samad joined the programme as the chief guest while president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Md Atiqul Islam was the special guest.
Executive director the PRI Dr Ahsan H Mansur was the moderator and its chairman Dr Zaidi Sattar presented a paper titled 'Trade Regulations, Trade Facilitation and Competitiveness'.
Dr Sadiq in his paper noted that Bangladesh is substantially less favourable than competitors in the IFC-sponsored doing-business indicator 2015: it had a low score of 171 as compared with the worst-performing country ranking of 189 for Chad.
"Getting electricity and enforcing contracts put Bangladesh at the near-bottom of the global list of countries," he told the meet.
He said on average it takes 1442 days to enforce a business contract and the financial cost of enforcement is as high as 67 per cent.
On the other hand, it takes 400 days in Vietnam and 453 days in China. The financial costs for the contracts are 29 per cent and 16 per cent respectively.
Dr Sadiq said getting access to power in Bangladesh takes 429 days while it takes 91 days in Indonesia, 104 days in Sri Lanka and 106 days in India.
Bangladesh takes 244 days for property registration, against only 20 days in China, 27 days in Indonesia and 47 days in India, he said in a comparative account of the business environs.
Speaking at the function, the BoI executive chairman, Dr SA Samad, said there are still some basic laws remaining to be amended to cope with the present needs.
"The power problems have been eased but the gas-related problems did not improve," the boss of the investment board told his audience.
He said the BoI takes prompt actions whenever it knows the problems relating to fresh investment or further facilitation of investment.
Citing an example of Lafarge Surma Cement, Dr Samad said the board did necessary lobbying with India for extracting limestone from Meghalaya state by the sister concern of the France-based cement giant.
Lafarge Surma Cement uses limestone of the Indian state and it had faced with the closure of quarrying the limestone on grounds of polluting the environment.
Speaking at the programme, BGMEA president Md Atiqul Islam said buyers are greatly concerned over the political developments in Bangladesh.
He cited scarcity of land for garment industry as top challenge facing the largest export-earning sector.
Mr Islam said around 40 per cent garment factories are now housed in shared buildings.
The trade-body leader said the buyers would not place orders with the factories located in shared buildings after next three years.
"The buyers gave us five years for relocating garment units from the shared buildings, but though five years had elapsed so far, the situation did not improve for lack of land," Mr Atiq told the meet.
He said an area earmarked for the garment village remained still under 14-foot water at Bowshia.
Speaking as expert panellist, Anis A Khan, vice-president of Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), said Bangladesh now needs another massive reform in the financial sector that was earlier made in the 1990s to derive the desired benefits.
He feels that Bangladesh now needs commodity exchange to ensure fair prices of the agricultural outputs.
The chamber chief proposed futures and the hedge funds to meet the modern-day demand.
Mr Khan said, "The prices of fuels have fallen sharply on the global market but the local industries are yet to derive any benefit from it."
Uzma Chowdhury, a director at Pran Group, said the rules and regulations available in the country are favourable for the readymade garment industry.
"We the other sectors have little laws favouring us," she regretted.
She said there are three organisations regulating the food industry in the country.
"We are really puzzled as to who will go under such three separate government organisations," said the Pran Group director.
She said there is need for initiatives to boost the bilateral trade with India.
Speaking at the function, former commerce secretary Shohel Ahmed said the land crisis might be mitigated by using the premises owned by the state-owned losing enterprises.
"There are many losing state-owned enterprises and the lands owned by the organisations might be converted to mini industrial parks," Mr Shohel said.
Bangladesh Institute of Development Studies (BIDS) Director-General Dr Mustafa K Mujeri, director of the Bangladesh Foreign Trade Institute Dr Mostafa Abid Khan and director of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Abdul Haque also spoke as the expert panellists.