A DECLINE in business environment, as the Bangladesh Business Climate Index 2023–2024 launched on May 30 shows, caused by the required reforms yet to be done, pressure from tax authorities and increasing interest rates is worrying. The index that the Metropolitan Chamber of Commerce and Industry, Dhaka and the Policy Exchange, Bangladesh have prepared, has weighed the comprehensive business environment, ecosystem, uncertainties and disruption in the global supply chain caused by the Russia-Ukraine war and the Israel-Hamas conflict. The composite index score in the 2024 financial year declined to 58.75 from 61.95 in the 2023 financial year as seven out of 10 pillars faced deterioration. The index has showed slight improvement in three pillars — access to land, trade facilitation and technology adoption. But a significant decline has been observed in the seven other pillars — starting business, availability of regulatory information, infrastructure, labour regulation, dispute resolution, paying taxes and access to finance. A composite score of 58.75 marks a decline and suggests that no significant reform measures have taken place to attend to the challenging business landscape in a year. There has been a consistent decline in access to finance and paying taxes for three consecutive years.
The home-grown index of business-related challenges, which the Metropolitan Chamber of Commerce and Industry, Dhaka initiated in 2021 in the wake of the World Bank’s discontinuation of its Doing Business report that was announced in September 2021, should have worked as a wakeup call for the government and its policymakers to effect reforms after the assessment of the business climate and what is required for economic prospects. This has, understandably, not been the case. The Metropolitan Chamber of Commerce and Industry introduced the index to provide data for the government and the private sector on regulatory and other barriers to doing business. The Policy Exchange chair says that the composite score shows that the business environment is hamstrung by bottlenecks, warranting significant efforts for a meaningful resolution. The survey for the index, run on 520 small, medium and large enterprises, suggests major work in tax framework, approval process and taxation regime to improve business environment. The report on the index also suggests updates in the legislation. It has recommended the implementation of a national investment climate reform initiative with enhancements needed for the day and a stimulated growth in employment and export, a broadened economic foundation and support for small and medium enterprises.
The government must, in such a situation, improve infrastructure and logistics, strengthen financial systems, enhance legal and regulatory framework and bolster institution government not only to tap the potential still unexplored but also to improve on the situation. This is imperative because an improved business environment could lead to further investments and create employment which will add to the economy and lessen much of the burdens that the government now faces. The government must also attend to regulatory hurdles that hold off starting business.
