Dhaka, Wednesday, 29 September 2021

BD should care to make its business environment more friendly


There is no doubt that globalization is a decisive factor in growth and prosperity of any nation; it is particularly prevalent in the modern world, as technological advancements continue to bring the world closer together and make more connected with every passing year.

On that front, it is disappointing to see that Bangladesh has failed to improve its ranking in the Global Connectedness Index (GCI) released by DHL, the German logistics company.

The report, based on trade, flow of capital, and information, showed no change in Bangladesh’s connectivity with other countries for the past two years, remaining at 140th among 169 countries, scoring 34 out of 100.

There is no doubt that Bangladesh has made incredible strides in the last decade; our GDP growth is higher than it ever has been and continues to grow; we are on the cusp of shedding our LDC tag and reaching middle income status; and we have massive public infrastructure projects in the pipeline which will no doubt have massive positive effects on the country. However, as our ranking on this index shows, we need to do better.

There is little alternative to embracing globalization -- among its many virtues, it allows for a better flow of information, increases capital flow, and particularly encourages foreign direct investment -- and Bangladesh, despite all its public projects, is still comparatively lacking in FDI and private investments.

Therefore, Bangladesh needs to make its business environment more friendly, with fewer barriers and greater ease of doing business. Our country is on the verge of a significant turnaround, and we should make sure we do everything within our abilities to realize our vision.

On the other hand, Bangladesh's ranking on economic freedom has moved up seven notches to 121st from 128th this year, according to the Heritage Foundation, a Washington-based think tank.

According to the 2019 Index of Economic Freedom released by the organization, the government’s reforms have improved the freedom of doing business in the country. However, slower implementation of the reforms are undermining economic development. “Bangladesh’s economic freedom score is 55.6, making its economy the 121st freest in the 2019 index,” said the report.

While the country's overall score has increased by 0.5 points, it scored higher in terms of property rights and "government integrity countering declines in investment freedom and fiscal health", the report added. In the 2018 Index of Economic Freedom, Bangladesh’s position was 128th, with a score of 55.1 points.

Bangladesh also ranked 27th among 43 countries in the Asia-Pacific region, and its overall score is below the regional and world averages, showed the report. The world average freedom score is 60.8 points, while the Asia Pacific regional average stands at 60.6 points.

As per the report, robust annual economic growth of approximately 6% for two decades has been driven by a rapid increase in private consumption and fixed investment.

"Nevertheless, Bangladesh still grapples with poor infrastructure, endemic corruption, insufficient power supplies, and slow implementation of economic reforms," the report stated.

On the other hand, the report found that the "fragile rule of law" continues to "undermine economic development", while "corruption and weak enforcement of property rights" force workers and small businesses into the informal economy.

Furthermore, despite some progress in "streamlining business regulations, entrepreneurial activity is hampered by an uncertain regulatory environment and the absence of effective long-term institutional support for private-sector development", according to the report.

The report also stated that although a well-functioning labour market has not been fully developed yet, labour productivity growth has been slightly higher than wage hikes.

The index also revealed that in the South Asian region, Nepal ranked 136th, Sri Lanka ranked 115th, Bhutan ranked 74th, India 129th, Pakistan 131st, and the Maldives achieved the status of 141st economy.

Hong Kong, Singapore and New Zealand each logged increases in their index scores, finishing first, second, and third in the rankings, respectively scoring 90.2, 89.4, and 84.4 points.

The Index of Economic Freedom evaluates countries on four broad policy areas that affect economic freedom—rule of law, government size, regulatory efficiency, and open markets.

Additionally, property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labour freedom, monetary freedom, trade freedom, investment freedom, and financial freedom are also taken into account while measuring the economic freedom of a country.

Economists and industrialists have expressed almost identical views on the report, stressing on doing more regulatory and on-site initiatives to improve the ease of doing business to take the country to a faster and sustainable economic growth trajectory.