Ease of business necessary for sustainable economic growth
How Bangladesh’s economy can be benefitted by ease of Business
The Business Standard spoke to Shafiul Islam Mohiuddin, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), and Professor Abu Ahmed, an economist and honorary professor of economics at the University of Dhaka, about how Bangladesh's economy can be benefitted by ease of Business.
Shafiul Islam Mohiuddin
Former president of FBCCI
In every sector, be it bureaucracy, politics or somethings else, the presence of black sheep would always prevail. And in my opinion, the people who are related to misdeclaration, under-invoicing, over-invoicing and misuse of bond facilities must be brought under justice. But first, we need to ensure that honest businessmen are not harassed in this process.
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In the absence of raw materials in Bangladesh, exporting products of the garments sector totally relies on the import of materials like cotton and petrochemicals. As the import procedure gets lengthier, time becomes a major concern. We cannot even procure sample orders of around US$3 billion for the delayed delivery of the sample yearns.
Bangladesh has now become the third largest apparel exporter in the world after losing the top position to Vietnam. Despite that I believe it is still possible for us to regain the lost status.
The bureaucratic process of clearing products from the ports is another major concern. This process significantly lacks in transparency. Files frequently get stuck behind red tape, delaying the clearing process. In the current era of technology, things can and should be done online.
The situation is different when we are trying to export products. The government has established Bangladesh Investment Development Authority (BIDA) to provide one-stop services to the investors, but if the supporting organisations do not help, BIDA alone cannot tackle all the issues. That is precisely why transparency is necessary in all of these bureaucratic procedures.
The lengthy procedures make it hard to conduct business in the country and it is one of the reasons why the foreign investors are losing interest. The debacle does not end here, as even within the country, new entrepreneurs and seasoned businessmen alike are losing their interest.
We are currently living in the era of the Fourth Industrial Revolution and if we want to make the current business procedures smoother, we need to take a few measures. First and foremost we need to change our mentality and working process. Only then WILL it be possible to have a positive impact on the business sector and country's economy.
Professor Abu Ahmed
Economist
In World Bank's 'ease of doing business index', Bangladesh ranks near the bottom of the list. The main reason behind this is the prevailing bureaucratic system and the lack of transparency in law and order. Though, on paper it may look very nice and orderly, in actual context it is not functional at all.
Our regulatory framework regarding ease of doing business also lacks transparency. The regulatory frameworks need to be more business-friendly. For example-- the regulators have now placed a restriction on importing telecommunications equipment which is not a friendly tactic at all.
Apart from the bureaucratic process, taxation poses another concern. The current tax rate of Bangladesh varies from 25 to 45 percent, and though every other country of the world is trying to reduce tax rates as much as possible, Bangladesh is going the other way. We are thinking that if we lower down the tax rate, collection of revenue would fall as well, which is wrong as a concept.
If we can correct the current taxation rate, foreign companies might get interested in conducting business from here by establishing offices. It is very unfortunate that the big companies do not speak up regarding this issue, as they want to evade tax. If we can reduce the tax rate at least by 5 to 10 percent, it will surely attract the investors and will create a competitive market. And as there will be more businesses the revenue will rise automatically, bringing a positive impact on the national economy.
