Initiatives undertaken by the government to reform the business environment have helped Bangladesh emerge in the list of top 20 improvers in Doing Business 2020, according to a World Bank report.
China, India, and Pakistan are among the countries that have also been grouped in the list for improving the most on ease of doing business score.
According to the World Bank, Bangladesh made it easier for entrepreneurs to start a business, obtain an electrical connection and access credit.
Among other initiatives, the report said, Bangladesh lowered the name clearance fee for new company registration, abolished digital certification fees and reduced registration fee calculations based on share capital.
The report also appreciated the improvement of access to credit by expanding coverage of Bangladesh's credit information bureau to include five years of records and data on loans of any amount.
"In Dhaka, the electricity supplier cut the security deposit for a new connection by half and undertook major investments to expand its staffing and digitization of processes; licensing times by the Office of Electrical Adviser and Chief Electrical Inspector were also reduced," the report mentioned.
The other countries in the list, in alphabetic order, are Azerbaijan, Bahrain, Djibouti, Jordan, Kenya, Kosovo, Kuwait, Kyrgyz Republic, Myanmar, Nigeria, Qatar, Saudi Arabia, Tajikistan, Togo, Uzbekistan, and Zimbabwe.
The selection of Bangladesh in the list of top 20 reformers has raised the hopes for the country's improvement in the ease of doing business index this year onward.
"As a result of various initiatives, Bangladesh will see its position lifted in doing business index this year. We expect a substantial jump in next year's index," said Md Sirajul Islam, newly appointed Executive Chairman of Bangladesh Investment Development Authority.
The chief executive of the official investment promotion agency told The Business Standard on Saturday that the government took several initiatives to improve the environment of investment.
"Crisis of energy, power, and land has been reduced. Public investment in road and communication infrastructures has been on the rise to facilitate private investment and business," he said.
Economies are selected based on the number of reforms and on how much their ease of doing business score improved.
The list of 20 countries, put in alphabetic order in the report published on Friday, however, does not reflect the best performing / ranked economies, which will be disclosed at the time of Doing Business 2020 launch on October 24, 2019.
"This list does not reflect fully an economy's attractiveness for businesses, and is purely based on the improvements across 10 different regulatory areas," said the report.
According to the doing business report of the world bank published in October 2018, Bangladesh ranked the 176th among 190 countries, going up by a single notch from a year earlier.
The government wants to upgrade the country's position among the best 100 within 2021.
To achieve this target, the government took several initiatives in 2016 by forming the National Committee for Monitoring & Implementation of Doing Business (NCMID) with 15 members, passing the One-stop Service Center bill at the national parliament, increasing the supply of power, importing liquid natural gas (LNG).
At the same time, the government also took an initiative to establish 100 economic zones and invested a huge amount of money to develop the infrastructure of transport and communication sector.
The government of Bangladesh has implemented 18 initiatives over a decade to reform the business environment of the country, and 12 of the initiatives have made business easier in Bangladesh.
The remaining six initiatives did not help to ease the business process.
Areas of improvement
According to the World Bank report, Bangladesh made starting a business more expensive by increasing the cost of business registration at the Registrar of Joint Stock Companies and Firms (RJSC) due to a reform initiative in 2018.
Due to another reform initiative implemented in 2017, Bangladesh made paying taxes more complicated for companies by increasing the time it takes to prepare Value Added Tax (VAT) and corporate income tax returns, said the report.
The World Bank said the reform initiative implemented made paying taxes costlier for companies by increasing the corporate income tax rate in 2008 while making less costly by reducing the corporate income tax rate in 2010 and eased again in 2016 by reducing the corporate income tax rate.
According to the report, the Bangladesh government implemented six reforms regarding start business from 2008, while four of them eased doing business and the remaining two made business difficult.
In 2008, Bangladesh made starting a business more complicated by introducing an additional process for verifying the payment stamp duty, the report said.
Steps that made businesses easier
The government simplified business registration formalities, reducing the time, cost and number of procedures to start a business in 2009, by launching a full-fledged online business name clearance and registration process in 2010, eliminating the requirement to buy adhesive stamps and further enhancing the online registration system in 2011.
According to the report, the government further made starting a business easier in 2014 by automating the registration process and reducing the time required to obtain a trading license and to complete the tax and value-added tax registration.
The report said the government of Bangladesh speeded up property registration by increasing efficiency at the municipal deed registry office in 2009 and reduced the property transfer tax to 6.7 percent of the property value in 2011.
The report said Bangladesh made getting electricity more difficult by imposing a moratorium on new electricity connections from April 2010 to March 2011 because of an electricity supply shortage.
This moratorium has led to long delays for customers and has increased the time to obtain an electricity connection, it observed.
Moreover, government mage getting electricity more difficult by requiring all customers to meet 7 percent of their electricity needs through solar energy, making it necessary to install solar panels in 2013.
In 2016, Bangladesh reduced the application processing time for new connections in both Dhaka and Chattogram thanking an increase in the country's network capacity.
According to the report, Bangladesh reduced the time required to clear goods by automating customs clearance procedures at the Chattogram port, which has eased cross border trading in 2010 and made it easier by introducing a fully automated, computerized customs data management system, ASYCUDA (Automated System for Customs Data) World in 2015.
Bangladesh improved access to credit information by establishing an online platform for sharing such information in 2016.
Zahid Hossain, former lead economist of Dhaka office of the World Bank told The Business Standard, "Despite making remarkable progress in access to electricity, registration of land and taxation, Bangladesh is still on the bottom in these areas."
At the same time, Bangladesh had made a drastic fall in the index of starting a new business, he pointed out.
"Although a bill has been passed by the parliament, the One-stop Service Center is yet to take effect; establishment 100 economic zones are on the table of discussion; the supply of electricity is not sufficient to meet the growing demand," he added.