- Bangladesh Investment Environment Development (BICI) to boost investment, firm registration
- Framework designed in consultation with businesses
- Will include surveys to help improve ease of doing business
- Bribery, lengthy process chief complaints
- 7 pillars identified: business entry, exit and technology adaptation, industrial infrastructure and logistics, cross border trade and business, commercial dispute resolution, legal regulations, tax regime, financial and non-financial incentives and access to finance.
- 50 reformations in next 50 weeks
- Bangladesh ranked 168th out of 190 for ease of doing business
The Bangladesh Investment Development Authority (Bida) is undertaking a new programme to encourage investment by simplifying firm registration procedures for starting a business.
The programme, called the Bangladesh Investment Climate Improvement (BICI), aims to increase investment and firm registration by at least 10% annually.
It looks to facilitate the business environment by simplifying seven important aspects on different stages of starting a business taking opinions from businessmen.
Initially, 50 reform proposals will be implemented in the next 50 weeks and 100 reform proposals will be implemented by the ministries concerned in three years, according to the BICI framework finalised in consultation with the Cabinet Division and sent to the Ministry of Finance.
The new programme comes as the National Committee for Monitoring the implementation of the Doing Business Reforms, chaired by the cabinet secretary, recently decided to keep implementing reforms for making an attractive and investment-friendly environment for the local and foreign investors.
According to Bida officials, the new programme is in line with World Bank's Ease of Doing Business programme under which some initiatives have already been taken and others are in process.
The BICI framework identifies seven pillars taking into account the Economist Intelligence Unit index and local indicators.
These include - business entry, exit and technology adaptation, industrial infrastructure and logistics, cross border trade and business, commercial dispute resolution, legal regulations, tax regime, financial and non-financial incentives and access to finance.
At a recent workshop titled the "Framework on Proposed Bangladesh Investment Climate Improvement Programme," it was said problems will be resolved quickly by conducting a survey among business persons across the country through a third party.
Under the programme quick surveys will be conducted every year to identify and solve various problems of the traders at the field level.
Before the programme was finalised, Bida had taken the opinion of top business organisations, as entrepreneurs have often expressed disappointment over business environment reforms.
The complaints include the pressure to pay bribes to get services, high tax rate, the inability of Bida's one-stop service to provide recourse, legal hurdles and lengthy procedures faced by start-ups.
Bangladesh had ranked 168th out of 190 countries in the last Ease of Doing Business Index published by the World Bank in 2019.
While no index has been published since, the Bangladesh government also does not have specific information on whether the country's standing has improved or worsened.
Moreover, officials concerned do not know whether businesses at the field level are getting any benefit from the various initiatives taken by the government at various times.
The BICI is aligned with vision 2041, officials said.
As per the BICI, the proposed quick and mini surveys will be conducted by 30 April every year. At the same time, existing analytical reports from the past 12 months and private sector inputs will be used to determine need-based reforms.
The inputs will be gathered using predetermined templates of the surveys.
The finalisation of issues will be done by Bida's BICI Reform Unit through analysis and structured dialogue sessions with the private sector.
The execution of the time bound action plan will be the responsibility of the implementing agencies.
A pillar-specific working group will convene monthly meetings to observe the progress of implementation of the reforms, while a task force will hold bi-monthly meetings to take stock of progress to inform the National Steering Committee headed by the private industry and investment advisor to the prime minister and the monitoring committees chaired by the cabinet secretary.
Last June, the Bida held a workshop with representatives of relevant government ministries and the private sector on the BICI programme.
There, the outgoing executive chairman of the organisationSirajul Islam said out of 84,000 service applications submitted to the One-Stop Service (OSS) in the last three years, only 158 were applications for services from other organisation aside from Bida.
The OSS platform now also includes other bodies overseeing different matters.
Furthermore, not a single application for Dhaka North City Corporation's trade licence was submitted to the portal.
"One Stop Service Assurance Committee was formed under the leadership of the finance minister to oversee the implementation of OSS, but despite repeated efforts by Bida for the past eight months, not a single meeting of that committee was held," said Sirajul Islam.
Bida Director (Investment Environment Services) Jibon Krishna Saha Roy said the World Bank's EOBd only took into consideration the business facilitation issues of Dhaka and Chattogram.
The proposed BICI programme will be implemented to improve the investment environment of the entire Bangladesh.
"The reform activities will be identified in the light of various indicators related to the domestic and foreign business environment and by reviewing the views of all public and private sector stakeholders at all stages of formulation and implementation. Internal and neutral or third-party surveys will be conducted if necessary," he said.
Those concerned said Bida has identified 97 reforms under six pillars. Under the EODb, 46 reforms have already been implemented and 29 reform proposals are under implementation.
Participating in the workshop, Japan External Trade Organization (JETRO) Country Representative UG Ando said the BICI should focus on simplifying the process of starting a business.
He said it takes about six months to set up a branch or liaison office in Bangladesh, which makes investors vulnerable.
Establishing branch offices as soon as possible is currently a special demand of Japanese investors.
The JETRO official also advised to make all licence issuance and renewal processes online to prevent any scope of bribery for services.
Adeeb H Khan, senior partner of KPMG Bangladesh, said it is difficult to explain Bangladesh's tax system to foreign investors as the effective tax rate is much higher than corporate tax., while turnover tax is levied in addition to the basic tax rate.
He said it takes 8-10 days for the Registrar of Joint Stock Companies And Firms (RJSC&F) to verify the inward remittance of foreign capital through local banks. As a result, the company formation time increases, which he recommended reducing.
President of the Metropolitan Chamber of Commerce Industry (MCCI) Saiful Islam said most business licences are issued for one-year, which is challenging for investors. He proposed to issue business licenses for five years.
He said to increase competitiveness before LDC graduation, the lead time should be reduced, pointing out the present inefficiency of the port as a major obstacle. He recommended competitive international bidding to allow entry of more efficient port handlers.
Nasser Ejaz Vijay, president of Foreign Investors Chamber of Commerce and Industries (FICCI) and chief executive officer of the Standard Chartered Bangladesh, said conducting a survey is necessary to identify 10 significant process related challenges in implementing investment initiatives or conducting business.
According to the results of the survey, he recommended taking steps to reform the processes
He also suggested conducting a survey to verify the real impact of the reforms, noting that the positive effects are not being felt by the private sector in most cases.
Chairman of Chittagong Stock Exchange Asif Ibrahim said, "Speed money [bribe] is demanded in many cases for issuing bond licences."
Former chairman of Business Initiative Leading Development and AK Khan Co. Ltd. Director AbulKashem Khan said business environment reform in Bangladesh is not promising and the country was falling behind as its competitors were moving forward. Private sector participation in the proposed BICI will create collective responsibility, he said.
He said currently it was mandatory to give a commercial address for getting a trade licence, forcing many to use fake addresses as getting a new one was not possible for new investors.