Energy price shock, pollution top risks to doing business in Bangladesh

Energy price shock and high pollution have been identified as the leading risks for doing business in Bangladesh, according to a recent insight report published by the World Economic Forum.

Since the energy sector in Bangladesh is highly subsidised, it subjects the government to repercussions of market fluctuations, thus making energy price shock the top risk.

Energy price shock has also been ranked as the top risk for doing business in Pakistan, according to the report titled "Regional Risks for Doing Business 2019." 

The report adds that South Asia is still a net importer of crude oil, despite the rising demand for energy in the region, making it the fifth biggest impediment to doing business in the region. 

Ranking as the second biggest threat to doing business in Bangladesh, pollution has been identified as posing great economic risk to the country. "Each year, Bangladesh loses approximately $6.5 billion to pollution and environmental degradation," the report reads. 

Citing data from Greenpeace, the report ranked Dhaka, the capital of Bangladesh, as the eighth most polluted city.

Pollution could also explain why "failure of urban planning" ranks as the fourth risk in the region. But the sense of risk around urban planning may include other factors. 

Urban populations, particularly in Bangladesh – where failure of urban planning ranked fifth – are growing rapidly. According to the UN, the population of "Dhaka will increase by more than 10 million inhabitants by 2030." 

Yet the infrastructure of these cities is at risk of failing to keep up with this growth. The World Bank has said that Bangladesh suffers from some of the lowest local spending on urban infrastructure, with most cities offering "inadequate infrastructure and low levels of urban services," the report added.

The report identified unemployment or underemployment, failure of financial mechanism or institutions and failure of national governance, as the other risks that Bangladesh faces.       

In South Asia as a whole, however, water crises took the lead as the number one risk for doing business. At a country level, water crises ranked as the topmost risk in India, second in Pakistan and fourth in Sri Lanka. 

Although there are bilateral arrangements on the Indus (India and Pakistan) and Ganges (India and Bangladesh) rivers, water still presents geopolitical challenges in the region, being a potential weapon in cross-border disputes, as countries have threatened cutting off water flow because of outbreaks of violence in disputed territories.

India is one of the 17 countries that face extremely high water stress, and the northern part of the country faces severe groundwater depletion. This year, India faced a drought in Chennai – the country's sixth-largest city, which is home to over 10 million people. 

By 2020, more than 20 cities, including New Delhi, will be at a risk of running out of groundwater – a scenario that would affect approximately 100 million people, says the report.

Meanwhile, failure of national governance was ranked as the top risk for doing business in Nepal, while in Sri Lanka it was food crises.

The report, prepared in partnership with Marsh & McLennan Companies and Zurich Insurance Group, offers a business perspective on the impact of global risks and illustrates how they are experienced differently in each region. 

It is based on the risk-related findings from the executive opinion survey for 141 economies globally. 

Over 12,000 executives highlighted concerns ranging from economic to political, societal and technological risks.