A triple whammy – corruption, inefficient bureaucracy, and a lack of access to credit – put a spoke in the wheel of businesses, especially small ventures, which were trying to recoup Covid-induced losses when the pandemic eased in mid-2021, according to a new survey by the Centre for Policy Dialogue (CPD).
It will take three years for them to dispel pandemic blues, according to high officials at 45% of the companies surveyed in April-July last year.
The executive opinion survey report, prepared by CPD Research Director Dr Khondaker Golam Moazzem was published on Tuesday.
Some 68% businesspeople considered corruption to be the main obstacle to their recovery, while 67% and 55% of business entities respectively termed incompetent administration and insufficient project financing the biggest challenge, Khondaler Golam Moazzem said while presenting a keynote.
Besides, 42% responders said the country's economy is still under pressure, while 63% claimed disbursements under stimulus packages were "disproportionate" for small and medium enterprises at a time when the pandemic was at its peak.
Some 28% of businesses said they are having to cut spending to offset pandemic impacts, which led to instances of layoffs, the CPD research director noted.
The survey has also explored the types of new businesses coming up in the next 10 years. Some 67% of the respondents said digital financial services will flourish further, while businesspeople have kept the skilled manpower sector in second place and data management in the third in terms of growth.
Citing the US sanctions on the RAB, the CPD expressed concern that the emergence of any complexities out of it will have a long term effect on Bangladesh's businesses.
The CPD conducted the survey to report the state of business competitiveness of Bangladesh during 2021 in the wake of Covid-19 normalisation and to compare the changes to understand the level of recovery in the existing business environment.
In 2020 too, the think tank conducted a similar survey on Bangladesh's business environment and identified inefficient bureaucracy as the biggest obstacle to doing business, followed by challenges posed by corruption and limited access to credit.
While speaking at the beginning of the latest survey result revelation, CPD Executive Director Dr Fahmida Khatun said the survey looked at business environment, infrastructure, institutional capacity, good governance and financial management.
Despite the "build back better" approach in the post-Covid period, businesses continue to face structural challenges with new ones added to those, ending up questioning competitiveness of the business environment, according to the study.
Moreover, the businesses accounted for a mixed bag of recovery after the sector failed to ensure decent employment and wages, social and environmental development and access for the marginalised.
The study was conducted in 39 large 17 medium, 12 small and five micro factories under four sectors, such as agriculture, manufacturing, non-manufacturing services, and covered 10 issues.
The 10 issues were infrastructure, institutions, safety and security, financial system, trade and investment, competition, business operations, governance and innovation, building human capital, working and employment, and managing the economic recovery and risks.
According to the study, improvements have been reported in corporate ethics; less pressure for bribes during tax payment and awarding of public contracts. However, bribes in export-import trade remained almost unchanged.
The CPD analysis found that businesspeople over the years positively acknowledged the government's long-term vision for economic development, which includes automation and digitalisation of trade and tax payment systems and strengthening the public procurement system.
On the other hand, fiscal instruments failed to satisfy the needs of the people and businesses and ensure a conducive environment.
As per the survey, businesses performed poorly to serve people equally, while taxes could not address the inequality, and tax obligations were difficult to comply with. Moreover, addressing environmental degradation was also disappointing.
Some 58.9% mentioned that protection of personal data held by the public companies is somewhat absent.
To improve the business environment for ensuring early recovery, the surveyors recommended that the country's tax structure go through a major revision focusing on the equity of different categories of people.
The CPD suggested that the National Board of Revenue and Tariff Commission jointly review the fiscal expenditure incurred for providing fiscal incentives and subsidies to different categories of enterprises and activities.
Although safety and security issues did not make progress in 2021 in contrast to that in 2020, the financial sector and trade and investment-related issues have either somewhat recovered or are at the recovery phase.
Meanwhile, the capital market has been struggling in building confidence among investors. Major challenges in it included poor-quality IPOs, weak regulatory enforcement role of the securities regulator, anomalies in financial reporting and suspicious trading in the secondary market. Other issues were a lack of transparency in BO accounts and failure to ensure due diligence of the stock exchanges and other stakeholders.
Regarding the faster recovery in the trade and investment sector, the survey recommended attracting more foreign visitors for improving the country's image.
The domestic business environment has also somewhat improved and passed the pre-Covid level, but the overall competitive environment is still below the minimum average level.
Entrepreneurs still believe that corporate businesses are dominated by a few groups of companies as in the previous time; retail services are somewhat improved, and the provision of professional services has improved.
Despite improvements in the situation with 46.5% of businesspeople indicating that new companies with innovative ideas have been growing, 48.6% of respondents mentioned that fiscal measures distort competition to some extent.
During the survey, an unbalanced recovery was observed particularly in the case of SMEs and informal sector activities as a result of the disproportionate distribution of stimulus packages for the SMEs that hindered them from maintaining a similar level of recovery as observed in the case of large-scale enterprises.
The CPD, in this regard, suggested that the Competition Commission be proactive to monitor the activities of the "dominant market players in different sectors" – who are likely to make an adverse impact on the market.