One-Stop or One More Stop?: Syed Akhtar Mahmood discusses deregulation and institutional reform

What is your initial assessment of the budget's deregulation proposals?

The shift from "red tape" to "white tape" during the Ershad era proved that changing the colour of a ribbon does not diminish the tyranny of the file. The current budget proposes a "One-Stop Shop" to digitise permits and licences, aiming to reduce the number of steps and the time required for approvals. 

While these digital intentions are laudable, they often fail to address the underlying regulatory burden; without genuine reform, a One-Stop Shop frequently morphs into a "One More Stop Shop" or even a "Full Stop Shop".

Why does the bureaucracy consistently create such complex hurdles for businesses?

It is an inherent, global characteristic of bureaucracy that its primary instinct is to control. This is driven partly by incentives for rent-seeking, but also by a sincere, albeit misguided, belief that without stringent control, the economy or society will fall into chaos. 

Over time, these regulations accumulate; the rule book in Bangladesh today is vastly more congested than it was 30 years ago because control mechanisms naturally build upon themselves. 

This results in a negative-sum game where public welfare is not protected, yet businesses are persistently harassed.

How do these regulatory uncertainties specifically impact the investment climate?

When we survey investors, they consistently cite bureaucratic complexity and uncertainty as primary deterrents. It is not just about the length of time — say, four months for a permit — but the unpredictability of that timeframe. 

An investor might see a peer receive approval in a week while they remain stuck for months without explanation. Furthermore, the sudden imposition of retrospective taxes or new regulations without prior consultation creates an environment where long-term planning becomes impossible.

Is there a genuine risk of the bureaucracy sabotaging these new reforms?

History suggests so. Bureaucrats are experts at undermining reforms that threaten their control. If they perceive a strong political will, they may remain quiet initially to please their ministers, but they eventually find ways to sabotage the system. 

We have seen instances where automated customs systems are bypassed by claiming the "server is down", or where a single, isolated accident — like a building collapse — is used as a pretext to reinstate discarded controls.

Why haven't previous initiatives, like the 2007 Regulatory Reform Commission, succeeded?

The 2007 Commission, led by Akbar Ali Khan, suffered a slow death following the change in government. The prevailing logic within line ministries — such as telecom or commerce — is that they alone should decide on reforms within their jurisdictions. 

However, leaving reform to the very ministries that benefit from control is ineffective; meaningful change requires an independent, cross-ministerial body with the authority to push through institutional inertia.

How can the government bridge the gap between investment summits and actual FDI?

There are many bridges to cross between a summit and actual investment. Summits may generate initial interest, but foreign investors are not moved by rhetoric; they look for credible indicators that a country is truly on the move. 

If they discover that the promised reforms are not being felt on the ground, they will simply withdraw. Rather than promising billions in immediate investment, the government should focus on building a transparent pipeline and demonstrating a consistent commitment to improving the regulatory environment over time.

What is your view on the ambitious revenue and growth targets for FY31?

Setting ambitious targets can sometimes mobilise a machinery, but they must be grounded in institutional reality. The National Board of Revenue (NBR), for instance, requires incremental, consistent improvement rather than overnight overhauls. 

We must learn from our own history — such as the introduction of VAT in the 1990s — to understand how institutional changes can be successfully implemented. The danger lies in setting targets so high that they become surreal, divorced from the actual capacity of the institutional ruins mentioned by the Finance Minister.

How do we move from a zero-sum conflict to a win-win scenario?

We need to transition from blunt deregulation to smart regulation. Regulation is necessary for public safety and environmental protection, but it must be efficient. 

To achieve a win-win outcome, the government must establish a consultative mechanism that includes businesses, bureaucrats, and civil society. This would help bridge the deep-seated mistrust that many officials have toward the private sector, whom they often view merely as profit-seekers rather than partners in development.

Does the current budget include the necessary mechanisms for this transition?

Currently, the budget lacks a clear feedback mechanism. Without a system to gather real-time data from the ground, the government cannot know if its policies are actually working or if they are creating new traps. 

In economics, we often assume that action A leads to result B, but in the complex reality of Bangladesh, action A might lead to D. A learning system within the government is essential to monitor these deviations and take corrective actions as they happen. 

What would be your final advice to the policymakers for the next four years?

Reform is a relay race, not a single sprint. You must implement changes in "batches," learning from the first set to make the second set more effective. While a broad roadmap is necessary, policymakers must remain alert to the weather conditions of the economy — the unforeseen consequences and bureaucratic resistance that will inevitably arise. 

Ultimately, institutional reform is not about a single stroke of a pen but about a persistent, evidence-based drive to change the very behaviour of the state.