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Post-pandemic, the speed in planning and execution will be the determining factor for businesses to survive amid changing behaviour of consumers and the volatility in the global supply chain.
But Bangladesh does not seem to be well-prepared to support businesses looking to thrive in the changing times as cumbersome processes still dominate and entrepreneurs struggle to secure necessary documents from government offices.
Even before the coronavirus pandemic, the country ranked lowly in the now-defunct World Bank’s global ranking of the ease of doing business index mainly because of the delay in issuing important documents from government offices.
Although Bangladesh advanced eight notches to 168 out of 190 counties in the Doing Business 2020 report, the last report published by the multilateral lender in 2019 before it was scrapped for data irregularities last year, the challenges ranging from regulatory barriers and weak infrastructure to inadequate energy supply have kept stifling local businesses.
The predicament faced by startups and small enterprises is even deeper since their financial capability is not strong enough to manage documents from government offices by spending additional money. As a result, fresh entrepreneurs feel discouraged in making investments sometimes.
Owing to the complexity, Bangladesh is also one of the lowest recipients of foreign direct investment and many foreign investors leave the country after carrying out initial surveys.
Usually, prospective investors in Bangladesh require to collect 42 signatures from various government offices to set up a venture.
Recently, a study report from the Centre for Policy Dialogue (CPD) said opening a factory requires quite a long list of 18 commercial documents in addition to the environmental certificate.
Some of the major requirements are export registration certification, trade licences, value-added tax certificate, tax identification number, the article of the memorandum, the certification of incorporation, bonded warehouse licence, and construction certification.
In order to meet the structural or building safety standards, factories need building permits from the Rajdhani Unnayan Kartripakkha, city corporations, municipalities, or development authorities, depending on their location.
Businesses also have to obtain certificates on designs, city survey documents, and the copy of allotment letters, said the CPD study report.
The scenario is much different in Vietnam, one of the competitors of Bangladesh, according to a businessman.
For example, a Taiwanese investor in Vietnam needs to fulfil eight requirements and requires five weeks and $2,940 to start a new business venture, he said.
Entrepreneurs complain that doing business is becoming difficult day by day because of the additional time and money spent on obtaining government documents and permissions.
They allege that they are harassed by the officials of various offices under the National Board of Revenue (NBR) for services related to tax, customs and bonded warehouses.
Local entrepreneurs are already in a tight spot for the worsening gas crisis and the delay in the release of goods from ports.
Businesses already have to wait 11 days and six hours to have their cargoes released after their arrival at seaports, according to the Time Release Study 2022 of the NBR. Land ports take 10 days and eight hours and airports take seven days and 11 hours to deliver goods.
And the challenges confronting entrepreneurs show no sign of abating although businesses urgently need to improve their efficiency with a view to becoming more competitive in the international markets as duty benefits could go following the country’s graduation from the group of least-developed countries in 2026.
Large business groups have been able to navigate through the web of complexities and corrupt practices on the back of their financial muscle, but small companies are failing to operate in the same environment, said another entrepreneur.
Businesses have demanded the extension of the tenure of trade licences to three to five years from one year in a bid to save time and money.
Corruption is also a major barrier standing in the way of businesses.
According to a study by the Center for Governance Studies, more than half of SMEs in Bangladesh have to pay a bribe to obtain essential services such as acquiring and renewing licences, using public utilities, and obtaining the tax identification number and the value-added tax certificate.
In terms of perception, almost nine out of 10 SMEs believe corruption is pervasive in the SME sector, it said.
At the event where the CPD shared the study report, a businessman said he had to pay Tk30,000 to obtain a certificate from an office of the NBR for import purposes.
In another frustrating development, the One Stop Service Centre under the Bangladesh Investment Development Authority has not been fully functional. The state agency is supposed to provide more than 150 services from a single window to ease business processes.
The CPD suggested the introduction of a one-stop service at every regulatory body that provides any permits.
As Bangladesh recovers from the coronavirus pandemic and is set to become a developing country in four years and aspires to be a developed economy in less than two decades, the need for speeding up regulatory reforms has only grown.
A congenial business environment is also needed to make the most of the 21st century dubbed as the Asian Century as large nations in the continent are expected to play a dominant role globally in the coming decades.
According to McKinsey & Company, $1 out of every $2 of global consumption in the next 10 years is going to take place in Asia, indicating the importance of growing businesses in Asian countries.
Bangladesh should utilise this opportunity by eliminating all trade barriers and improving business climate.
(TDS)
