Corruption still biggest barrier to business: CPD study

Businesses in Bangladesh still point to corruption as the biggest barrier to their activities, according to a study report by Centre for

Policy Dialogue.

However, a number of new factors, such as inadequate infrastructure, inflation and foreign currency instability, global factors and

lack of sufficient long-term planning have also emerged as some of the concerns, the survey of entrepreneurs on the state of

business competitiveness said released on Sunday.

Corruption remained the most problematic factor, with 64.6 percent of respondents complaining about its high level. The second

biggest issue was inadequate infrastructure, cited by 44.6 percent and limited access to financing and inefficient government

bureaucracy cited for third by 43.1 percent.

However, new factors have also reared their heads. These include inflation pointed out by 38.5 percent, foreign currency instability

38.5 percent and policy instability 35.4 percent.

The CPD suggested for comprehensive policy support to meet short, medium, and long-term challenges amid uncertain post-COVID

business environment.

On a more positive note, businessmen had fewer complaints about a high tax rate and the gradual reduction in top-tier tax rates

may have contributed. However, complexity of tax regulations is perceived as more troublesome than rate of the  tax, the study said.
The study also found entrepreneurs perceived the three biggest economic risks for Bangladesh in the coming years as rapid,

sustained inflation (25 percent), a debt crisis (22 percent), and severe commodity price shocks and volatility (22 percent).

The three biggest social risks they pointed out were high cost-of-living crisis (51 percent), employment and livelihood crisis (19

percent), and infectious diseases (8 percent).

They also assessed digital inequality and failure of cyber security measures as the top technological risks and human-made

environmental damage and natural disasters as the biggest environmental risks.

The think tank has urged the government to plan and implement a series of policies and strategies to address these risks and

deliver long-term competitiveness to businesses.

Despite sporadic improvements, institutional inefficiencies have also made things harder for businesses, the CPD said. It pushed for

major reforms to public institutions for better transparency, accountability, and efficiency, and recommended that the major

political parties should commit to such reforms in the upcoming election.

The government should also focus on improving the efficiency of infrastructure, which is showing some positive changes from the

substantial investments in the past decade, CPD said.

The finance sector must undergo a major overhaul, including amendments to      the Banking Company Act, lifting the cap on

lending rate, transparency in outstanding loans and effective oversight by regulators, it said.

It also suggested stronger regulatory oversight, proper corporate governance practices, and instilling of corporate ethics. Human

capital development should become a mainstream activity and it should evaluate its 'digital Bangladesh' initiatives thoroughly to

identify its strengths, weaknesses, and issues, it said.