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2. Information for Dutch Companies

 
2.3 Doing Business in Bangladesh

Bangladesh ranks number 88 out of 175 countries on the ease of doing business ranking (World Bank, Doing Business 2007). To compare, China ranks 93, India 134, Malaysia 25, Netherlands 22, Thailand 18 and Vietnam 104. Based on this ranking, it is fair to say that Bangladesh performs relatively well compared to countries in the region. Despite this, Bangladesh has received relatively little interest of Dutch traders and investors thus far.

 

The following table (table 4) gives a snapshot of how Bangladesh ranks on the ten topics that comprise of the overall ranking. In addition, per indicator some details are given for example on the number of procedures/documents needed and the time it takes to get things done. For more information, please visit the website of the World Bank (http://www.doingbusiness.org).

 

Table 4 The ease of doing business in Bangladesh

 

 

Bangladesh

India

Vietnam

China

NL

 

Ease of

 

 

 

 

 

Doing Business

 

88

134

104

93

22

Starting a Business

68

8 steps, 37 days

88

97

128

38

Dealing with Licenses

67

13 procedures,185 days

155

25

153

80

Employing Workers

75

Rigidity of employment index 30 (0-100, 0=best)

112

104

78

86

Registering Property

167

8 procedures, 425 days,

10.5% of property value

110

34

21

20

Getting Credit

48

Legal rights index 7 (0-10, 10=best), Credit information index 2 (0-6, 6=best)

65

83

101

13

Protecting Investors

15

Investor protection index 6.7 (0-10, 10=best)

33

170

83

99

Paying Taxes

72

17 payments, 400 hours,

40.3% of profit

158

120

168

82

Trading Across Borders

134

Export: 7 documents, 35 days, $902/container.

Import: 16 documents,57 days, $1,287/ container

139

75

38

16

Enforcing Contracts

174

50 procedures, 1,442 days

173

94

63

31

Closing a Business

93

4 years, cost 8% of estate

133

116

75

62

 

Based on this table, it is easy to see that in particular contract enforcement and registering properties are main impediments to doing business in Bangladesh. Also distressing is the low rank Bangladesh receives on the ease of trading internationally (exports & imports). Trade liberalization policies are being carried forward, however, with respect to reduction of quantitative restrictions, opening of trade in many restricted items, rationalization and diminution of import tariffs. Bangladesh is making efforts in opening up markets and participating in regional trade deals like SAFTA, BIMSTEC, and TIFA (with USA) and WTO on a global scale.

 

The rankings above specifically relate to business regulation and enforcement. Important other factors that contribute to the business enabling environment such as infrastructural development, financial sector development and corruption perceptions are not included. A World Bank/Bangladesh Enterprise Institute (2003) Investment Climate Assessment reveals that firms in Bangladesh find the following obstacles most hampering for economic growth and development:

 

  • Infrastructure (ports, roads and air connections are worse than its neighbors);

  • Electricity problems (70% of the firms rely on electric generator at great expense);

  • Pervasive corruption (Transparency International Corruption Perceptions Index of Bangladesh has been 102 (most corrupt) for 5 years in a row);
  • Business regulation (frequent visits from government agencies);

  • Access to finance (mostly short-term only and the large share of non-performing loans portends potential difficulties);

 

Next to this, Bangladesh is often confronted with public outbreaks of dissatisfaction in the form of blockades, strikes and hartals (demonstrations), which are estimated to have lead to 200 days of workdays loss during 1995-2000. A recent example of this is the serious unrest in the garments sector due to low wage complaints. Rather violent hartals have pressured the garments associations, the government and factory owners to take the demand of the garment labor unions serious. A minimum wage commission (in which all stakeholders participate) has proposed to revise the minimum wage upwards, but not all stakeholders agree upon this proposal yet (in particular not on how quickly it should be implemented). Another recent example has been the public outrage over the proposed open-pit mining by Asia Energy which eventually led to the loss of lives and the postponement by the GoB of this long-planned foreign investment.

 

On the positive side, the Government (GoB) is committed to structural reforms for enhancing the business climate in line with its Poverty Reduction Strategy (PRS); the National Strategy for Economic Growth, Poverty Reduction and Social Development. Great emphasis has been put on private sector-led economic growth. Together with developing partners, GoB has initiated various reform programmes to improve the investment climate at large. However, there are concerns over the pace and capacity of GoB with regard to the effective and efficient implementation of these (structural) reforms. In addition, 2006-07 is a crucial year politically as it will transcend through three governments outgoing, caretaker and newly elected. From Doing Business in 2007 if follows that business climate reforms are mostly initiated during the first 15 months of a new government. Based on this, a positive outlook might be expected, although it naturally remains to be seen what the new GoB will do.

 

bullet

Other useful web addresses for information on doing business in Bangladesh

 

www.boi.gov.bd

The website of the Board of Investment (BOI), the principal private investment promotion and facilitating agency for both domestic and foreign investors, provides information on investment promotion (i.e. country/sector information) and on investment facilitation (i.e. registration/approval, utility connections).

 

www.epb.gov.bd 

The website of the Export Promotion Bureau (EPB) has a very useful website on which information on sectors and products, export promotion, export performance, trade information, trade fairs etc. can be found. Its reports are very useful in identifying opportunities, bottlenecks, thrust sectors, scope, etc

 

www.nbr-bd.org

The website of the National Board of Revenue (NBR) provides information on taxes (VAT, customs and income tax), tax-policies, tax-laws, tariffs, duties and other revenue related fees/charges.

 

www.nbr-bd.org/nbrweb/customfiles/customshomepage.asp

The website of Bangladesh Customs falls under the umbrella of the NBR. The customs site provides detailed information on tariffs and custom related queries.

 

www.bei-bd.org

The website of the Bangladesh Enterprise Institute, a non-profit, non-political research organization for research and advocacy work for private sector development, provides. An important area of its work is on Corporate Governance which is sponsored by Embassy of the kingdom of the Netherlands.

 

www.sedf.org/publications.php or

www.sedf.org/login/uploadfile/2005122160.pdf  

The website of the South Asian Enterprise Institute (SEDF) provides information on the business enabling environment and features Investment Climate Assessments. Moreover, the site features the Entrepreneurs Guide to Regulatory Processes in which all regulatory processes related to starting and operating a business in Bangladesh are listed and described.

 

www.epzbangladesh.org.bd

The website of the Bangladesh Export Processing Zones Authority, the official organ of the government to promote, attract and facilitate foreign investment in EPZs, provides information on the functioning and investment opportunities in the EPZs of Bangladesh.

 

http://ec.europa.eu/comm/external_relations/bangladesh/intro/index.htm

The website of the European Union relations with Bangladesh provides useful information on the country, its economic structure and trade aspects. Of particular interest is the section on economic co-operation in the mutual interest, as it provides a link to Asia Invest. Asia invest aims to promote the internationalization of European and Asian small and medium sized enterprises (SMEs).

 

http://dhaka.usembassy.gov/doing_business.html

The website of the USA embassy in Bangladesh, the US trade centre provides a very useful country commercial guide.


 

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