MCCI launches the third iteration of Bangladesh’s first homegrown index

TDS Desk:

Distinguished speakers attend the launching of the Bangladesh Business Climate Index for fiscal year 2023-24 at an event held in the capital on Thursday.

The country’s business environment dropped to 58.75 points in the last fiscal year ending June 2024 from 61.95 points scored in the previous fiscal year, in a homegrown index, owing to lethargic regulatory reforms, weak infrastructure and complexity in access to finance.

The result means a year-on-year drop of 3.2 points on the Bangladesh Business Climate Index (BBX). It also marks the first dip below the psychological 60-benchmark on the index with a 0-100 range, in its three-year history since the introduction in 2021-22 financial year.

The Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange, Bangladesh (PEB) formally unveiled the BBX for the fiscal year 2023-2024 at an event in the capital on Thursday.

Salman Fazlur Rahman, private industry and investment adviser to the prime minister, graced the event as chief guest while Lokman Hossain Miah, executive chairman of Bangladesh Investment Development Authority (BIDA), attended as special guest.

According to the index, seven out of 11 economic pillars of the country deteriorated. These pillars contain a total of 39 sub-indicators that are used to calculate the index. The survey was conducted among 520 small, medium and large enterprises.

“New business launches, availability of regulatory information, infrastructural facilities, labour regulations, dispute resolution, tax payments, and access to finance deteriorated while access to land, trade facilitation mechanisms, and technology adoption improved,” the survey stated.

Presenting the survey, PEB CEO Dr M Masrur Reaz stated that during 2023-2024, the BBX score dropped to 58.75 points from last year’s 61.95 points, showing that significant efforts are needed to address business environment challenges.

“There were improvements in three pillars coupled with drops in seven pillars. Rajshahi was the best performing region while Barisal came last,” he added.

Dr Masrur emphasised improving infrastructure and logistics, strengthening financial systems, enhancing legal and regulatory frameworks, bolstering institutional governance, etc, for unlocking the national economy’s growth potentials.

Salman F Rahman said tax regime is a big problem in the country. “We need to increase the tax base, decrease the tax rates, and further improve the country’s infrastructures. By targeting a business and investment friendly landscape, Bangladesh could increase the inflow of domestic and foreign investments and remain firm on its growth trajectory,” he also said.

He asserted that since now there are three BBX reports, a trend could be identified in the country’s business environment, which BIDA could analyse and base its actions on.

Lokman Hossain Miah said BIDA has always remained committed to improving Bangladesh’s investment landscape and is open to suggestions from the business community.

He appreciated the organisers for launching the report for 2023-24, claiming it would help BIDA chart its next course of actions.

MCCI President Kamran T Rahman said that the BBX 2023-2024 evaluates the country’s comprehensive business environment, ecosystem, uncertainties, disruptions in the global supply chain, and the escalating situation arising from the Russia-Ukraine conflict and Israel-Palestine conflict.

He believed the study would help investors and policy makers over industry-specific action programmes.

Foreign Investors’ Chamber of Commerce and Industry (FICCI) president Zaved Akhtar emphasised the credibility, capability, and consistency of policies and simplification of customs, tax, and VAT frameworks in Bangladesh.

Yuji Ando, country representative of JETRO, welcomed the latest BBX report and pointed out that 62% of Japanese companies operating in Bangladesh were expecting to expand as per a survey.

In the open forum, topics that came up for discussion include different ways of improving the pillar scores in the future and the need to focus more on improving access to finance, ease of paying taxes, and policy stability.