Bangladesh ranks 29th in the World Bank’s B-Ready Index

Bangladesh ranked 29th among 50 countries in the World Bank’s Business Ready report, which is set to replace the global lender’s flagship Ease of Doing Business report, which has not been published since 2021.

Bangladesh ranks behind Nepal and Indonesia but is doing better than Pakistan, which is ranked 37th, according to the first draft of the B-Ready 2024 report presented at an informal meeting of the lender’s top executives in July.

Estonia and Singapore are the top two performers, each scoring above 70 in all three pillars. Bangladesh is among the best performers in operational efficiency (above 70), scores moderately in regulatory framework (between 50 and 70) and ranks low in public services (below 50).

Vietnam, one of Bangladesh’s main competitors in the global apparel market, has been classified in category “B” due to the better quality of public services in the country.

Bangladesh scored 56.99 points for its regulatory framework, 41.46 for public services and 70.49 for operational efficiency, writes Sharifa Khan, alternate executive director of the World Bank, in a letter to Economic Relations Department Secretary Shahriar Kader Siddiky.

The new report, due out this year as a pilot for an initial three-year phase, aims to provide an independent assessment of the business environment and inform policymakers on areas for intervention to support private sector-led growth.

The first report in the series, B-Ready-1, assesses 50 countries, including Bangladesh. A second report will be released in 2025 and a third the following year, analyzing the business friendliness of 112 and 185 economies, respectively.

The report assesses an economy’s business environment across three pillars – regulatory framework, public services and operational efficiency – across 10 topics – starting a business, locating a business, utilities, workforce, financial services, international trade, taxation, dispute resolution, market competition and corporate insolvency.

Bangladesh in the latest Doing Business report

In the latest Ease of Doing Business report for 2020, Bangladesh ranked 168th out of 190 economies. That was an improvement from 176th position the previous year, which the bank attributed to three reforms – lowering business registration fees, improving the electricity connection system and expanding the reach of the central bank’s credit information bureau.

As noted in the 2020 report, Bangladesh has lagged behind other South Asian economies in implementing reforms since the Doing Business survey began in 2003-04.

This gave Bangladesh second-to-last place in the world in terms of contract enforcement and 184th out of 190 in terms of property registration.

“Transferring a property title in Bangladesh takes an average of 271 days, almost six times longer than the global average of 47 days. Adjudicating a commercial dispute through a local first-instance court takes an average of 1,442 days, almost three times longer than the average of 590 days among OECD high-income economies,” the report said.

To connect a new building to the electricity grid, a company must complete nine procedures, most of which apply not only to the region but also to the entire world. Only two other economies in the world require nine steps to get connected, according to a recent report by the Doing Business Bank.

Has the situation improved significantly since then?

The head of Bangladesh’s investment promotion agency painted a frustrating picture as he explained to entrepreneurs why the country receives much less foreign investment than its neighbours.

As Lokman Hossain Miah, executive chairman of Bangladesh Investment Development Authority (Bida), said in February last year, it takes about six months to set up a company in Bangladesh, while Vietnam provides all related services in 35 days, Indonesia in 49 days and India in 60 days.

At the same event, American Chamber of Commerce President Syed Ershad Ahmed said that favorable policies and regulations alone will not attract foreign direct investment (FDI).

In his opinion, the most important thing is the proper implementation of this policy.

In all three pillars – regulatory framework, public services and operational efficiency – Bangladesh ranks lower than Nepal. The regulatory framework is better in Pakistan than in Bangladesh, according to the B-Ready report.

Vietnam significantly outperforms Bangladesh in all three categories, particularly in regulation and public services.

The analysis of B-Ready’s results clearly shows that Bangladesh scored fairly well in the operational efficiency category, meaning that Bangladeshi companies have learned to achieve good results by utilizing existing business regulations and government services effectively and efficiently.

As we read in the summary of the B-Ready report, existing companies can be resistant to difficult conditions, but both existing and potential companies can succeed if the business environment improves.

It finds that companies are resilient in the public services gap in areas such as starting a business, location, workforce, media, competition and taxation. In starting a business, Bangladesh is better off than Vietnam, which scores better in utilities and workforce – two key components of manufacturing growth. The country also lags behind in taxation, international trade and market competition – areas that make Vietnam more competitive in the global market.

Bangladeshi industries, especially those that occupy important export positions such as garments, struggle with expensive and irregular supply of services, as well as a less productive workforce.

Trade leaders and analysts have long stressed that Bangladesh must get rid of customs hurdles, ensure high-quality energy supply to factories and effectively negotiate with major trading partners for better trade deals once the country loses its least developed country status in 2026.

The B-Ready 1 report notes that while more developed economies tend to perform better, countries do not have to be wealthy to create a good business environment.

As highlighted, low- and middle-income economies were in the two best performing groups in all categories except taxes and market competition.

The report found that economies differ most in terms of firstly public services, secondly in terms of operational efficiency and thirdly in terms of regulatory frameworks – the three pillars of assessing a business-friendly economic environment.

The stark difference in public services is behind the wide variation in the business environment across economies. The report finds that economies are better at passing laws than delivering public services. It says the “public services gap” is evident across regional and income groups and across topics.

Noting that economies with a favorable business environment in one theme tend to perform well in others, the report suggests there is room for improvement across the board for most economies, pointing to the need for comprehensive reforms. This was outlined in a report summary presented in July at an informal meeting of the executive directors of the Bank and IDA and the boards of IFC and MIGA.

What does Bida say about the B-Ready report?

Referring to the B-Ready report, Bida’s Lokman Hossain told TBS on Thursday: “They (World Bank) sent it to us for our opinion. I saw that Bangladesh was ranked 129th there. But they (World Bank) did not actually contact us before preparing the report. They did not get any information from us. We do not know the basis on which this report was prepared.”

He added: “Bangladesh was ranked 168th out of 190 countries in the latest Ease of Doing Business report published by the World Bank. When the report was discontinued, we had undertaken 112 reforms to improve our business environment. Forty-four of them have been implemented. We are still working on them.”

Why should the economy be ready for business?

The lender believes that the economy needs to be business-friendly for the private sector to thrive, drive economic growth and create jobs.

The world needs to create jobs for 44 million young people a year in the coming decade, 30% of them in Africa. Low-income economies need to achieve about 9% annual growth in GDP per capita to end extreme poverty within a decade. Middle-income countries need long-term economic growth of more than 5% to escape the middle-income trap, the report says.

To meet this challenge, the private sector must become more dynamic and resilient. In developing countries, the private sector accounts for about 90% of jobs, 75% of total investment, 70% of output and 80% of government revenues, the project says.