Business environment not conducive to attracting FDI

The relevant policy makers in Bangladesh must give focus on improving the environment of doing business so that foreign business entities get attracted to Bangladesh.

That the business environment in Bangladesh is not favourable in attracting foreign direct investments can be best illustrated by the fact that, of the Japanese companies that are here in Bangladesh, 71 per cent is dissatisfied with the general business environment.

This has been revealed in a survey conducted by the Japan External Trade Organisation (JETRO) and the survey report was released yesterday.

Report says that, of this 71 per cent, 26.2 per cent is highly dissatisfied and 44.6 per cent slightly dissatisfied regarding business climate.

In this study, the responses from nearly 4,400 companies in the countries in Asia and Oceania were elicited for consideration.

Some 214 Japanese firms in Bangladesh also took part in the study, which was carried out from August 22 to September 21 last year.

The findings are certainly not good news for Bangladesh that aspires to attract more FDI to bolster its economy.

The complicated customs clearance procedures, it has been found, are the biggest challenge for business operations in Bangladesh.

The JETRO country representative rightly suggested that for Bangladesh it is necessary to improve the business environment addressing the issues facing Japanese companies, especially in custom clearance procedures.

There are other factors that also create a negative impact on doing business here.

Some 72.6 per cent of companies found that volatility in the exchange rate and 64 per cent described difficulties in local procurement of raw materials and parts as other major challenges.

There are complaints about infrastructure also. 65 per cent of respondents called the shortage of electricity as another major challenge.

Bangladesh has a huge growth potential and this has been acknowledged by the Japanese companies, but without necessary improvement, this growth potential will remain unutilised.

Positively, companies find the conditions of recruiting human resources such as general workers and staff and hiring engineers and specialists as satisfactory.

Also, cost of labour in Bangladesh is very competitive when compared to the countries in Asia and Oceania.

As usual, bureaucratic hurdles have also come up as a major setback for doing business.

The lack of efficiency in administrative procedures in issuing permits and licences, problems in the legal system related to preferential treatment or foreign capital, lack of an efficient tax system, and the delay in obtaining visas and work permits are hindering foreign companies to operate with ease. Bangladesh’s bureaucracy will have to be smart when there is stiff competition in attracting FDI among countries in this region.