From 2006 to 2019: A story of how rising red tape made business difficult

For the first time in 2006, Bangladesh was thoroughly assessed by the World Bank for its Ease of Doing Business Index. Bangladesh ranked 65.

Thirteen years down the line, it stands at 168. But that does not tell the whole story. Once you segregate the indicators and compare with 2006, a story of bureaucratic horror emerges – a story of unhindered red tape that has made doing business difficult over this period.

Some examples will make things clear.

Bangladesh ranked 92 worldwide on the paying taxes indicator of the ease of doing business index for 2006. A typical business made only 17 tax payments per year.

The global lender in the report recommended for reforms to ease the tax payment procedure. 

But things have gone in the opposite direction. Over the years, the payment number increased to 33 per year, according to the latest doing business report.

In the same report, Bangladesh had a worldwide rank of 65 on the ease of starting a business indicator. In the latest report, the country ranked 131 even after improvement of seven notches in the last one year through some reforms on this indicator. This tells us how red tapism made starting business more difficult.

Take one more example. In the ease of doing business report for 2006, Bangladesh had a global rank of 17 on the protecting investors indicator- the top performer in the South Asian region.

We could not defend the ranking on the protecting investor indicator. In the latest index, Bangladesh ranked 72, even after moving up 17 notches from the last year. 

Thirteen years ago, Bangladesh's ranking looked pretty well on the other indicators as well, like registration of property, trading across borders, enforcing contracts. 

The good score on the indicators resulted in a good rank as Bangladesh obtained 65th position in doing business index for 2006.

The beginning was pretty good. But the country was unable to defend the opening score.

Every year its ranking slipped some places, thanks to measures taken by successive governments, making business more and more difficult.

The fall continued over the years until 2017 when the country ranked 177 in the doing business report for 2018. Thus, Bangladesh's ranking slipped 112 places. 

The fall stopped in the index for 2019 as Bangladesh improved just one place. 

And it improved eight places in the latest index for 2020 after carrying out some reforms in the last year.

But the situation has become much complicated and difficult. Game changing reform measures are needed to ease the business climate by cutting red tape.

Here, the recipes applied by India and Pakistan offer some foods for thoughts.

India ranked 138 in doing business report for 2006, lagging far behind Bangladesh.

But game changing reforms carried out by India in the last five to six years helped it to record continuous improvement in the ease of doing business index.

Between 2014 and 2019, India improved its rank by 79 positions.

The country now ranks 63rd in the latest doing business report.

In 2014, India stood at a dismal 142nd place. But it improved its rank in seven out of 10 indicators and according to the World Bank's latest doing business index, the country is now moving closer to international best practices.

The country has made significant improvements on indicators like resolving insolvency, construction permits and trading across borders.

The Pakistan story is more intriguing.

It ranked 66 in the doing business report for 2006. But over the years its ranking slipped more than 50 places thanks to the rise in red tapism.

The country's policymakers woke up to the ground reality. They moved for reforms to cut red tapes.

Pakistan made starting a business easier by expanding the functionalities of the online one-stop-shop. It made the approval process for obtaining a construction permit easier and faster in Karachi and Lahore - two major cities of Pakistan.
 
It also made registration of electricity and property easier for businessmen.

It eased the process for paying taxes by introducing online payment modules for value added taxes and corporate income taxes and lowered the corporate income tax rate.
 
Riding on the reforms, Pakistan climbed up 28 spots to become the 108th country in the global ease of doing business rankings this year, from 136 the previous year.
 
Our reform measures look weak compared to those of India and Pakistan.

India and Pakistan cut some red tapes through reforms.

But the reforms we carried out only helped to reduce the cost of starting business and did not address the bureaucratic and administrative hurdles that companies face while operating in the country.

Our government reduced the cost of registration and clearance for new firms, removed the fee for acquiring digital certificates, reduced security deposit fee for new electricity connection, and widened the coverage of the Credit Information Bureau.

These reforms, in the view of business leaders and economists, had little to no impact on easing the business process.

One thing good is everybody knows what reforms are required. Bangladesh needs game changing moves to cut unhealthy red tapes. Otherwise, no reform will work to ease doing business.