Bangladesh ranks 29 in World Bank’s B-Ready index

Bangladesh ranks 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 that has ceased to be published since 2021.

Bangladesh stands behind Nepal and Indonesia but fares better than Pakistan, which is placed 37th in the chart, 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 scorers, each achieving above 70 in all three pillars. Bangladesh is among the top scorers in operational efficiency (above 70), scores moderately in the regulatory framework (between 50 and 70), and ranks low in public services (below 50).

Vietnam, one of Bangladesh's key competitors in the global apparel market, has scored higher due to the country's better public services.

Bangladesh obtained scores of 56.99 in regulatory framework, 41.46 in public services, and 70.49 in operational efficiency, writes Sharifa Khan, alternative executive director at the World Bank, in a letter to Economic Relations Division Secretary Shahriar Kader Siddiky.

The new report, set to appear this year on a pilot basis initially in a three-year phase, aims to provide an independent evaluation of the business environment and offer policymakers insights into areas for intervention to support private sector-led growth.

The first report in the series, B-Ready-1, evaluates 50 countries, including Bangladesh. The second report will appear in 2025 and the third in the following year, analysing the business friendliness of 112 and 185 economies, respectively.

The report assesses an economy's business environment based on three pillars – regulatory framework, public services, and operational efficiency, on the basis of 10 topics – business entry, business location, utility services, labour, financial services, international trade, taxation, dispute resolution, market competition, and business insolvency.

Bangladesh in the last Doing Business report

In the last Ease of Doing Business report in 2020, Bangladesh ranked 168th out of 190 economies. This marked an improvement from the previous year's 176th position, which the Bank attributed to three reforms – reducing business registration fees, improving the electricity connection system, and expanding the coverage of the central bank's credit information bureau.

Bangladesh lagged considerably behind other South Asian economies in implementing reforms since the inception of the Doing Business study in 2003/04, the 2020 report noted.

It placed Bangladesh next to last globally on the enforcing contracts indicator and 184th out of 190 on the registering property indicator.

"Transferring a property title in Bangladesh takes, on average, 271 days, almost six times longer than the global average of 47 days. Resolving a commercial dispute through a local first-instance court takes, on average, 1,442 days, almost three times more than the 590-day average among OECD high-income economies," the report stated.

To connect a new building to an electrical grid, a business needs to complete nine procedures, the most of which are not only in the region but also globally. Only two other economies in the world require nine steps to obtain a connection, the Bank's last Doing Business report found.

Has the situation improved much since then?

Bangladesh's investment promotion agency chief painted a frustrating picture while explaining to a business audience why the country was receiving much less foreign investment than its peers.

Starting a business in Bangladesh takes about six months, whereas Vietnam provides all related services in 35 days, Indonesia in 49 days, and India in 60 days, Bangladesh Investment Development Authority (Bida) Executive Chairman Lokman Hossain Miah said in February last year.

At the same event, American Chamber President Syed Ershad Ahmed stated that favourable policies and friendly rules on paper alone would not attract foreign direct investment (FDI).

Proper implementation of those policies matters most, he said.

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

Vietnam is far ahead of Bangladesh in all three counts, especially in regulations and public services.

Going through the B-Ready score sheet, it is evident that Bangladesh scores fairly in operational efficiency, which means Bangladeshi businesses have learnt to perform well by making efficient and effective use of the existing business-related rules and government services.

Existing firms can be resilient to poor conditions, but both active and potential firms could thrive if the business environment improves, the B-Ready report summary says.

It finds that firms are resilient to the public services gap across topics such as business entry, location, labour, utilities, competition, and taxation. In business entry, Bangladesh is better placed than Vietnam, which scores better in utility services and labour – two vital components for manufacturing growth. The country also falls behind in taxation, international trade, and market competition – the areas that keep Vietnam more competitive in the global market.

Bangladesh's industries, especially those in key export sectors such as apparel, are struggling with expensive and irregular utilities as well as a less productive labour force.

Trade leaders and analysts have long been stressing that Bangladesh needs to remove customs hassles, ensure a quality supply of energy to factories, and negotiate efficiently with major trading partners for better trade deals once the country graduates from LDC status in 2026.

The B-Ready report-1 notes that although more advanced economies tend to perform better, countries do not need to be rich to develop a good business environment.

Low- and middle-income economies can be found in the top two performing groups in all topics except taxation and market competition, it points out.

It says economies seem to vary most on public services, second on operational efficiency, and third on regulatory framework – three pillars set for assessing an economy's business-facilitating environment.

The stark difference in public services drives much of the variation in the business environment across economies. The report finds that economies are better at enacting regulations than providing public services. It says a "public services gap" is evident across regional and income groups and across topics.

Noting that economies with a favourable business environment in one topic tend to perform well in others, the report suggests there is room for improvement across all topics for most economies, indicating the need for comprehensive reforms. This is outlined in the report summary presented in July at an informal meeting of the Executive Directors of the Bank and IDA and the Boards of Directors of IFC and MIGA.

What Bida says on B-Ready report?

Regarding the B-Ready report, Bida's Lokman Hossain told TBS on Thursday, "They (the World Bank) have sent it to us for our opinion. I saw Bangladesh ranked 29th there. But they (the World Bank) did not actually contact us before preparing the report. They did not take 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 publication of this report ceased, we undertook 112 reforms to improve our business environment. Forty-four of them have been implemented. We are constantly working." 

Why should an economy be business-ready?

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

In the coming decade, the world must create jobs for 44 million young people annually, with 30% of those in Africa. Low-income economies must achieve about 9% annual GDP per capita growth to end extreme poverty within a decade. Middle-income countries need long-term economic growth of over 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 creates about 90% of jobs, 75% of total investment, 70% of output, and 80% of government revenue, the draft states.