CPD Media Briefing

Bangladesh Business Environment 2022

Findings from the Executive Opinion Survey

Study Team
Dr Khondaler Golam Moazzem
Research Director, CPD
Ms Jebunnesa
Programme Associate, CPD
Ms Chowdhury Fariha
Programme Associate, CPD

29 January 2023

1
2
 Content

I. Introduction and Objectives

II. Methodology
III. Key Features of Bangladesh Business Environment 2022
IV. Bangladesh’s Position under Different Pillars: Detailed Analysis
V. Conclusion

3
I. Introduction and Objectives

4 4
 I. Introduction and Objectives
 The business environment in Bangladesh has passed an uncertain time during
the post-covid period
 CPD has carried out an ‘Executive Opinion Survey (EOS)’ during April-July 2022
under the partnership with the World Economic Forum (WEF)
 The objective of the survey was to appreciate the perception of
entrepreneurs/businessmen on the state of business competitiveness and
factors and institutions responsible for long-term growth, especially during the
post-pandemic period
 This survey covered economic, social, governance and environmental
issues to trace out their relationship with business competitiveness
 It also covered issues related with shared prosperity, environmental
sustainability and management of risk
 Domestic issues concerning businesses during this volatile period are
also highlighted
 The WEF has collected data of 11800+ respondents of 121 economies during
2022
 However, it has postponed publishing the Global Competitiveness Report in
2022 5
 I. Introduction and Objectives

 Major objectives of the press briefing are-

 To report the state of the business environment of Bangladesh during
2021-22 in the backdrop of the easing of the COVID-19 pandemic;
 To compare Bangladesh’s performance of competitiveness with selected
Asian competing countries with a view to understand the gaps in
competitiveness during the post-pandemic period;
 To put forward suggestions for improvement in the business environment
from long term sustainability point of view.

6
II. Methodology

7
 II. Methodology
 The Executive Opinion Survey (EOS) covers the issues related to following
pillars:
(a) Infrastructure, (b) Safety & security, (c) Financial system,
(d) Trade & investment, (e) Competition, (f) Business operations,
governance & innovation, (g) Institutions, (h) Building human capital,
(i) Working & employment, and (j) Managing economic recovery &
risks
 A Rapid Assessment Survey has been conducted along with the Executive
Opinion Survey highlighting domestic issues concerning the businesses
 Number of respondents: 74 senior officials of different private
companies
 Location: Dhaka, Chattogram, Narayanganj, and Gazipur
 Survey period: April to July 2022
Survey Respondents
Sector-wise Number of Participants Factory Size Number of Factories

Agriculture 3 (4.11%) Large 39 (52.7%)

Manufacturing 37 (50.68%) Medium 14 (18.9%)

Services 33 (45.21%) Small & Micro 17 (23%)

8
Did not Response 1 (1.35%) Did not Response 4 (5.4%)
 II. Methodology

 Executive Opinion Survey (EOS) and Rapid Assessment

Survey (RAS) use qualitative data (7-point Likert scale)
 Negative responses (Scale: -3~-1)
 Indifferent responses (Scale: 0)
 Positive responses (Scale: 1~3)

 Analysis has been performed by employing three different statistical

techniques

 Frequency analysis (% of respondents)

 Weighted index (average weighted response)

 Chi-square test

9
 II. Methodology
• Radar diagram is used to figure out changes in the perception on
different issues between 2021 and 2022
Hypothetical Radar DiagramPresentation

-0.05

-0.28

-0.28
-0.39
-0.55

-0.90

-0.49 -0.88 0.08

0.11

-0.88

-0.35
-0.54
-0.07
0.00
0.09

2022 2021

10
 III. Key Features of
Bangladesh Business Environment 2022

11
 10.0
20.0
30.0
40.0
50.0
60.0
70.0

0.0
Corruption 64.6

Inadequate infrastructure
44.6
Limited access to financing
43.1

Inefficient government
43.1

bureaucracy

Inflation
38.5

Foreign currency instability

38.5

Policy instability
35.4

Complexity of tax regulations

26.2

High tax rates

24.6

Poor work ethic in the labor force

16.9

Inadequacy educated labor force

16.9

Government instability
16.9

Crime and theft

16.9
Most Problematic Factors for Doing Business in 2022

Poor public Health

15.4
III. Key Features of Bangladesh Business Environment 2022

12

Insufficient capacity to innovate

15.4
% of Total response 2022

Restrictive labor regulations

10.8
 10.0
30.0
50.0

20.0
40.0
60.0
80.0

0.0
70.0 64.6
Corruption

44.6
Inadequate infrastructure

43.1
Limited access to financing

% of Total response 2022

43.1

Inefficient government bureaucracy

38.5

Inflation
38.5

Foreign currency instability

35.4

Policy instability

% of Total response 2021

26.2

Complexity of tax regulations

24.6

High tax rates

16.9

Poor work ethic in the labor force

16.9
Previous Years

Inadequacy educated labor force

% of Total response 2020
16.9

Government instability
16.9

Crime and theft

15.4

Poor public Health

III. Key Features of Bangladesh Business Environment 2022

15.4

13

Insufficient capacity to innovate

Most Problematic Factors for Doing Business in 2022 Compared to

10.8

Restrictive labor regulations

 III. Key Features of Bangladesh Business Environment 2022

Most problematic factors for doing business in 2022 (Size-wise)

52.9

47.1 35.3
71.4 47.1 29.4
58.8 52.9

50
50 17.6 17.6
21.4 42.9 50
28.6 17.6
21.4 21.4 23.5 23.5 11.8 5.9
59 29.4
41 14.3 28.6 14.3 11.8
33.3 38.5 30.8 14.3 14.3
28.2 28.2 25.6 28.2 7.1
12.8 12.8 15.4 10.3 15.4 17.9 10.3

14
Large Medium Small & Micro
 III. Key Features of Bangladesh Business Environment 2022
 Some significant changes are observed in case of top problematic factors in doing
business during 2022
 Corruption has been topping the list in 2022 as it did in earlier years
 64.6% of respondents complained about high level of corruption as the major
problematic factor
 44.6% of respondents complained about inadequate infrastructure as the
second most problematic factor, whereas inefficient government bureaucracy
and limited access to finance placed third together
 The severity of these three problematic factors has reduced compared to the
previous years – it indicates that the businesses have also been suffering
from new arising factors (see slide 11)
 A new set of factors have emerged as important. These include inflation (38.5%)
followed by foreign currency instability (38.5%) and policy instability (35.4%)
 Given the uncertain business environment, businesses need comprehensive
policy support targeting the short-, medium- and long-term challenges
 Businessmen’s perception regarding high tax rate has further improved
 It is ranked the eighth important factor (24.6%), which was earlier ranked
fourth problematic factor
 A gradual reduction in top-tier tax rates may contribute to improving the
perception
15
 III. Key Features of Bangladesh Business Environment 2022
 In contrast, complexity of tax regulation is perceived as more problematic
(26.2%) than the high tax rate
 Perception regarding public health has been significantly improved (15.4%)
compared to the previous year
 This happened perhaps because of the decreasing Covid affected cases among
the working population
 The level of severity of problems is different for different categories of
enterprises (see slide 13)
 By and large, corruption severely affects all categories of businesses. 52.9%
of small and micro enterprises have considered corruption as the most
problematic factor, 71.4% of medium and 59% of large
 Medium enterprises marked limited access to finance, inadequate
infrastructure, policy instability, and government instability as bigger
problematic factors
 Small & micro enterprises are facing the pressure of inflation, instability of
foreign currency, and inefficient government bureaucracy
 Large enterprises found more problematic issues in case of inadequate
infrastructure, inefficient government bureaucracy and foreign currency
instability
 Hence, government needs to ensure customized policy support for different
categories of enterprises targeting diverse challenges 16
 III. Key Features of Bangladesh Business Environment 2022

 The top three economic risks for  The top three societal risks for
Bangladesh for upcoming years are- upcoming years are-
 Rapid & sustained inflation (25%)  Cost-of-living crisis (51%)
 Debt crisis (22%)  Employment and livelihood
 Severe commodity price shocks crisis (19%)
or volatility (22%)  Infectious diseases (8%)

ECONOMIC RISKS SOCIETAL RISKS

Asset bubble burst Cost of living crises

5% 6% 0%
10% 8% Employment and livelihood
22% Collapse of a crises
systemically Erosion of social cohesion and
important industry 8% wellbeing
Debt crises Infectious diseases
22%
6% 8% Widespread youth
Rapid and/or disilusionment
sustained inflation Severe mental health
10% deterioration
51%
Proliferation of illicit Collapse or lack of social
economic activity services and public
19% infrastructure
25% Large -scale involuntary
migration
17
In percentage
 III. Key Features of Bangladesh Business Environment 2022

 The top technological risks for  The top environmental risks this
Bangladesh this year are- year are-
 Digital inequality (36%)  Human-made environmental
 Failure of cybersecurity damage (29%)
measures (36%)  Natural disasters and extreme
weather events (21%)
Human-made
TECHNOLOGICAL RISK ENVIRONMENTAL RISKS environmental damage

Digital inequality Natural disasters and

extreme weather
events
3%
8% Failure of climate-
12% Failure of change adaptation
cybersecurity 9% 29%
measures Severe commodity
36% supply
16% Automation and
displacement of jobs 10%
Failure of climate-
change mitigation

Digital power Terrestrial biodiversity

concentyration and loss and
20% 21%
monopolies ecosystem collapse
36%
Blue(marine/freshwat
er) biodiversity
loss and ecosystem
In percentage collapse)
18
IV. Bangladesh’s Performance under Different
Pillars: Detailed Analysis

19
 IV.1 Institution
Somewhat disagree that effective 2022 2021
regulation protects personal data
held by private companies
(58.9%→51.4%)
Largly disagree that are taxes:
Intellectual property is somewhat
Addressing environmental
not protected (61.6% → 59.7% )
degradation (69.1%→38%)

Somewhat disagree that taxes: -0.54 Bribes are somewhat common in

Addressing inequality in your connection with the Imports-
society (57.1%→62%) -0.68 exports (74.6% → 71.4%)
-1.03 -0.30
-0.94
Somewhat disagree that the taxes: Bribes are largely common in
Easy to comply with -0.76 -1.01 connection with the Public
(59.7%→61.1) utilities (61.6% → 49.3%)
-1.19
-0.73 -1.27
-1.09
Somewhat disagree that the
Bribes are largely common in
government serve the interest of
connection with Tax payments
everyone equitably
(58.9% →47.8% )
(51.4%→57.5%)
0.06
Govt. have a long-term vision in Bribes are largely common in the
place to some extent ( 53.4% awarding of public contracts and
→31%) licenses (63% → 54.3%)
Bribes are largely common in
obtaining favorable judicial
decisions (55.6% →47.1 %)

20
 IV.1 Institutions

2022 2021
Somewhat disagree that the govt.
respond effectively to change (42.3%
→44.4% )

Corporate ethics of companies are

-0.18 Legal and judicial systems for
companies in settling disputes are
somewhat poor (61.6% → 61.7%)
somewhat inefficient (58.3%…

-0.75 -0.71
Largly agreed that private businesses
Illegal diversion of public fund is
to challenge govt. actions/ regulations
somewhat common (63% → 65.3%)
through legal system is difficult…
-0.96
-1.33

Somewhat agreed that the judicial -0.90 Somewhat disagree that the govt.
-0.41
system is not independent from -1.07 ensure a stable policy environment
influences (69.9% → 62.5%) for doing business (41.1% →49.3% )

Somewhat agree that the property -0.62

0.04 Ethical standards of politicians are
rights, including financial assets
largely low (68.5% →67.6% )
protected (40.3% →64.4%)
Somewhat burdensome for
companies to comply with the public
administration's requirements…

21
 IV.1 Institutions
 Weak institutions are the most challenging components for doing business in
Bangladesh
 Improvement of institutions is sluggish and most importantly, their
performance has deteriorated during 2022
 Public entities dealing with taxes, licenses, public utilities, judicial system, export,
and import have poorly performed during the year 2022
 Fiscal instrument do not necessarily meet the need of the people, businesses
and society
 There is an increase in the use of bribes in connection with tax payment (-
1.19; 47.8%); and licenses (-1.27, 54.3%); public utilities (-1.01, 49.3%); and
largely common in obtaining favorable judicial decisions ( -1.09, 47.1 %)
 Tax structure needs major revision focusing on the equity of different categories
of people as performance indicators related to tax are poor and deteriorating
 Weak performance in serving people equally (-0.73; 51.4%); could not address
inequality (-0.94; 57.1%) and it was difficult to comply with tax obligations (-
0.76; 59.7%)
 Perception regarding the use of bribes in export and import trade (-0.3;
74.6%) has lessened perhaps due to gradual rise of practices of digital
payment system
 Businessmen over the years positively acknowledged the government’s long-term
vision for economic development which has continued in 2022 (0.06, 31%)
 The perception level has improved which is due to business-focused public 22
policies and their implementation over the years
 IV.1 Institutions
 Majority of institution-related indicators are showing further negative
results during 2022 survey
 For example, the government is less responsive to changes (-0.18;
44.4%); private businesses’ less ability to challenge government
decisions (-1.33; 74%) and poor corporate ethics (-0.67; 61.7%)
 Some marginal improvement in perception (though below the average
level) was observed during 2022 compared to that in 2021
 For example, protection of property rights (0.04%, 64.4%)
independence of judiciary (-0.9; 62.5%) and ethical standard of
politicians (-1.07; 67.6%)
 Businesses further struggling in a poor governance situation in number of
public entities
 This is reflected in the lack of ability to ensure a stable policy
environment (-0.41; 49.3%); illegal diversion of public funds (-0.96,
65.3); burdensome public administration’s compliance (-0.62;
57.5%) and inefficient legal & judicial system to settling dispute(-
0.71; 56.2)
 Such inefficiencies and weaknesses made a severe adverse impact for
businesses particularly on SMEs
23
 IV.1 Institution
Cross Country Comparison of Quality of Public Institutions
6.0 5.6
4.9
5.0
4.4 4.2
3.9 3.9 3.8
4.0 3.4
3.1
3.0 2.7

2.0

1.0

0.0
Bangladesh India China Vietnam Thailand
Government's responsiveness to change Efficiency of legal framework in settling disputes
Ethical behavior of firms Government ensuring policy stability
Ethical behaviour of politicians Ease of compliance with government regulation
Property rights Judicial independence
Diversion of public funds Efficiency of legal framework in challenging regulations
Personal data protection Intellectual property protection
Irregular payments in exports and imports Irregular payments in public utilities
Irregular payments in tax collection Irregular payments in public contracts
Irregular payments in judicial decisions Government long-term vision
Government acts in the interest of all individuals Ease of complying to tax system
Tax system addressing inequality your society Tax system addressing environmental degradation
Venture capital availability

• Bangladesh’s institution related indicators in most cases are behind those of

comparable countries of Asia
• Perception on ‘government long term vision’ is to a large extent positively
acknowledged by businesses where it is found to be better in Bangladesh
compared to that in Thailand
• Perception on irregular payments in exports and imports is the weakest
part in case of Bangladesh compared to those of competing countries 24
 IV.2 Infrastructure

Quality of Road infrastructure is

somewhat poor (32.9%⤍44.6%) 2022 2021

Somewhat agree that the town -0.28 The Train services are somewhat
and city centres are overcrowded
inefficient (48.6% ⤍56.8 )
(67.1%⤍71.6)
-0.28

Somewhat agree that the

-0.55 0.08
government does not fund and The Air transport services are
subsidize investment in green -0.88 somewhat efficient (42.9% ⤍
and sustainable energy and 32.4)
infrastructure (55.7%⤍68.5)
-0.88
-0.35

Somewhat agree that the water The Seaport services are

supply is reliable (27.4% ⤍ 0.09 somewhat inefficient (42.3% ⤍
44.6%) 49.3)

Somewhat agree that the Public

transport services are inefficient
(54.2% ⤍61.7%)

25
 IV.2 Infrastructure
Somewhat agree that digital
platforms not at all used to
provide Healthcare Services
(52.7%)

Somewhat agree that digital Somewhat agree that digital

platforms not at all used to platforms are used to provide
provide Transportation, Education to a great extent
mobility and logistics (46%) 0.23 (43.8%)
-0.49
-0.48

Somewhat agree that digital

platforms are used to provide 0.11 Somewhat agree that digital
Professional services platforms are used to provide
including technical support Financial Services to a great
0.66
services to a great extent extent (63%)
(56%)
0.37

Somewhat agree that digital

platforms are used to provide
Hotel, Restaurants and Leisure
Services to a great extent
(52%) 26
 IV.2 Infrastructure
 Performance of majority of infrastructure-related facilities is perceived to be below the average
level compared to that in 2021
 Key indicators have performed weakly during 2022 and those have deteriorated
 For example, poor quality of road infrastructure (-0.28; 44.6%); less efficiency in train
services (-0.55; 56.8%); inefficient seaport services (-0.35; 49.3%) and poor public
transport services (0.88 ; 61.7%)
 Despite major public investments in key infrastructures related to road, rail and seaport,
performance of those facilities is still perceived to be poor.
 It is important improve the efficiency of these infrastructures and related logistic facilities
 Some of the recent developments in infrastructure projects (e.g. Padma bridge, Metro-rail
in Dhaka city and Karnaphuly tunnel in Chittagong) would contribute to improve road/rail
connectivity within the country
 A considerable progress in water supply is mentioned by businessmen (0.09; 44.6%)
 Perhaps this is because of improvement in water supply infrastructure in major cities;
however, quality of supplied water is still a major area of concern
 Bangladesh is lagging behind in developing green cities and clean energy based infrastructure
 Even though the Central Bank introduced green financing and draft IEPMP promotes
clean energy, the perception on public funding for green energy and infrastructure has
further declined (-0.88; 68.5%)
 The perception on overcrowding of city centers seems to be marginally improved (-0.28;
71.6%); further improvement in city-traffic would help reduce the pressure on a single city
like Dhaka/Chittagong
 The government with the support of development partners should make substantial investment
towards developing green cities, clean energy based power and energy system, better urban waste
management system and reduced industrial pollution mechanism etc. 27
 IV.2 Infrastructure
 Bangladesh climbed up 27 notches to rank 76th in the world in the digital
wellbeing thanks to the country's performance in internet affordability, security
and quality, according to the Digital Quality of Life (DQL) Index 2022. (The
Business Standard, 2022)
 Positive performance observed in case of facilitating financial services
(0.66; 63%); hotel, restaurant and leisure services (0.37; 63%); education
services (-0.23; 43.8%) and professional services including technical support
(0.11, 56%)
 However, there is still lack of digital service activities in health care services
(-0.49, 52.7%) and in providing transportation, mobility and logistics (-0.48,
46%)
 According to the DQL report, Bangladesh has significantly improved in four of
the five indicators this year except for the electronic government pillar, where
its position is unchanged
 A report of the Bangladesh Telecommunication and Regulatory Commission’s
(BTRC, 2022) confirmed that the number of mobile subscribers are 181.67
million in October 2022
 However, till April 2022, 114 million people, or more than two-thirds (67.9
percent) of the population, are still without access to the internet
(DATAREPORTAL)
28
 IV.2 Infrastructure
Cross country Comparison on Quality of Infrastructure
7.0
6.0 5.3 5.4 5.3
5.0
5.0 4.6 4.5 4.4 4.7
3.9
4.0
3.0
3.0
2.0
1.0
0.0
Bangladesh India China Vietnam Thailand

Quality of road infrastructure Efficiency of train services

Efficiency of air transport services Efficiency of seaport services
Efficiency of public transport Reliability of water supply
Investment in green energy and infrastructure Quality of town and city centers
Use of digital platforms for providing professional services including technology support Use of digital platform for providing Hotels, restaurants and leisure activities services
Use of digital platform for providing Education services Use of digital platform for providing Financial services
Recovery plan Use of digital platforms for providing care and healthcare services
Use of digital platforms for providing transportation, mobility and logistics

 Among the comparable countries, Bangladesh is behind in most of the

infrastructure related indicators
 The performance is relatively better in case of using digital platforms for
providing financial services
 The performance is poorer in case of quality of town and city centers
29
 IV.3 Safety and Security

Somewhat agree that the costs

2022 2021
impose on businesses for
climate change
(56.5%→57.5%)

Somewhat agree that the

Somewhat disagree that police -0.63 organized crime such as Mafia
services be relied upon to
oriented racketeering impose
efficiently enforce law and
huge costs on businesses
order (57.5% →65.65%)
(42.3% → 43.1%)
-0.89 -0.36

-0.57

Somewhat agree that the Somewhat agree that the

wide-scale social and political incidence of crime and
unrest impose costs on violence impose huge costs on
businesses (19.2%→36.11) -0.04 businesses ( 49.3% →55.56%)

30
 IV.3 Safety and Security
 Businessmen’s perception regarding safety and security has been significantly
deteriorated in 2022 compared to that in 2021
 This is reflected in case of the perception on organized crime such as mafia-
oriented racketeering (-0.36; 43.1%) and crime and violence (-0.57, 55.56%)
 57.5% respondents observed that climate changes are somewhat rose cost of doing
business (-0.63)
 These are causing rise in higher demand for jobs in city areas, pressure on
urban city services and rise in informal economic activities due to rise in climate
displaced migrants in urban areas/city centres
 Businessmen are being concerned about quality of services of law enforcement
agencies
 65.7% of businessmen perceived that police services are yet to be relied upon to
enforce law and order efficiently (-0.89)
 In recent times the poor quality of services of the law enforcement agencies
created a perception where it failed to assure basic human rights of people
 These agencies need to invest more for improvement in the quality of services
 Perception on social and political unrest has further declined (-0.04; 36.1%) this
year which is a major concern for business environment in the country
 Bangladesh has ranked 127th out of 140 nations on the World Justice
Project’s Rule of Law Index 2022. According to the RoL Index 2022, Bangladesh
has dropped two points from last year 31
 IV.3 Safety and Security
Cross Country Comparison on Quality of Safety and Security
7.0

6.0

5.0
5.0
4.3 4.2 4.2
4.0 4.0 3.9
4.0
3.5 3.5
3.0
3.0

2.0

1.0

0.0
Bangladesh India China Vietnam Thailand
Business costs of climate change Business costs of wide-scale social and political unrest
Business costs of crime and violence Business costs of Organized crime
Adequate protection for the environment and nature Adequate protection for cultural heritage
Reliability of police services

 Among the selected competing countries, Bangladesh’s performance is poorer

in case of lack of protection for the environment and nature and reliability of
police services
 Bangladesh’s performance is relatively better in case of costs due to wide
scale social and political unrest 32
 IV.4 Financial System
Somewhat agree that the
soundness of banks is
extremely low(19.4%
→41.1%) 2022 2021
-0.09

It is largely difficult for

SMEs have somewhat
start-up entrepreneurs to
poor access to finance -0.27 -1.34
obtain equity funding
(52.1% →45.9 )
(70.8% ⤍ 51.4%)

-0.32

Financial auditing and

reporting standards are
somewhat weak (41.1%
→ 49.3%) 33
 IV.4 Financial System
 Financial sector is somewhat worsened after the pandemic – most of the indicators are
showing lower score than year 2021
 Overall level of performance of the financial sector has remained in the negative
indicating a struggling situation as in previous years
 According the respondent, negative perception is observed in case of the
soundness of banks (-0.09; 41.9%); accessing start-up capital (-1.34; 51.4%)
and financial and auditing reporting standards (-0.32; 49.3%)
 45.9% of businessmen indicated that SMEs are facing difficulty in obtaining funding
from the financial sector (-0.27; 45.9%) and the progress is rather slow compared to
other financial market indicators
 According to World Bank, there is a $2.8 billion investment deficit in the SME
sector.
 Capping the interest rate is a major barrier for SMEs to avail necessary credit
from the banks; government should withdraw interest rate cap on lending rates
 Further enhancement of credit support and innovating financial tools are
needed for ensuring access to credit to SMEs
 The capital market has been struggling in building confidence among the investors
 Major challenges of the capital market include poor-quality IPOs (56.3%),
weak regulatory enforcement role of SEC (53.1%), anomalies in financial
reporting (50%) and suspicious trading in the secondary market (50%)
 Other issues include – questionable role of institutional investors, lack of
transparency in BO accounts, failure to ensure due diligence of DSE/CSE 34
 IV.4 Financial System
BU SINE SSM E N PE RCE PTIO N O N BANKING SECTO R AND CAPITAL M ARKE T
In percentage
2022 2021

56.3
53.1
41.9

50

50
36.5
34.4

33.8

31.1

29.7
28.4

23.4
21.6
23
WEAK REGULATORY QUESTIONABLE SUSPICIOUS POOR QUALITY ANOMALIES IN LACK OF DUE LACK OF
AND ENFORCEMENT ROLE OF TRADING IN THE IPOS FINANCIAL DILIGENCE OF TRANSPARENCY IN
ROLE OF SEC INSTITUTIONAL SECONDARY REPORTING DSE/CSE BO ACCOUNTS
INVESTORS MARKET

 Non-performing loans soared to a new high at Tk 1.34 trillion at the end of

September, 2022. The amount is 9.36 per cent of the total outstanding loans in
the banking sector (The Financial Express).
 According to Bangladesh Bank data, 32 banks held more than Tk 1,000 crore
in defaulted loans each and six of them accounted for more than Tk 5,000
crore in classified loans each
 Assessing the defaulted loan following international standard would
reveal much higher level of outstanding loan in the banking sector
 Government has made commitments to improve the governance of the banking
sector as part of the meeting the ‘structural conditionality’ of availing IMF loan
(Daily Star, 2023). These conditionality include
 Improvement of governance in the financial sector
 Amendments of the Bank Company Act
 Setting up an asset management company to dispose of soured loans 35
 IV.4 Financial System
Cross Country Comparison on Quality of Financial System
6.0 5.6 5.6

5.0
5.0 4.8
4.5
4.3
4.0 3.9
4.0 3.7 3.8

3.0

2.0

1.0

0.0

Bangladesh India China Vietnam Thailand

Soundness of banks Strength of auditing and accounting standards

Financing of SMEs Distortive effect of taxes and subsidies on competition

 Bangladesh’s performance on quality of financial services is relatively good

compared to that in India.
 However, it is still behind compared to other competing countries (e.g.
China, Vietnam, Thailand)
36
 IV.5 Trade and Investment
Somewhat agree that non-
tariff barriers do not limit 2022 2021
domestic competition
(35.3% → 17.8)

0.08

Largely agree that the

foreign visitors (tourists and
FDI rules and regulations
business travellers) are
-1.15 are somewhat relaxed
heavily concentrated in a
(55.6% → 56.9)
few destinations 0.63
(66.7%→52.8)

0.69
Somewhat expects supply
chains to be more globalized
( 64.8% →62.2)
37
 IV.5 Trade and Investment
 Trade and investment related issues did not improve during 2022 after the
pandemic
 Non-tariff barriers have somewhat limiting impact on the competition in the
domestic market (0.08; 17.8%)
 Rules and regulations related to foreign direct investment (FDI) remain at the
same level (0.63; 56.9%) for three consecutive year - further initiatives are
required to attract more FDI with regard to tax, infrastructure, skilled manpower
 Despite various initiatives, FDI inflow remains at low level ($2.2 billion in FY22)
 Lack of proper infrastructure, limited functionality of one stop service
facilities, weak financial reporting of local companies etc. are considered as
drawbacks for attracting FDI in the country.
 62.2% businessmen have the view that supply chains has somewhat been
globalized (0.69, 62.2%) ;
 More open global supply chains on different products would lead to rise in trade
and in diversified export products with diversified markets
 Attracting more foreign visitors could improve the business environment of the
country
 However, 52.8% entrepreneurs noticed that foreign visitors/tourists are not so
much interested to move in different places and is highly concentrated in only
few destinations (-1.15; 52.8%)
 Such a perception is not helpful in improving network with foreign visitors38in the
country
 IV.5 Trade and Investment
Cross Country Comparison on Quality of Trade and Investment Indicators
6.0
5.5 5.4
5.2 5.1
5.0 4.8
4.4 4.4
4.0 3.8
4.0

3.0
3.0

2.0

1.0

0.0
Bangladesh India China Vietnam Thailand

Prevalence of non-tariff barriers Impact of rules on FDI

Evolution of supply chains Geographically dispersed tourism

 Bangladesh and India are at the same level with regard to trade and
investment related preparedness
 Bangladesh is better in terms of supply chain management issues
39
 IV.6 Competition
Somewhat agreed corporate
activities are dominated by
2022 2021
a few business groups
(65.8%% → 69.4%)

Somewhat agree that

Well-developed and deep
Individuals are not able to
clusters are somewhat
move their data and records -0.89 -0.18 nonexistent (46.4% →
easily between firms -0.35
46.6%)
(46.6%→55.6%)

-0.41
Somewhat agree that new -0.19 To some extent fiscal
companies with innovative measures distort
ideas not at all grow rapidly competition (48.6% →
(46.5% → 56.8%) 43.8%)

40
 IV.6 Competition
Buyers somewhat make
purchasing decisions
based on product
performance (57.5% →
67.6%)
0.81

Buyers somewhat not

Buyers somewhat not
make purchasing decisions
make purchasing decisions
based on company
based on product impact
commitment to diversity,
on the environment and
equity and inclusion -0.77 -0.96 nature (53.4%→ 59.2%)
(54.9%→ 59.2%)

-0.44 -0.43
Buyers somewhat not Buyers somewhat not
make purchasing decisions make purchasing decisions
based on company based on product impact
commitment to decent on health, mental health
work standards and wages and well-being (50.7%→
(53.4→ 48.6%) 44.3)

41
2022 2021
 IV.6 Competition
 There is further deterioration in competitiveness of business environment in 2022
compared to the previous year (2021)
 Perception regarding the overall competitive environment is below the minimum
average level
 Entrepreneurs still considered that the corporate businesses are dominated by the
few groups of companies as like previous time (-0.89; 69.4% in 2022 and -0.74;
65.8% in 2021)
 The Competition Commission needs to be proactive to monitor the activities of the
‘dominant market players’ in different sectors – who are likely to make an adverse
impact on the market
 43.8% of respondents mentioned that fiscal measures distort competition to some
extent (-0.19, 43.8%); more target oriented measures promoting diversification in
investment, products and markets are needed. These measures need to be
reviewed on a regular basis
 The situation have grown worse in case of innovative ideas. 56.8% of businessmen
indicated that new companies with innovative ideas have not been growing (-0.41)
 It has worsened from the the pre-covid level (-0.25; in 2019)
 Entrepreneurs perceived that most of the fiscal measures (subsidies, tax breaks, etc.) do
not at all support SME growth and the emergence of new entrants (-0.07, 47.23%)
 Although the situation has improved, but 46.6% entrepreneurs mentioned that well-
developed and deep clusters remained at poor state (-0.18; 46.6%) 42
 IV.6 Competition
 Buyers' decision in the market is not necessarily taken place based on their
competitive behaviour
 Buyers' choice regarding products has improved - about 67.6% buyers fairly
make their purchasing decision based on product quality aside from product
price (0.81)
 On the other hand, 48.6% buyers somewhat do not consider company
commitment to decent work standards and wages (-0.44, 48.6) but the
severity is lessen compared to the previous year
 The perception has worsened in case of buyer’s purchasing decision based on
product’s impact on health, environment and diversity issues
 44.3% buyers somewhat do not consider product impact on health, mental
health and well-being (-0.43, 44.3%) ;
 59.2% buyers somewhat not considered product impact on the environment
and nature (-0.96, 59.2%);
 59.2% buyers do not make purchasing decisions based on somewhat company
commitment to diversity, equity and inclusion (-0.77, 59.2%)
 Finally, the respondents indicated that individuals can not share any information or
data between the firms (-0.35; 55.6%)
 It has also been observed that the company's information or data is restricted
for public dissemination
43
 IV.6 Competition
Cross Country Comparison on Quality of Competition
6.0
5.2 5.3 5.1 5.3
4.9
5.0 4.6
4.2
4.0 3.8
3.2 3.3
3.0

2.0

1.0

0.0
Bangladesh India China Vietnam Thailandd

Buyer sophistication on product performance Buyer sophistication on environment and nature

Buyer sophistication on product impact on health, mental health and wellbeing Buyer sophistication on company commitment to decent work standards and wages

Buyer sophistication on company commitment to diversity, equity and inclusion Extent of market dominance

State of cluster development SME effect of taxes and subsidies on competition

Companies embracing disruptive ideas Data portability between firms

Growth of innovative companies

 Bangladesh’s performance is exceptionally good and close to most of the

competitive countries in case of buyer’s satisfaction on product performance
 In none other indicator the country is near to competing countries
 It is relatively behind in case of extent of market dominance issues 44
 IV.7 Business Operations, Governance and Innovation

Somewhat relatives or 2022 2021

friends hold senior
management positions in
companies (41.1% →
50%)
Somewhat disagree that
Senior management
companies participate in -0.31
delegate authority to
mutually beneficial
subordinates is somewhat
collaboration on R&D
0.01 high (35.6% →39.7% )
(69.4%→67.1)

-0.85
Somewhat agree that
Somewhat disagree that
-0.03 companies nurture an
businesses and
internal culture of open
universities collaborate on 0.04collaboration (46.6% →
R&D (74% →42.5% )
37%)

People somewhat move to

other parts of the country 0.07 -0.28 Somewhat disagree that
companies embrace risky
to pursue professional
or disruptive business
opportunities (47.9%
ideas (52.1% → 45.8%)
→57.5% )
0.04
Somewhat agree that there
is a culture of taking risks
45
to pursue entrepreneurial
IV.7 Business Operations, Governance and Innovation

Somewhat agree that companies give 2022 2021

equal workforce opportunities to Women
(39.7%→26.02%)
Largly disagree that companies give equal 0.26 Somewhat agree that companies give
opportunities to rise to positions of equal workforce opportunities to those
leadership to those who identify as LGBTI 0.29from a typically disadvantaged religious,
(75%→76.1%) ethnic or racial background…

Somewhat disagree that companies give

Somewhat agree that companies give
equal opportunities to rise to positions of
equal workforce opportunities to born to
leadership to those with disabilities -1.54 0.13 low-income parents (39.7%→27.14%)
(67.1%→32.9%)
-0.99

Somewhat agree that companies give -0.74 Somewhat disagree that companies give
equal opportunities to rise to positions of 0.01 equal workforce opportunities to those
leadership to low-income parents -1.27 with disabilities (66.2%→61.44)%
(39.7%→22.2%)

Somewhat agree that companies give

0.51 Largly disagree that companies give equal
equal opportunities to rise to positions of
workforce opportunities to those who
leadership to those from a typically 0.03 identify as LGBTI (70.8%→62.5%)
disadvantaged religious, ethnic, or racial…
Somewhat agree that companies give
equal opportunities to rise to positions of
leadership Women (43.84%→17.6%)

46
IV.7 Business Operations, Governance and Innovation

Somewhat disagree that

companies account for the
impact of their own local 2022 2021
production facilities on
Environment and nature
(57.7%→56.17%)

Somewhat disagree that Somewhat disagree that

companies account for the companies account for the
impact of their own local -0.56 impact of their own local
production facilities on production facilities on Health,
Diversity, equity and inclusion -0.56 -0.54 mental health and well-being
(59.4%-54%) (60%-52.11%)

Somewhat disagree that -0.39 Somewhat disagree that

companies account for the -0.32 companies account for the
impact of their own local impact of their own local
production facilities on Decent production facilities on
work standards and wages Provision of reskilling and
(49.3%→50%) upskilling (54.9%→50%)

47
 IV.7 Business Operations, Governance and Innovation
 A considerable improvement is observed in case of performance of business
operations during 2022 though government related issues are remained at low level
 Better performance in business operations are observed in cases where
companies somewhat nurture an internal culture of open collaboration (0.04,
37%); management somewhat delegating authority to the subordinates (0.01;
39.7%) companies somewhat embracing risky or disruptive business ideas (-0.28;
45.8%); companies taking risks to pursue entrepreneurial projects (0.04, 40.3% )
 Corporatization in management practices is highly important. Companies
should maintain a business continuity plan to avert systemic and operational
risks
 The business culture is somewhat changed positively compared to previous year though
at low level in the following indicators-
 Businesses and universities somewhat now collaborate on R&D (-0.03, 42.5%);,
companies somewhat participate in mutually beneficial collaboration on R&D (-
0.85, 67.1%)
 However, perception is deteriorated in some of the cases
 About 50% respondents replied that relatives and friends without having
necessary merit holding senior management position (-0.31; 50%)
 This indicates lack of professionalism in the corporate sector of Bangladesh
 A number of new indicators are added in the EOS 2022. However performance is poor
on those indicators
 Public reporting of companies on various issues are somewhat poor - public
reporting on environment (-0.7, 56.2%), social (-0.63, 58.3%) and governmental
48
(-0.38, 51.4%) issues
 IV.7 Business Operations, Governance and Innovation

 Marginal but positive changes is observed in developing inclusive workplace

environment
 Companies somewhat giving equal workforce opportunities to woman
(0.26, 26.02%), opportunities to rise to positions of leadership to those
from a typically disadvantaged religious, ethnic, or racial (0.51, 30.1%);
those with disabilities (-0.99, 61.4%) except those who identify as LGBTI
(-1.54, 76.1%)
 There is a decline in perception on companies give equal opportunities to
rise to positions of leadership Women (0.03, 17.6%)
 Bangladesh ranked 71st out of 146 countries on the Global Gender Gap Index
2022 with a score of 0.714.
 Women in Bangladesh saw a decline in overall gender parity in 2022
from 2021 when Bangladesh ranked 65th
 Curiously for people who born to low-income parents there is a decline in
both aspect of giving equal workforce opportunities (39.7%→27.1%) and equal
opportunities to rise to positions of leadership

49
 IV.7 Business Operations, Governance and Innovation
Cross Country Comparison on Business Operations, Governance And Innovation Issues
6.0 5.3 5.1
4.9
5.0 4.7
4.3 4.2 4.4
4.0 3.5 3.4

3.0 2.4
2.0
1.0
0.0
Bangladesh India China Vietnam Thailand
Reliance on professional management Willingness to delegate authority
Collaboration within a company Internal labour mobility
Companies adaption to crisis Attitudes towards entrepreneurial risk
University-industry collaboration in R&D Collaboration between companies
Inclusion of women in workforce Inclusion of all religious, ethnic or racial backgrounds in the workforce
Inclusion of those from low-income backgrounds in the workforce Inclusion of those with disabilities in the workforce
Inclusion of those who identify as LGBTQI+ in the workforce Inclusion of Those from a typically disadvantaged religious, ethnic or racial background in the leadership
Inclusion of Those born to low-income parents in the leadership Inclusion of Those with disabilities in the leadership
Inclusion of Those who identify as LGBTI in the leadership Inclusion of women in leadership
Public reporting of environmental, social and governance metrics: Environmental impact Public reporting of environmental, social and governance metrics: Social impact
Public reporting of environmental, social and governance metrics: Governance Oversight of production impact on The environment and nature
Oversight of production impact on Health, mental health and wellbeing Oversight of production impact on Provision of reskilling and upskilling
Oversight of production impact on Decent work standards and wages Oversight of production impact on Diversity, equity and inclusion

 Bangladesh is behind in almost all indicators related to business operation and

governance compared to other comparable countries
 It’s performance is relatively better in cases of inclusion of disadvantaged
peoples in working opportunities
 It’s performance is poorer in case of opportunities to LGBTQ people
50
 IV.8 Building Human Capital
2022 2021
Somewhat disagree that primary
education system meet the needs
of a competitive economy (55.6%
→58.3 %)
Somewhat disagree that current Somewhat disagree that
education system meet the Maths secondary non-vocational
and sciences skills needs of a education system meets the
competitive economy… needs of a competitive economy…
-0.34
-0.67

Somewhat disagree that current -0.79 Somewhat disagree that

education system meet the -0.21 -0.21 Vocational education system
Digital and technology skills meet the needs of a competitive
needs of a competitive economy… economy (40.3%→50%)

-0.94
-0.56
Somewhat disagree that current -0.77 -0.30 Somewhat disagree that the
education system meet tertiary education system meets
theCollaboration and self- the needs of a competitive
management skills needs of a… economy (51.4%→49.3%)
Somewhat disagree that current Somewhat disagree that the
education system meet the current education system meets
Innovation and creativity skills the Global citizenship and civic
needs of a competitive economy… responsibility skills needs of a…

51
 IV.8 Building Human
Somewhat disagree that the Capital
education system meet the
needs of a competitive
economy (59.7% ⤍ 61.7%)

-0.68

2022 2021
Companies perceive human Companies somewhat do not
capital expenditure to invest in training and
somewhat to minimize cost
-0.58 -0.52 employee development
(60%→62.5 ) (62.5% → 67.1)

-0.70

Somewhat disagree that

government invest in mid-
career reskilling and
upskilling opportunities
(69.4%→57.2)

52
 IV.8 Building Human Capital
 Business perception regarding human capital is rather limited
 Entrepreneurs have agreed that the current education system is still behind in
complying with the needs of the competitive economy (-0.68; 61.7%). A number
of factors are found to be improved when compared to the pre-pandemic period
 58.3% of respondents somewhat agree that primary education still lags
behind in meeting the needs of a competitive economy (-0.67)
 67.1% of respondents perceived that companies are not investing enough
in the training and development of the employees (-0.52) and 62.5% of
respondents have the opinion that companies invest on human capital
expenditure to minimize costs (-0.58)
 Further decline is observed in the basic level of education and human
resource development
 Moderate improvement has been seen in tertiary education and professional
skill development though it still belongs in the negative zone
 49.3% of respondents perceived that tertiary education system somewhat
did not meet the needs of the competitive economy (-0.30). Challenges are
observed in the case of vocational education (-0.21; 50%); non-
vocational education (-0.79; 66.7%)
 Curriculum development, improvement of teacher’s skill and quality,
orientation with international skill development system, standardization of
national skills under NSQF, more public investment on vocational and non-
vocational institutes are highly essential. 53
 IV.8 Building Human Capital
 In terms of skill development, significant improvement is required in the
number of indicators
 The system is yet to meet the digital and technological skill needs of the
country (-0.21; 43.7%)
 It is somewhat not meeting the innovation and creativity skills (-0.74;
58.3%) or the collaboration and self-management skills needs (-0.71;
59.7%)
 Current education system is still not meeting the global citizenship and
civic responsibility skills needs of a competitive economy (-0.77; 59.2%)
 The government is not investing enough in the mid-career reskilling and
upskilling opportunities (-0.70, 57.2%)
 The current education and skill development systems are not conducive to
creating human capital that can meet the needs of digital technologies,
creativity skills and self-management skills, etc.
 Government intends to move from ‘Digital’ to ‘Smart’ Bangladesh by 2041
through building necessary infrastructure and institutions (e.g., smart
government, smart citizen, smart economy and smart society)
 However, it is important to review of various initiatives undertaken for ‘Digital
Economy’ development with a view to better understand their achievements
and weaknesses
 Such review will help deciding the ‘Smart’ Bangladesh related activities54
 IV.8 Building Human Capital
6.0 Cross Country Comparison on Quality of Human Capital
5.2
4.8
5.0 4.5
4.5
4.0
3.9 3.7
4.0
3.4 3.4
3.1
3.0

2.0

1.0

0.0
Bangladesh India China Vietnam Thailand

Quality of the educational system Quality of primary education

Quality of secondary education Quality of vocational training

Quality of tertiary education Educational system to teach skills for global citizenship and civic responsibility

Educational system to teach innovation and creativity skills Educational system to teach collaboration and self-management skills

Educational system to teach digital and technological skills Educational system to teach maths and sciences skills

Extent of staff training Country investment in mid-career training

Companies´ perception of human capital spending

 Bangladesh is behind in human capital development compared to other

competing countries
 Its performance is relatively better in case of education system to teach
digital and technological skills
 It is behind most in case of global citizenship and civic responsibility
55
 IV.9 Working and Employment

2022 2021
Regulations related to the hiring of
foreign labor are somewhat not
restrictive (41.4% → 18.1%)
Somewhat agree that companies
Labour-employer relations are
find people in the local labour
somewhat cooperative ( 34.7%
market with the skills required to
→25%) 0.38fill their vacancies (41.7% → 29.2%)
0.08
0.17
Somewhat difficult for companies
The online labour platforms made
find people by hiring foreign labour
somewhat improve working
with the skills required to fill their
conditions (41.5→19.4%)
0.03 vacancies (36.9%→41.8)
-0.31

Somewhat disagree that female and -0.77

-0.21 Average pay is somewhat not reflect
male workers take equal time off to
to employee productivity (52.8% →
care for children and the elderly
-0.56 45.8%)
(66.2→60.6%)

Somewhat disagree that companies Somewhat agree that wages are

offer flexible working arrangements equal between low-paid workers
0.01
such as remote and part time work 0.71and high-paid workers
(55.6→54.9%) (58.3%→32.9%)
0.29
Regulations are somewhat allow For similar work, wages for women
flexible hiring and firing of workers somewhat equal to those of men
(42.9% ⤍ 22.2%) (40.3% → 23.9%)

56
 IV.9 Working
Somewhat and Employment
agree that members
of the population have sufficient
access to the Childcare and pre-
primary education
(53.4%→24.3%)
Somewhat agree that have 0.09
Somewhat 2022
disagree that 2021
all
opportunity to improve
members of the population have
individuals economic situation 0.17
sufficient access to the Eldercare
through personal efforts (39.4%
(71.2%→64.8%)
→19.7 )

Largly disagree that all members -0.99

Somewhat agree that all
of the population have sufficient -0.12 members of the population have
access to the Unemployment
sufficient access to the Education
income, training and re-
-1.42 (45.8%→48.5%)
employment support…

-0.44 -1.30
Somewhat disagree that all -0.30 Somewhat disagree that all
members of the population have members of the population have
sufficient access to the Public sufficient access to the Housing
transportation (43.1%→50.7%) -0.44
(65.3%→66.2%)

Somewhat disagree that all Largly disagree that all members

members of the population have of the population have sufficient
sufficient access to the Physical access to the Mental healthcare
healthcare (48.6%→50.7%) (72.2%→52.1%)

57
 IV.9 Working and Employment
 Working and employment have experienced mixed trends during the post-covid period
 A number of indicators have experienced positive changes in 2022 - companies
somewhat find people with skills required to fill their vacancies (0.38; 29.2%),
regulation related to hiring and firing of workers (0.29, 22.2%), improved online
platform (0.03, 19.4%), somewhat sufficient childcare and pre-primary education
(0.09, 24.3%), a better opportunity to economic situation through personal effort
( 0.17, 19.7%)
 25% mentioned that labour-employer relations are somewhat cooperative, and it
has improved (0.17) – reflecting a better interaction, discussion and negotiation
happened during the pandemic period
 Performance deteriorated in case of a number of indicators including-
 Somewhat difficulties in hiring foreign workers (-0.31, 41.8%), unequal wage
structure for man and women (0.01, 23.9%), insufficient access to public
transportation (-0.44, 50.7%)
 Majority of people do not have sufficient access to unemployment income, training and
re-employment-related support (-1.42; 56.3%), eldercare (-0.99; 64.8%) and mental
healthcare (-1.30; 52.1%) and sufficient access to education (-0.12, 48.5%)
 Bangladesh is confronting challenges of not having a universal social protection
scheme
 Taking precedence of other countries, the Universal Pension Management Bill has
passed in January, 2023
 Similarly, employment insurance and unemployment insurance schemes need to be
58
introduced in a phased approach
 IV.9 Working and Employment
Cross Country Comparison on Quality of Working and Employment Issues
6.0

5.0

4.0

3.0

2.0

1.0

0.0
Bangladesh India China Vietnam Thailand
Ease of hiring foreign labour Fill vacancies by hiring foreign labour
Ease of finding skilled employees in local labour market Pay and productivity
Wage polarization Wage inequality between men and women
Hiring and firing practices Flexibility of working arrangements
Equal care leave Impact of the online gig economy on working conditions
Cooperation in labour-employer relations Access to Childcare and pre-primary education
Access to Eldercare Access to Primary, secondary, tertiary and lifelong education
Access to Housing Access to Mental healthcare
Access to Public transportation Access to Unemployment income, re-training and re-employment support
Accessibility of healthcare services Social mobility

 Bangladesh is better performed in four indicators compared to its competitive

countries which include wage polarization, co-operation in labour-employer
relationship and easing of finding skilled employees etc
 Its performance is poor in case of access to unemployment income,
retraining, and re-employment supports
59
 IV.10 Managing the Economic Recovery and Risks
 After the pandemic crisis the recovery of the economy has become a major
concern
 52% of businessmen perceive that the Covid-19 vaccination program
organized by the government is largely satisfactory (1.64)
 32.8% of businessmen responded that the economic growth and revival
strategy of the country is not so effective (-0.01; 32.8%)
 55.7% of businesses opined that the government’s effort to support private
sector productions is somewhat inadequate (-0.43)
 47.1% of respondents somewhat disagree that the government support
market demand through fiscal incentives (-0.47)
 44.1% of businessmen perceived that money laundering through various
channels is largely pervasive (-1.16)
 Government measures regarding money laundering is highly inefficient
 42% expressed their view that a large part of economic activities are
undocumented and unregistered
 20% indicated that businesses are using internet for selling their foods and
services (0.13)

60
 IV.10 Managing the Economic Recovery and Risks
 According to the businessmen the Padma bridge would bring multiple benefits
to the economy. These includes-
 Some new supply chains (64.4%)
 Higher level of employment generation in the North-West part (56.7%)
 Moderate rise of availability of skilled manpower (58.3%)
Positive Aspects of the Padma Bridge
61.02 64.41
56.67

31.03 33.9
16.95
8.33

Availability of skilled Overall increment of Non-firm Agro Access to finance for Employment Investments in the Develop new supply
manpower for Foreign Direct activities SMEs in the south- generation in the south-west part chains
business Investments west part south-west part

 There is a deficit of high-quality and professional training services in the

country (-0.67, 61.9%)
 The government’s negligence towards protecting the environmental and
natural assets were not appreciated either (-0.99; 66.1%) and so the cultural
heritage assets are not adequately protected (-0.53; 56.9%)
 Bangladesh has ranked 162nd out of 180 countries in the 2020
Environmental Performance Index (EPI) (2020)
 64.8% businessmen expressed their views that government is conducting
timely updates of legal frameworks (-0.89)
61
 IV.10 Managing the Economic Recovery and Risks
 According to the businessmen major lessons for Bangladesh from the Sri Lanka debt
crisis are – (a) avoid undertaking unnecessary large projects (59.5%); (b) need to
promote export diversification 944.6%) and (c) avoid taking bulk loans from a single
lender (32.4%) and enhancing private investment (32.4%)
Lessons of Sri Lanka Crisis for Bangladesh
Avoid undertaking unnecessary large projects 59.46
Need for export diversification 44.59
Avoid taking bulk loans from a single lender 32.43
Enhancing private investment 32.43
Require strong revenue collection 29.73
Accumulating higher foreign reserve 29.73
0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00

 Ukraine-Russia War has a number of Adverse Impact of Ukraine-Russia War

adverse impact on Bangladesh International

Cost of
production,
transactions,
economy. These include among others- 37.5
53.1

 Rising cost of production Demand

(53.1%), uncertainty in import of from foreign
buyers, 17.2
final goods (32.8%), higher cost of Exports of
imported raw materials (39.1%) final goods,
10.9
Ocean based
transportati
and difficulty in international Import of on, 29.7

transactions (37.5%) raw

materials,
Imports of
final goods,
39.1 32.8 62
 IV.10 Managing the Economic Recovery and Risks
 There is a deficit of high-quality and professional training services in the
country (-0.67, 61.9%)
 Businessman expressed their opinion that government should explore more
gas fields (22.6%) to address the shortage of gas
 Other measures stop illegal gas supply (19.67%), and decline dependency
on gas for electricity production ( 15.2%)
 57.63% of businessmen indicated that inflation affected their business
(-0.75%)
 Companies suffer a number of skill-related difficulties. These include-
 Poor work ethic (14.55), Lack of critical thinking (13.9%), lack of creativity
(11.1%)
 The constraints with the potential to hinder the growth of new markets (see
next slide) include – (a) lack of initiatives and financing from the public sector;
(b) lack of innovative breakthrough; (c) lack of skills and talents; (d) lack of
needed complementary infrastructure.

63
 IV.10 Managing the Economic Recovery and Risks

CO N STRAINTS WITH THE POTE NTIAL TO HINDE R THE G ROWTH O F N E W M ARKE TS

Lack of Lack of Lack of

Lack of Lack of Lack of
initiative Lack of demand to agreement
Lack of needed legal Lack of mature
and Lack of fiscal space sustain on the
innovative complemen framework clear firms to
financing skills and and private a value
breakthrou tary s for the market reliably
from the talent sector commercial of the
gh infrastructu product or standards produce
public financing ly viable product or
re asset products
sector market asset
Series1 16.16 15.66 14.65 12.63 12.12 10.61 6.57 5.05 4.55 2.02

64
 IV.10 Managing the Economic Recovery and Risks
 Businessmen have identified major technologies for business for the
next ten years (next slide)
 39.7% indicated that Bangladesh’s major technologies would be
power storage and generation in the next ten years
 Given the ongoing fuel crisis and rise in the price of electricity and
gas, a major technological focus for Bangladesh would be renewable
energy and energy conservation-related technologies
 36.5% indicated that in the future, E-commerce and digital trade,
education & workforce development would be the second most
strategic important technologies. Covid-19 opened a new door to
digitalize different sectors of Bangladesh.
 3D and 4D printing, agriculture, and health technologies would be
other important areas of focus, given the rise in the per capita
income, shortages of skilled labour force and gradual rise in the
demand for different services
 A major future policy focus is how these new technologies would be
accommodated without having an adverse effect on employment65
 Power storage and generation 39.7

E-commerce and digital trade 36.5

Education and workforce development 36.5

3D and 4D printing… 20.6

Agriculture Technologies 19.0

Health and care technologies 17.5

Robots, non-humanoid… 17.5

Biotechnology 15.9

Environmental management… 15.9

Quantum computing 15.9

Robots, humanoid 11.1

Climate change migration technology(Energy,… 11.1

Digital platforms and apps 11.1

Distributed ledger technology(e.g.blockchain) 9.5

Encryption and cyber security 9.5

New Materials… 6.3

Artificial Intelligence(e.g. machine learning,… 6.3

Water-related adaptation technologies(e.g.… 6.3

Augmented and virtual reality 4.8

Internet of things and connected devices 4.8

Big data analytics 3.2

Text,image, and voice processing 3.2

Cloud computing 1.6

Satellite services and space flight 1.6

Other(free text field) 1.6

Nanotechnology 0.0
In percentage

Biodervisitry protection technologies 0.0

IV.10 Managing the Economic Recovery and Risks

Electric and autonomous vehicles 0.0

Strategically important technologies for Bangladesh in the next 10 years

Cryptocurrencies 0.0
66
 0.0
10.0
20.0
30.0
40.0
50.0
60.0
Agriculture, forestry, and fishing 48.4

Advanced manufacturing
43.8

Informationa and technology

37.5

services
Accomodation, food and leisure
32.8

services
Education

upgradation
Employment, education and
18.8 17.2

training services
Medical and healthcare services
Business Support and premises
maintenance…
Government and public sector
14.1 12.5 12.5

Energy, technology and utilities

Financial services and capital
markets
Supply Chain and Transportation

Telecommunications
10.9 10.9 10.9 9.4

Electronics
7.8

Water and Waste Management

6.3

Research, Design and Business

4.7

Management Services
Oil and Gas
4.7

Production of Consumer Goods

4.7

Retail and Holesale of Consumer

3.1

Goods
would contribute to new market opportunities. These include–

Personal Care, Wellbeing, and

3.1

Repair Services
In percentage

Care and social work services

1.6
TECHNOLOGIES MOST LIKELY TO GENERATE NEW MARKET OPPORTUNITIES

Real Estate
1.6

Rental, Reservation and Leasing

IV.10 Managing the Economic Recovery and Risks

information & technology services, accommodation, food & leisure

 Agriculture, forestry & fishing, advanced manufacturing,

services, and education would be most affected by the technological

 According to the entrepreneurs, the technological shift in some sectors
1.6

Services
67

Mining and Metals

1.6
V. Conclusion

68
 V. Conclusion
 Bangladesh’s business environment did not show progress during 2021-22-
either it was stagnated, or it was deteriorated compared to the previous
year
 Corruption remains the most problematic factors for doing business for
majority of enterprises though the severity of its impact has been gradually
shared with other structural and newly emergent problematic factors
 The other major problematic factors include inadequate
infrastructure, limited access to finance and inefficient bureaucracy
 The emerging factors include inflation, foreign currency instability
and policy instability – hence the challenges are multiplied through new
factors
 A number of emergent global economic, social, technological and
environmental risks that need to be taken into account by Bangladesh
at least in the medium term (see slide 16-17)
 The government should provide importance and put necessary
discounts emergent on those risks in formulating and implementing
different policies, strategies, plans and operations targeting long term
competitiveness, productivity enhancement, ensuring sustainability,
addressing climate vulnerabilities and ensuring green growth and clean
development
 V. Conclusion
 Institutional inefficiencies and weaknesses have further worsened though some
improvement has taken place sporadically
 Such institutional weaknesses have a discriminatory adverse impact on SMEs
 A major reform needs to be ensured in case of public institutions dealing with
private investments through better transparency, accountability, efficiency
 Major political parties should commit such reforms in their upcoming
national election manifesto
 Surprisingly, businessmen still suffer from poor infrastructure despite having
substantial investments over the last decade through some positive changes are
discerned (e.g. water supply)
 A major focus should be provided on improvement in efficiency in
infrastructural facilities, urban city development with less pollution and
traffic, clean energy development
 Public investment with the support of development partners and FDI needs
to focus on green city development, clean energy development, waste
management, industrial pollution control etc.
 Businessmen are worried about the safety and security-related issues concerning
organized crime, climate-related business risks, poor quality services of law
enforcement agencies, social and political unrest
 These issues need special attention particularly in a year just before the next
national election. Institutional reform is needed for ensuring better services
of law enforcement agencies 70
 V. Conclusion
• Financial sector needs major overhauling which could be initiated as part of
complying with IMF loan conditionality – amendment of bank company act,
lifting the cap on lending rate to ensure better access for SMEs, transparency in
outstanding loan, the effective oversight role of the central bank, security and
exchange commission (SEC) and Insurance Development and Regulatory Authority
(IDRA)
• Competitive environment in the businesses has further deteriorated due to lack
of proper practices of corporate governance, weak regulatory oversight and lack of
corporate ethics
• The Competition Commission, the Consumer Rights Protection Division of
the MoC, Central Bank, the NBR and the Ministry of Finance should play due
role in ensuring competition in the market
• Companies playing the role of ‘dominant market player’ needs to be
regularly monitored in their operations in different segments of the markets
and supply chains
• Inclusive supply chain in major sectors needs to be developed with the
assured presence of SMEs in each segment of the supply chain
• Business-related information needs to be disclosed in an integrated
information and data system to review the operations of the market players
in the supply chains 71
 V. Conclusion
• Human capital development is yet to become a mainstream activity of
the government
• In order to ensure a breakthrough public and private investment
(including FDI) is needed in digital and technological development,
skill development, innovation and creativity improvement
• A thorough review of ‘digital Bangladesh’ related activities is needed in
order to identify the successes, weaknesses and challenges.
• Such a gap analysis will help to better design the activities under the
new initiative of the government called ‘Smart Bangladesh’
• A number of technological breakthrough will be required in the case
of energy, digital trade, 3D/4D, agriculture and health technologies
• FDI should get priority along with local private investment
• Major investment breakthroughs will be required in innovative ideas,
competitive infrastructure, legal infrastructure, fiscal space and skill
development and talent hunting

72
Thank You!