World Bank says bureaucracy a major weakness of Bangladesh economy

Enterprise

15/12/2015 16:28

By Serajul Quadir 
    DHAKA, Dec 15 (Reuters) - Bureaucracy is a major obstacle to 
economic growth in Bangladesh, burdening businesses with extra 
costs and leaving them less competitive than companies 
elsewhere, the chief economist of the World Bank said on 
Tuesday. 
    "Bureaucracy hinders the process of business in Bangladesh 
while neighbouring countries like Singapore and South Korea are 
faster and more efficient," said Kaushik Basu, who is also a 
senior vice president of the bank, as he concluded a four-day 
visit to Bangladesh. 
    A business leader told Reuters separately that he had 
calculated Bangladesh's bureaucracy cost business $1 billion a 
year. 
    An intricate legal infrastructure means opening a business 
can involve at least a dozen government departments, said Ershad 
Ahmed, a former president of American Chamber of Commerce in 
Bangladesh - the "central bank, national board of revenue, port 
authority, ministry of labour, telephone department, energy and 
power company, related regulating bodies and so on." 
    And the World Bank admitted its own bureaucracy could cause 
problems, particularly in sanctioning loans, said Basu and 
Martin Rama, the acting country director of the World Bank in 
Bangladesh. 
    "We have been trying hard to narrow it down as soon and as 
much as possible," Rama told reporters. 
    Basu also said Bangladesh needed to increase investment in 
infrastructure sector. Rama said in the same press briefing that 
out of total assistance it provided so far, 40 percent was 
allotted to infrastructure, especially for energy and power. 
    Basu called on Bangladesh to increase taxation, which is 
lower relative to the size of the economy than in other Asian 
countries, even Nepal. At present, Bangladesh's tax-GDP ratio is 
9.6 percent, compared with Nepal's 12 percent. In Bulgaria, the 
poorest member of the European Union, it's about 28 percent. 
    Basu praised several Bangladesh achievements, among them its 
foreign exchange reserves, growth of exports, economic growth, 
flow of remittance, ready-made garment sector, growth of 
investment and estimation of poverty. 
    Foreign exchange reserves are now $27 billion, equivalent to 
seven months of imports, according to Atiur Rahman, the governor 
of the Bangladesh central bank.  
    "This comfortable reserve has strengthened the confidence of 
investors and lenders, particularly abroad," Rahman said. 
    The reserves have helped to keep the exchange rate stable 
for several years, Basu said. 
 
 (Reporting By Serajul Quadir, editing by Larry King) 
 ((serajul.quadir@thomsonreuters.com; +88-01711823346; Reuters 
Messaging: serajul.quadir.thomsonreuters.com@reuters.net)) 
 
Keywords: ECONOMY BANGLADESH/WORLDBANK