Bangladesh’s business environment saw a decline in the year 2023-24 compared to the previous year, largely attributed to sluggish regulatory reforms, inadequate infrastructure, and challenges in accessing finance, according to the Bangladesh Business Climate Index (BBX) released on Thursday.

The BBX 2023-24, launched by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange, Bangladesh (PEB), recorded a decline in the homegrown index from 61.95 to 58.75, measured on a scale of 0-100. This marks the third edition of the BBX.

Presenting the findings at the MCCI Gulshan office in Dhaka, PEB Chairman M Masrur Reaz emphasized the necessity for significant reforms based on the survey conducted among 520 small, medium, and large enterprises.

The study evaluated eleven major pillars of the business climate, including starting a business, access to land, regulatory information availability, infrastructure, labor regulation, dispute resolution, trade facilitation, tax compliance, technology adoption, finance accessibility, and environmental considerations.

While access to land, trade facilitation, and technology adoption showed improvement, seven out of ten pillars common to previous editions witnessed deterioration.

Notably, access to finance and tax compliance exhibited continued decline over the three-year period.

Reaz highlighted the urgent need for drastic reforms in areas such as access to finance and tax compliance, noting enforcement challenges despite favorable laws.

Concerns were also raised regarding the declining business environment in Chattogram, one of Bangladesh’s economic growth centers, over the past three years.

Reaz emphasized the importance for the government to address this decline to ensure optimal business benefits and facilitate trade and investment.

He advocated for targeted reforms and improvements in last-mile regulatory service delivery arrangements to enhance the overall business climate.

According to MCCI President Kamran T Rahman, the BBX 2023-2024 report provides a comprehensive assessment of the business environment, ecosystem, and factors such as global supply chain disruptions and escalating tensions from conflicts like the Russia-Ukraine and Israel-Palestine conflicts.

Expanding its scope to cover 12 key industrial sectors, this study aims to pinpoint the necessary policies and reforms to maintain competitiveness in the global market.

Rahman emphasized that the insights from this report will guide investors and policymakers in crafting industry-specific action plans.

Private Industry and Investment Adviser to the Prime Minister, Salman Fazlur Rahman, expressed disappointment over the overall decline in various indicators.

He identified tax compliance and the performance of the National Board of Revenue (NBR) as major hurdles in the business landscape.

Rahman advocated for broadening the tax base and reducing tax rates to boost government revenue, acknowledging the revenue shortage.

Former MCCI President Nihad Kabir echoed the need for simplifying tax procedures to facilitate hassle-free tax payment for businesses.

Zaved Akhtar, President of the Foreign Investors’ Chamber of Commerce and Industry (FICCI), emphasized the importance of three Cs—credibility, consistency, and capability of policies—to attract more foreign direct investment. He highlighted the complexity of starting a business in Bangladesh, citing the requirement of 150 approvals and the intricate tax framework, including VAT.

Yuji Ando, Country Representative of the Japan External Trade Organization (JETRO) in Bangladesh, noted that despite 62 percent of Japanese companies expressing a desire to expand operations in Bangladesh, some faced challenges with the legal system and registering their names with government offices.

He cited the example of Toyota, which registered under a different name due to bureaucratic hurdles.

Lokman Hossain Miah, Executive Chairman of the Bangladesh Investment Development Authority, also contributed to the discussion.