Business Environment and Development Prospects of Bangladesh

Topics: Investment, Capital accumulation, Macroeconomics Pages: 7 (2253 words) Published: August 7, 2011
Economic growth in Bangladesh has benefited from two decades of liberalization policies that aimed to increase private sector activity. While reforms have eased licensing and regulatory burdens, particularly for the export sector, the domestic private sector continues to face difficult challenges to growth. This is particularly the case for small enterprises that account for the bulk of private business in Bangladesh. Weaknesses in financial markets, burdensome regulation, and prohibitive policies create market distortions that reduce local competitiveness. The Combined effect of poor infrastructure, weak public service delivery, corruption, and security concerns constrain the ability of businesses to function efficiently. As a result, a weak enabling environment imposes excessively greater constraints to business growth. Lack of adequate infrastructure is currently hindering the expected economic growth in Bangladesh. Infrastructure development is essential for reducing poverty and improving the living standards of its citizens. In addition to low accessibility, the quality and reliability of infrastructure and its associated services are also very poor. The country needs huge investment in order to improve the infrastructure necessary for higher economic growth. The Global Competitiveness Report (GCR) 2010-11, prepared by the World Economic Forum (WEF) and unveiled in Dhaka by the local research body, Centre for Policy Dialogue (CPD), noted that a dismal performance of Bangladesh is due to one particular area — infrastructure. So, the most important factor to ensure higher economic growth and boost investment is Development in infrastructure The policymakers are very much aware of the hard realities relating to infrastructure, particularly severe power and gas shortages. But the key functionaries of the government have not yet been able to do something convincingly enough to help improve the situation, in practical terms. Everyone, starting from a top industrialist down to a small businessman, is affected by the problems. Besides the constraints relating to gas and power supplies, the transportation of goods from one place to another is now, as noted earlier, an added problem. Inefficient transport operators, traffic congestion and large-scale unauthorized toll collection by people in or without uniform, have all compounded the problems here. The earlier improvement in the operations of the country’s main sea-port in Chittagong had raised hopes among the businesses. But that improvement is now under fresh threat because of growing workers’ indiscipline and mismanagement. In order to ensure the supply of accessible, affordable and reliable infrastructure, it is necessary to encourage the private sector to be engaged in the financing, construction and operation of infrastructure projects. To this end, the Government will be required to create an environment that encourages competition, efficiency and better services at affordable costs resulting in creation of best value for the country. The Government needs to move away from being the provider of infrastructure services and undertake the role of planner, policy maker and promoter of legislation. Domestic savings play a vital role in the country's economy by providing the investment necessary for development. One of the key indicators of economic development and business growth is the amount of money available for investment. It is also important to increase domestic savings to achieve a higher GDP growth. In Bangladesh savings rate is around 30% whereas investment rate is around 24%. So clearly there is gap between savings and investments. So challenge for our country is to increase investment opportunity and reduce this gap. Bangladesh may face difficulty in achieving the targeted growth rate due to investment shortage and increasing savings-investment gap. Forcast of savings and...

Bibliography: Bangladesh Bureau of statistics, Export promotion Bureau, Finance Division and Statistics Department, Bangladesh Bank
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