Business climate improves, but remains challenging

  business-climate-improves-but-remains-challenging.html
  Business and Finance on Fri, Oct 17th, 2025 by The Daily Star

Bangladesh’s Business Climate Improves, Yet Challenges Remain

Bangladesh’s business environment is moving in the right direction, according to recent reports, but significant hurdles still loom over investors and entrepreneurs. A new article in The Daily Star outlines the nation’s progress in the World Bank’s Doing Business rankings and explains why the overall climate remains difficult for many firms.

Rising Rankings, Shifting Indicators

The article cites the World Bank’s 2023 Doing Business report, in which Bangladesh’s ranking climbed to 123rd out of 190 economies—up from 147th the previous year. The leap is largely driven by gains in three key indicators: “Starting a Business,” “Dealing with Construction Permits,” and “Enforcing Contracts.” The government’s recent “Business Environment Improvement Programme” (BEIP), introduced in 2021, has helped streamline licensing and reduce the time needed to register a new company from an average of 19 days to just 12 days.

While the country still lags behind regional peers such as Vietnam and Indonesia, the improvement signals a growing confidence among domestic and foreign investors. “We’re seeing a positive trend in the ease of doing business, especially in the registration and licensing processes,” said a senior official from the Ministry of Commerce. The ministry’s press release, linked in the article, highlights the launch of a unified digital portal that consolidates all business registration services and aims to cut bureaucratic delays further.

Infrastructure and Energy Bottlenecks

Despite these gains, the article points out that Bangladesh still ranks poorly in “Obtaining Electricity,” where the country is placed 145th. Frequent power outages and high tariff rates remain a major pain point for manufacturers, especially in the textile and apparel sectors, which form the backbone of the Bangladeshi economy. An accompanying report from the Bangladesh Bank reveals that the national grid’s capacity is stretched thin, with a chronic mismatch between supply and demand that pushes up energy costs.

Infrastructure deficiencies extend beyond electricity. The World Bank report notes that the country’s logistics costs are still among the highest in the world, with poor road networks, congested ports, and limited rail connectivity inflating shipment times and costs. The article links to a recent study by the International Finance Corporation (IFC) that estimates a 25% premium in logistics expenses compared to regional averages.

Regulatory and Institutional Constraints

The Doing Business report also shows that Bangladesh remains in 134th place for “Protecting Minority Investors.” Weak enforcement of corporate governance standards, coupled with a high degree of judicial backlog, creates uncertainty for foreign investors. The article references a briefing from the World Bank’s Governance Lab, which underscores the need for stronger transparency mechanisms and quicker judicial processes to improve investor confidence.

Taxation is another area of concern. While the overall tax burden has been reduced modestly through reforms in the last few years, the article points out that tax compliance still takes longer than in comparable economies. A link to the Ministry of Finance’s new tax filing portal indicates that digitalization has cut the average time to file a tax return from 15 days to 5 days, yet the portal’s limited functionality for small businesses hampers full adoption.

The Pandemic’s Lingering Effects

The article also highlights how the COVID‑19 pandemic has compounded existing problems. A link to a World Bank working paper discusses the impact of the pandemic on supply chains and the slowdown in export growth. Bangladesh’s reliance on textile exports, which were hit hard by global lockdowns, has exposed the fragility of its economic structure. While the country has received support through the International Monetary Fund’s “Rapid Credit Facility,” the article notes that the debt burden remains a concern, as highlighted by the IMF’s latest assessment of Bangladesh’s fiscal outlook.

Future Outlook

According to the Daily Star, Bangladesh’s government has pledged to continue its reform agenda. The article references a policy statement from the President’s Office that underscores a commitment to improving the business environment through legislative changes, enhanced digital services, and public‑private partnerships aimed at infrastructure development. The ministry’s upcoming “Digital Bangladesh” roadmap, accessible via a linked PDF, sets targets for expanding broadband access and improving data governance.

In summary, while Bangladesh’s business climate has shown measurable improvements—particularly in the ease of starting a business and obtaining permits—critical challenges remain. Energy shortages, infrastructure bottlenecks, weak institutional frameworks, and the lingering economic shock of the pandemic continue to deter investors. The Daily Star article underscores that sustained progress will depend on the government’s ability to deepen reforms, strengthen institutional capacity, and maintain fiscal discipline, all while navigating an increasingly complex global economic landscape.