Bangladesh Investment Climate

| Bangladesh: A systematic approach to improving the investment climate | | | | | | | | | The Bangladesh Experience A systematic approach to improving the investment climateOverviewPoverty reduction needs a strong economy at its heart and in Bangladesh, the government faces numerous hurdles in attracting the investment it needs for a vibrant private sector that will provide jobs and raise incomes. The World Bank Group’s International Finance Corporation (IFC) has worked with Bangladesh and other partners from the development community in modernizing laws, rules and regulations, streamlining administrative procedures, improving working conditions and environmental performance.ChallengeInvestors in Bangladesh face a variety of constraints. Power supply is inadequate and unreliable. Clearing a consignment through the ports takes several days. The regulatory framework is cumbersome, unpredictable and non-transparent. Corruption is widespread. Access to the factors of production is limited - in a 2007 enterprise survey, almost half of the enterprises cited access to land as a major problem and one quarter found skilled labor to be in short supply. In the 2010 Doing Business Report, Bangladesh ranked 119 out of 183 countries.

Improving the investment climate is a daunting challenge for the government as its capacity to design and implement solutions is poor. Past donor efforts to catalyze change has often been ineffective. Behind this has been a failure to take a holistic view of things, to engage various stakeholders to create a voice for reforms, and to mobilize their knowledge and energy to help government bring about changes.ApproachIn contrast to past approaches, IFC has taken a path that stresses good donor coordination to achieve the best results. The Bangladesh Investment Climate Fund (BICF), managed by IFC in partnership with the UK’s Department for International Developmentand the European Union, has worked with the Government of