Cementing coordination among regulators

Every government, its institutions and agencies, and political parties, especially those in power, collectively define a country’s overall system. Any lack of coordination among these institutions has serious consequences for citizens, foreign investors, businesses, government officials, policymakers and others connected to the system, directly or indirectly. The difficulties faced by foreign investors and businesses are well known and often frustrating. Bangladesh’s relatively low inflow of foreign direct investment (FDI) compared with neighbouring countries clearly indicates the country’s inability to attract investment, despite having many positive factors in its favour.

For many years, there has been a significant lack of coordination among the country’s principal regulators. This has caused hardship for businesses and investors, ultimately affecting economic growth. Each organisation tends to operate from its own perspective, focusing on its own key performance indicators and institutional interests, often without considering the broader objective. As a result, processes slow down, increasing the time and cost of doing business while damaging the country’s reputation among investors, particularly foreign ones.

Successive governments have promised one-stop services for investors. To that end, the Bangladesh Investment Development Authority (Bida) was equipped with representatives from various regulators and placed under the Prime Minister’s Office to underline its importance. Unfortunately, due largely to bureaucratic processes, these measures have not delivered the desired results. FDI inflows remain below expectations and the concerns of businesses often go unresolved. Business chambers have occasionally raised these issues, but their efforts have largely remained isolated.

The Bangladesh Bank is the principal regulator for banks and non-bank financial institutions and also provides certain services to foreign investors. The National Board of Revenue (NBR) plays a critical role for domestic businesses, industrial units and foreign investors alike. In practice, however, many investors perceive the NBR as a deterrent rather than a facilitator. Between these institutions are Bida, export processing zones (EPZs) and economic zones, all tasked with encouraging investment. Yet investors often become frustrated when legitimate benefits and incentives are delayed or denied. Other regulators, including the Insurance Development and Regulatory Authority (IDRA), the Microcredit Regulatory Authority (MRA), the NGO Affairs Bureau and the Bangladesh Securities and Exchange Commission (BSEC), also play important roles.

Trust, transparency and business ethics remain challenges in Bangladesh, but regulators have yet to establish effective time-bound systems to address them. Files are often delayed on various grounds and, in some cases, allegations of rent-seeking cannot be entirely dismissed. Such practices undermine confidence and create uncertainty. When Bida was established, representatives from major regulatory agencies were included in its decision-making framework to improve coordination, particularly for foreign investors. Utility services, infrastructure, transport and port facilities are all critical to the smooth operation of industries, exports and businesses in a competitive global environment. Yet coordination among these bodies has remained weak. As a result, investors continue to face difficulties and foreign investment inflows remain affected.

Fundamentally, the problem lies in the number of hurdles investors and businesses must overcome to establish and operate their enterprises smoothly. Regulatory complexity, delays and uncertainty discourage investment and reduce competitiveness. Policy continuity, predictable regulations and effective coordination among regulators are essential if Bangladesh is to attract greater foreign investment. They are equally important for reducing the cost of doing business and strengthening the country’s competitive position. I am not aware of any comprehensive research identifying the reasons behind Bangladesh’s relatively low FDI inflows. Such a study, conducted by a credible institution, could provide valuable insights.

Ultimately, Bangladesh must ensure that commitments made to investors, particularly regarding taxation, incentives and the repatriation of profits, are honoured. At the same time, steps should be taken to reduce the difficulties faced by businesses and lower the cost of doing business. This is vital in an increasingly competitive and challenging economic environment, both at home and abroad.

The writer is a senior partner at Hoda Vasi Chowdhury & Co and past president of ICAB