LightCastle Partners ranks Bangladesh Business Confidence Index

The report was launched yesterday at the Daily Star, a strategic partner of this initiative. Mamun Rashid, Managing Partner, PwC Bangladesh; Niaz Rahim, Group Director, Rahimafrooz; and Masrur Reaz, Program Manager, Trade and Competitiveness, IFC Bangladesh, spoke at the event.

The aim of the report is to quantify the prevailing business sentiment by giving voice to the private sector business community, aggregating their views into a report. And this index is particularly interesting in the context of our country’s evolution towards middle-income status.

The study aims to understand the factors that influence the business ecosystem through a collection of facts, figures and opinions from our business community. It presents the status quo, identifies the challenges of growth and recommends actions to push the index up in the years to come.

METHODOLOGY

The harmonized expectation indicator (HEI) method was used to process the index score. This takes into account performance reviews for the past year, the current situation and expectations for the coming year. Company level representation has been carefully selected to reflect the respective industries. Industry representation has been organized to be proportional to their respective contribution to GDP. All surveys were conducted in June-July 2016.

IMPACT OF THE STUDY

The remarkable growth of Bangladesh’s private sector over time has highlighted the importance of having a confidence index that plays an important role as part of investor decision-making to enter new sectors or expand existing ones. already. The BCI can potentially indicate the conditions of the current business environment, which will provide more clarity for domestic and foreign investors.

It will also serve as a handbook for business leaders to understand the underlying economic challenges and opportunities. With superior access to information, they can simplify their decision-making process, better plan and execute in a timely manner to increase their presence in their respective markets. Finally, the report will draw the attention of policy makers to devote more effort and resources to the most pressing areas as determined by business leaders.

KEY IDEAS

The best performing sectors are information technology (92%), followed by healthcare (67%), RMG (63%) and financial institutions (56%). Industry executives cited the gradual growth in exports of high-value products, recent political stability and increasing purchasing power as the main factors behind their positive outlook.

41% of respondents have higher export expectations in the coming year thanks to recent infrastructure development, while 43% of export figures will remain unchanged due to electricity and gas shortages and inefficiencies in port management. In fact, 100% of respondents cited energy shortages as a major barrier to optimism.

96% of business leaders believe there is a large skills gap in their workforce. Respondents believe that a stronger recruitment pipeline at universities, greater investment in training and retention of workers, and better education systems are needed to address this critical issue. Over 72% of industry leaders are confident that they will be able to create more jobs for young people if the above tactics are actually put in place.

Linking academic research to business applications has been a strong recommendation from business leaders. Many academic institutions conduct cutting-edge research in various sectors, particularly in renewable energy and agriculture. However, many respondents complained that these R&D efforts often do not reach the hands that could apply these concepts on a large scale. If universities and the private sector come together more often, it could be a potential win-win situation for both parties. Universities will have more opportunities to fund their research while employers can apply these findings and simultaneously make deeper inroads in the recruitment pipeline.

The main issues cited by industry leaders are employee incompetence (96%), lack of standardization by regulators (73%), inefficient logistics (61%) and funding constraints (53 %). Perhaps these feelings can be best summed up in the words of one of the respondents, who said, “Optimism comes more from the absence of darkness than from the presence of light.

The sectors considered to have the highest growth opportunities over the next decade are: energy and gas, information technology and ready-made clothing.

CONCLUSION

Industry executives are not overly optimistic about the economic performance of the coming year. However, they are not completely cynical either. They believe that optimism will increase if the following are taken into account:

-Priority to political stability and security;

-Facilitation of national and foreign investments in the manufacturing sector;

-Increase rewards and recognition in tax payments;

-Export incentives once domestic demand is satisfied;

-A greater connection between academic research and commercial applications.

Our country is at a crucial time when we can capitalize on the demographic dividend and strategic geographic position to become the next Asian Tiger. Therefore, identifying and analyzing patterns of macroeconomics, taking the perspective of business leaders over multiple time periods, will provide us with superior insights, possibly leading to new opportunities in Bangladesh.

To learn more about industry specific information, you can download the report for free from LightCastle’s reporting portal at: www.lightcastledata.com/drive.