As the new government takes office, the business community is pinning its hopes on bold reforms to enhance the country’s business climate and eliminate persistent trade barriers that continue to hamper investment and competitiveness.
They hope the newly formed government will prioritise improving the country’s business climate and removing persistent trade barriers that continue to hinder investment and competitiveness.
Business stakeholders said that several longstanding obstacles, including complex licensing procedures, bureaucratic delays, infrastructure constraints, limited access to finance, issues at ports and customs, and high transaction costs, have slowed private-sector growth and discouraged both domestic and foreign investment.
They expect the new government to accelerate regulatory reforms, streamline approvals, and strengthen institutions to create a more investment-friendly environment as Bangladesh prepares to graduate from the Least Developed Country category.
Bangladesh’s steady economic rise over the past decades has transformed the country into one of South Asia’s most dynamic emerging economies.
With exports exceeding $55 billion annually and graduation from the LDC category set for November, Bangladesh is increasingly seeking to position itself as a regional manufacturing and investment hub.
Yet, despite this growth story, the business environment remains constrained by structural bottlenecks, including complex licensing procedures, weak logistics, regulatory uncertainty, and governance challenges.
According to a recent World Bank Group report, Bangladesh Country Private Sector Diagnostic, several structural barriers continue to limit private-sector development and trade.
The five major obstacles to doing business in Bangladesh are unreliable electricity supply, limited access to finance, corruption, the dominance of the informal sector, and high tax rates.
The report noted that firms believe 21 per cent of their barriers are related to disruptions in electricity supply, 17.2 per cent to access to finance, 13 per cent to corruption, 9.7 per cent to the informal sector, and 8.7 per cent to tax rates.
These constraints particularly affect small and medium enterprises, limiting their ability to expand and compete with the large conglomerates that dominate many sectors of the economy.
Businesses themselves acknowledge that, beyond macroeconomic challenges, regulatory inefficiencies and administrative hurdles remain a major concern. Industry stakeholders frequently cite lengthy approval processes, excessive paperwork, and frequent licence renewals as key barriers that increase the cost of doing business.
In many cases, establishing a new business in Bangladesh can take several months due to multiple approvals from different government agencies.
According to the Centre for Policy Dialogue (CPD), the current regulatory structure, comprising numerous institutions with specific mandates and jurisdictions, presents a complex landscape for businesses. This complexity often results in overlapping regulations, bureaucratic delays, and increased compliance costs.
The CPD explained that opening a factory requires a long list of 18 commercial documents in addition to the environmental certificate.
The challenge is further compounded for new entrants and foreign investors unfamiliar with local regulations, said the CPD.
Alongside these procedural constraints, the extensive redundancy of documentation and the frequent need for licence renewals also represent notable impediments to the business environment in Bangladesh.
Corruption remains one of the foremost challenges for businesses.
‘An alarming 67.6 per cent of businesses reported high levels of corruption as a major concern, citing a lack of transparency and accountability in business processes,’ said Golam Moazzem, research director of the CPD.
He added that corruption, along with the prevalence of undocumented fees and bribes, affects all business sectors.
A CPD study found that 100 per cent of large companies, 66.67 per cent of medium-sized enterprises, and 61.9 per cent of small and micro enterprises identified corruption as a major concern.
Moreover, around 58.57 per cent of businesses reported that bribes are commonly associated with the awarding of public contracts and licences.
The process of obtaining and renewing business licences often involves costs exceeding official fees; additional charges for essential permits—such as fire licences and environmental clearances—can range from Tk 50,000 to Tk 100,000 above the stipulated amounts.
The timeline for business licensing frequently exceeds the officially designated periods, resulting in substantial delays in securing the necessary licences and permits. The CPD stated that the renewal of a trade licence, officially meant to take no more than seven business days, can, in practice, take between 10 and 15 days.
This delay is often influenced by factors such as the efficiency of agents employed, additional payments to expedite the process, the broader bureaucratic environment, and the lack of streamlined procedures, all of which can further complicate and prolong licensing.
Establishing a business in Bangladesh can take up to six months, whereas the process is significantly faster in Vietnam (35 days), Indonesia (49 days), and India (60 days). The absence of independent decision-making bodies exacerbates delays, slowing regulatory approvals and discouraging potential investors.
Such delays can have detrimental effects on business operations, including disruption of ongoing activities, obstacles to expansion, and reduced investor confidence.
Business owners are frequently compelled to navigate bureaucratic hurdles, further prolonging the already lengthy licensing process and increasing costs and frustration, which can deter new ventures.
These inefficiencies slow investment decisions and reduce Bangladesh’s competitiveness compared with regional economies where business registration and regulatory approvals are considerably quicker, businesses noted.
Mohiuddin Rubel, former director of the Bangladesh Garment Manufacturers and Exporters Association, said they always demand business to be conducted on a timely basis and at lower cost.
‘Business is always time-sensitive, but we have to face multifaceted complexities, including bureaucratic issues, energy supply disruptions, inefficiencies in ports and logistics, and customs,’ he added.
He noted that acquiring land for business purposes is often hindered by bureaucratic inefficiencies, land disputes, and unclear ownership or title registration, which can lead to conflicts.
‘Investors frequently face significant challenges when trying to acquire land for industrial or commercial use,’ he said.
He also highlighted that several recent shocks, such as intensified labour unrest, road blockades, and factory closures, have interrupted production and deliveries.
‘Even the country has, for the first time, seen a complete shutdown of the customs house—an event that is rare globally,’ he added.
Rubel emphasised the importance of timing in modern business.
‘In another sense, if business becomes more time-consuming, the cost of doing business increases automatically. Maintaining lead time is important, which is heavily dependent on smooth transport, logistics, customs, no bureaucratic and licensing delay, and no corruption at all,’ he said.
As Bangladesh seeks to sustain economic growth and attract greater foreign investment, economists note that addressing these structural barriers is critical. They argue that such delays increase lead times and make it harder for exporters to compete in fast-moving global supply chains.
According to the Organisation for Economic Co-operation and Development, inefficient logistics and distribution networks continue to weigh heavily on Bangladesh’s competitiveness.
Additionally, costly transport and congestion along key corridors reduce the efficiency of export industries.
For export-oriented sectors such as garments, where buyers demand shorter delivery times, these delays can undermine competitiveness compared with countries such as Vietnam or China.
Recently, the European Union raised concerns over Bangladesh’s non-tariff trade barriers, focusing particularly on customs procedures.
Commerce Secretary Mahbubur Rahman said a recent meeting with an EU delegation highlighted 15 key issues relating to customs processes and daily operations, urging their simplification.
‘Our import tariffs are among the highest in the world, which they accept legally. But non-tariff barriers are not acceptable,’ he added.
He also noted that excessive protectionist measures, such as mandatory 100 per cent luggage scanning at airports, create long queues without meaningful benefits.
Regarding other barriers, the CPD said that power and utility supply constraints in Bangladesh have major effects on the business environment.
At the core of the problem are erratic weather conditions and financial limitations affecting the country’s ability to pay for fuel imports.
These challenges have contributed to an acute electricity crisis characterised by frequent and prolonged outages.
According to businesses and experts, in some regions outages last 10–12 hours, causing serious disruptions to manufacturing, service delivery, and other operations. Frequent fluctuations in electricity prices further compound the problem, with rising tariffs increasing overall business costs by three to four times.
Such unpredictability makes it difficult for businesses to plan and execute operations efficiently.
To cope with power shortages, many firms rely on alternative energy sources, such as diesel generators, which are considerably more expensive than grid electricity. This reliance raises operational expenses and directly affects profitability.
Mahmud Hasan Khan Babu, president of the BGMEA, said businesses face substantial operational difficulties due to unpredictable, prolonged power cuts.
He added that the power crisis affects both production and service sectors, as manufacturing units often struggle to maintain schedules, resulting in delayed order fulfilment and potential breaches of contractual obligations.
Moreover, frequent disruptions can interrupt supply chains, delaying the delivery of goods and raw materials and creating ripple effects across multiple industries.
Operations in the country’s industrial sectors have also been deeply affected by severe interruptions in gas supply.
Major industries, such as textiles, ceramics, and the captive power plants of the readymade garment industry, require a minimum gas pressure of 15 PSI, yet they usually receive only 2–5 PSI.
Moynul Islam, president of the Bangladesh Ceramic Manufacturers and Exporters Association, urged the government to abolish VAT and import taxes on LNG by declaring it a mandatory product.
Businesses also highlighted financial barriers that hinder entrepreneurial growth and economic development.
A major challenge is the relatively high interest rates on business loans, particularly for firms seeking formal financial support.
Lending rates in Bangladesh often reach around 10 per cent, comparatively higher than in neighbouring countries—for instance, 9 per cent in India, 6 per cent in Vietnam, 1 per cent in Cambodia, and around 3.45 per cent in China.
This disparity places a significant burden on businesses, especially SMEs, which constitute a major share of the private sector.
The Bangladesh Bank sets the benchmark interest rate, typically a margin above the treasury bill rate.
However, prevailing lending rates substantially raise the cost of capital for businesses. As a result, entrepreneurs face difficulties accessing affordable financing, discouraging new investment, constraining expansion, and limiting resources for critical operations, businesses said.
Mahmud Hasan Khan expressed hope that the new government would address these barriers.
‘We are seeking an appointment of the required authority where we would discuss the major barriers in detail. We would discuss with the government when our business would flourish and which parameters need to be eased,’ he added.
Zaidi Sattar, chairman of the Policy Research Institute, stressed the need for urgent trade policy reforms, noting that reforms delayed over the past 15 years must be implemented within the next three to five years to prevent Bangladesh from lagging behind competitors.
CPD’s Golam Moazzem urged the development of a comprehensive digital platform to streamline all business registration and licensing procedures, serving as a central hub for entrepreneurs and business owners.
He also called for the introduction of a unique number to serve as a single reference for all future transactions, submissions, and application tracking on the platform, alongside a one-stop-shop model allowing businesses to apply for and obtain multiple licences and permits.
Government services related to business activities should be fully digitised, including tax filings, customs clearances, and environmental approvals.
He also emphasised the need for reforms in the banking and financial sector to ensure lower interest rates and more streamlined loan procedures, particularly for SMEs.
According to businesses and experts, without reforms to improve governance, infrastructure, financial access, and regulatory efficiency, businesses may struggle to fully realise their export potential and compete effectively in the global market.
