Taking stock of bribery risk in business

Representational Photo

The emerging investors all bucked up to launch new businesses in Bangladesh often meticulously scan the horizon to find out how secure their money would be in a given context. Security and time are the crucial issues to measure the prospects of growth, especially for those who are set out to begin new ventures. Add to that the ordeal of breaking through the red tape and the not so savoury idea of bribing to ensure your smooth navigation through the processes.      

In Bangladesh, business initiatives face several hurdles. The most persistent ones are delayed approval for any new ventures, little access to financial support while entrepreneurs need to measure up to the standards and meet the criteria set by the regulatory bodies. 

With question of meeting criteria comes a flurry of entanglements – new entrepreneurs often face situations when they are forced to decide whether to bribe their way through the processes or risk being pushed out of the race. As bribery is a form of exchange that thrive in an environment where the institutions are weak and corruption is all pervading, it often dissuade the new business entrepreneurs from advancing with their projects. When some business people say that due to 'uncongenial atmosphere' they have backed out from investing in the economy, it is suggestive of a kind of corruption that continues to devastate us. 

The government's 'Zero Tolerance' policy against corruption seems not enough. Recently, Bangladesh ranked 178 in the bribery risk index. The US-based TRACE International has published the TRACE Bribery Risk Matrix 2019 that measured business bribery risk in 200 countries. TRACE is a global anti-bribery business association. 

Therefore, a country which is set for graduation to a middle income country by 2021, and is now welcoming more investments to ensure economic development, curbing corruption in services to facilitate business seems to cast a long shadow over its economic prospects. 

Independent business policy analysts often say that Bangladesh is still insecure for initiating businesses, particularly middle and small-scale investments tend to suffer in environment where corruption is rampant.   

According to the TRACE International assessment, government red tape continues to plague the business initiatives. The concerned official's expectation of bribes and regulatory burden in Bangladesh keep meddling with the dream of floating new enterprises. Moreover, Bangladesh receives low scores in anti-bribery deterrence and enforcement, transparency in services and capacity of media and civil society in checking corruption.

Though top officials of some business associations have expressed satisfaction with the slow but constant reduction of corruption in government offices, bribery risk is highest in Bangladesh compared to the seven other South Asian countries, according to TRACE.  

Md Muntakim Ashraf, senior vice president of the Federation of Bangladesh Chambers of Commerce and Industries, appreciates government drives against corruption.

According to Muntakim, digitisation of protocols in government procedure has checked corruption significantly.   

The FBCCI leader also sees the formation of the Bangladesh Investment Development Authority positively as he additionally thinks that the government wings would seek to improve the business atmosphere while trying to minimise corruption.  

However, Centre for Policy Dialogue's research director Khondaker Golam Moazzem finds contradiction in the word of mouth and the actual scenario. He feels uncomfortable with the notion that corruption in Bangladesh has largely been reined in. 

"Most of the people will admit that corruption is a huge challenge in Bangladesh. Many reports by corruption watchdogs have revealed that corruption practices still prevail in government offices, including those related to policy making, registration, logistics, procurement and taxation, and the trend is growing," Moazzem contends while citing the Global Competitiveness Report on Bangladesh to World Economic Forum. 

"To the business community, Bangladesh is a risky place for doing business," Moazzem continues, "The most important thing is that, corruption practices affect mostly the small-scale businesses. In some cases, corruption practices somehow help the rich businesses. Middle or small-scale businesses cannot afford the money that the big ones are often able to use to bribe for the required services. Many middle- and small-scale businesses have ceased to continue with their enterprises as they failed to invest money in bribing." 

He further adds, "Some government wings have direct involvement in corruption, we trend emerge in many studies. The prevailing scenario has scared the new entrepreneurs away, especially those with low-range investment." 

A clear-headed assessment of the trend of investment in the country is necessary. Amid the hullaballoo of big investments what has failed to grab our attention is that in recent times the number of middle- and small-sized business enterprises are dwindling in Bangladesh, he observes. 

"During the recent anti-corruption drives by the government, it has been proved that corruption prevails in different strata of the governance system. The victims are not only the common people but the businessmen, particularly, small-scale businesses." 

He finds "hard" infrastructural development in communication, transportation, power and energy generation as enthusiastic. Meanwhile, he emphasises positive reforms, which is the "soft" aspect, in the government wings that oversee logistics, registration and business compliance. 

"Business people cannot get sufficient services from the organisations. Actually, they need full package of services where all the facilities can work in a coordinated system. Power generation is not enough, rather, steps should be taken so that the entrepreneurs can get hassle-free power connection," Moazzem says.

"Initiation of the One Stop Services (OSS) in BIDA and BEZA is positive, indeed. Currently business people can access six types of services in BIDA's OSS, and there are ten more services to be added. But the OSS could work 100 times better than now if intra-institutional vested interests are solved". He continues,

Moazzem emphasises accountability and transparency. According to him the process needs to be transparent. Once it is online and open disclosure of business documents is ensured, the scope of transparency and accountability by the government against corruption practices would increase.    

Former president of Bangladesh Garment Manufacturers and Exporters Association, Md Siddiqur Rahman, admits that corrupt practices exist in the country.

"But it has been decreasing slowly. The ruling government is trying to minimise corruption. The effort is on to provide services online. There is little chance of corruption in any online-based system," he says. 

As a business veteran, Siddiqur knows well that prolonged procedures hampered businesses. Hence he advocates for online-based government procedures. 

Meanwhile, he puts emphasis on strong monitoring and law enforcement. 

"Honest people still work in government wings. Intra-department monitoring can work alongside that of the Anti-Corruption Commission. Business associations can collaborate with the government," Siddiqur opines.

Moazzem concurs with the business leader, "The government is now convening dialogues among the business stakeholders. We think that representation by private sector and civil society in government monitoring mechanism will ensure transparency and accountability. Furthermore, time-bound services will result in positive change."