Business climate for real estate, trade, and electronics worsens in FY25: MCCI-PEB business climate report

The business environment for three key sectors – real estate and renting, wholesale and retail trade, and electronics and light engineering – has worsened over the last fiscal year compared to FY24, according to the latest Bangladesh Business Climate Index (BBX) report released today (16 October).

However, out of the total 12, slight improvement was seen in nine sectors – agriculture and forestry, pharmaceuticals and chemicals, food and beverage, transport and communication, leather, ready-made garments (RMG), textiles, financial services, and construction.

Despite the mixed performance, the report noted that Bangladesh's overall business climate improved marginally in FY2024-25.

But, it cautioned that persistent challenges, including political unrest, geopolitical uncertainty, rising production costs, sluggish investment, inflationary pressure, high interest rates, and exchange rate volatility, continue to weigh on business confidence.

The report, jointly prepared by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh (PEB), was based on a survey of 650 businesses nationwide and launched at the MCCI office in Dhaka's Gulshan area.

Commerce Adviser Sk Bashir Uddin, Australian Trade and Investment Commissioner at Austrade Ben Carson, MCCI President Kamran T Rahman, Policy Exchange Chairman Dr M Masrur Reaz, and Bangladesh Chamber of Industries (BCI) President Anwar-ul-Alam Chowdhury spoke at the event, among others.

Speaking at the programme, Bashir Uddin said one of the main reasons for the lack of expected improvement in the index was the political situation during the previous government's tenure.

He added that the current government is working to ensure a level playing environment for all, which is expected to improve the situation in the future.

However, he noted that officials of the National Board of Revenue (NBR) still exercise excessive arbitrary power in VAT and tax audits, adding that the findings from the BBX report will be utilised in future policy decisions.

According to the findings, Bangladesh's overall business climate index rose slightly from 58.75 points in FY24 to 59.69 in FY25.

To sustain growth and unlock private sector potential, Bangladesh must address longstanding barriers such as power shortages, limited access to finance, corruption, informal competition, and high tax burdens, the report said.

It added that these challenges disproportionately affect small and medium enterprises, while large, inefficient firms continue to dominate many sectors.

It also stressed that the interim government's pledge to improve governance and transparency must translate into reforms in energy and finance to attract investment, enhance competitiveness, and sustain industrial recovery.

The index assessed the country's performance based on respondents' scores across 12 indicators – including starting a business, access to land, regulatory information, infrastructure, labour regulation, dispute resolution, trade facilitation, taxation, technology adoption, access to finance, and environmental standards.

Half of these indicators worsened in FY25, particularly regulatory transparency, infrastructure, labour rules, trade facilitation, and technology adoption, according to the survey.

In the construction sector, the report cited ongoing issues with infrastructure reliability, labour regulation, and trade facilitation, leading to higher costs and project delays. Access to finance remained stagnant amid stringent credit and collateral requirements.

The electronics and light engineering sector experienced one of the steepest declines – its score dropped from 83 to 51 – due to energy shortages, gas crises, and fuel price hikes disrupting production and raising operational costs.

In wholesale and retail trade, businesses faced difficulties with infrastructure, labour rules, and tax compliance, while technology adoption slowed. However, access to finance improved, and environmental compliance remained stable.

The report warned that Bangladesh faces mounting external and domestic pressures as it approaches graduation from Least Developed Country (LDC) status in 2026.

"Tariff preferences will erode, while global trade disruptions, inflation, energy bottlenecks, and financial sector fragilities continue to constrain competitiveness," it said.

Survey data showed that 76.9% of respondents observed no regulatory reform in land services during FY25. Registration delays, corruption, high fees, unclear pricing, and slow mutation processes were cited as major obstacles, especially for real estate and infrastructure-heavy industries.

About 37.5% of RMG firms and 42.9% of those in real estate, renting and business activities reported registration delays, while half of food and beverage firms cited corruption-related problems.

Overall, systemic inefficiencies and sector-specific hurdles continue to hinder land acquisition, particularly for infrastructure-intensive industries.

"Without meaningful reforms in land administration, record-keeping, and cost structures, these barriers will persist, constraining business expansion and investment in Bangladesh," the report said.

On the issues, Rupali Chowdhury, managing director of Berger Bangladesh Limited and former president of FICCI, said, "There is still a lack of trust between bureaucrats and businessmen. Both sides need to come forward to overcome this. The mindset of treating all businessmen as dishonest must change."