REJAUL KARIM BYRON and AHSAN HABIB

The World Bank (WB) has described regulatory burdens in Bangladesh as a tax on time and investment, saying they are holding back investment compared with peer economies.

“Complex, fragmented, and discretionary regulatory processes impose a substantial time tax on firms in Bangladesh, with clear consequences for investment and growth,” said the WB in its latest Bangladesh Development Update.

According to the WB report, senior managers spend an average of 13 percent of their time dealing with government requirements, more than in any comparable country in the region.

The headline figure, however, conceals far heavier pressures in parts of the country.

In Chattogram, managers devote about 40 percent of their time to regulatory compliance. In Barishal, the share rises to 60 percent, leaving little room for productive management and strategic decision-making.

The burden also falls unevenly.

Frontier firms, defined as the most productive companies in the formal sector, spend around five percentage points less time dealing with regulators and face fewer tax inspections than non-frontier firms.

Regulatory delays compound these challenges. Securing an operating licence takes 28 days on average. Construction permits and import licences take about 49 days each, nearly twice as long as in China or India, according to the report.

Starting a formal business in Bangladesh is also costly. At roughly $10,000, the price of entry exceeds 10 percent of annual revenue for more than half of firms younger than six years.

The consequences are tangible. Firms facing heavier regulatory demands are 19 percent less likely to invest.

That weakens competition, slows the shift of resources to more productive companies and entrenches productivity gaps across the private sector, according to the WB.

“Improving the business environment is central to sustaining growth and absorbing a rapidly expanding workforce,” said Dhruv Sharma, senior economist and lead author of the report.

“Reducing regulatory uncertainty, offering targeted deregulation, strengthening competition, and easing constraints to firm growth will help unlock private investment and jobs,” he added.

Revenue per worker in manufacturing and services stands at roughly one-third of the South Asian average. In services, the largest employer, labour productivity has stagnated since 2016.

POLICY BIAS TOWARDS FRONTIER FIRMS

The report said that policy support has tended to favour a small group of high-performing frontier firms.

Preferential tax treatment, subsidised finance and trade privileges have flowed The