Home ›› 02 Apr 2023 ›› Front
The manufacturing firms in Bangladesh show a complete lack of innovation for new products and services, the local institutions are not interested in making investments in this regard, and most establishments do not care enough to provide formal training to boost workers skills.
This was revealed in a report titled “World Bank Enterprise Surveys,” conducted from March to September last year, and compiled from the interview of manufacturing sector business owners and top managers from 998 firms.
The average operating period of companies participating in the survey was 22 years, and they are no longer introducing new products. However for South Asian countries, excluding Bangladesh, 29.5 per cent of firms had innovative new products, while this figure is 36.4 per cent globally.
On the issue, former president of Dhaka Chamber of Commerce & Industry (DCCI) and currently a director of Federation of Bangladesh Chambers of Commerce & Industries (FBCCI), Abul Kasem Khan said, “I think that in Bangladesh’s case, there is a lack of demand for new products or services.
“Firms do not go for new products, as when they analyse the market, they see that there is no demand for the product.”
According to the World Bank report, only 2.6 per cent of Bangladeshi firms are investing in research and development. But in the case of South Asian countries, it is 16.6 per cent. The figure is 20.3 per cent globally.
In this context, former lead economist of World Bank Dhaka Office Zahid Hussain said, “This has happened due to a lack of capacity and interest of the firms. Even those who are interested in innovation, choose not to move ahead due to a lack of intellectual property rights implementation.
“For example, why would someone invest in research and development (RND) and launch a new product, if it is later found that the product is being copied by someone else and no action is being taken by the government against this violation?”
Echoing the same, FBCCI Director Abul Kasem said, “The lack of coordination among industries, academia and business communities is the key reason behind lack of innovation. Although there are many talented students in Bangladesh, they do not choose research as a career as it is not lucrative.
“Therefore, government and private investments in research and innovation should be increased by a lot. This has been done in Japan, Singapore, and Thailand. We should follow the example set by these countries.”
Kasem added, “The FBCCI is planning to make a database containing information about studies and researchers across the country. This initiative will inform the business community about the ongoing research anywhere in Bangladesh.”
According to the report, businesses that participated in the survey pointed out 15 points, including access to finance and land, license permit, corruption, crime, labour regulations, as their biggest obstacles. Among these, electricity supply has been highlighted as a major issue.
However, Abul Kasem disagreed with this particular finding, saying that at the time this survey was conducted, Bangladesh was facing power shortages due to the USD crisis. The report may have reflected an issue which was prevalent at that time.
This business leader added, “I think that the biggest obstacle for enterprises in Bangladesh is the tax rate calculation, tax system, as well as the auditing system and lack of trust between the businesses and tax authority. We have to resolve this situation. Then our firms will have the opportunity to grow.”
According to the survey, 4.8 per cent firms in Bangladesh believe tax administration is one of the biggest obstacles, while 8.7 per cent firms believe
tax rates are an issue. In comparison, 2.5 per cent South Asian firms and 3.9 per cent firms globally believe tax administration to be one of the biggest obstacles.
Moreover, 7.8 per cent South Asian firms and 13.2 per cent firms across the globe termed tax rates the largest obstacle for them.
