Index of Economic Freedom 2022 classifies Bangladesh as a ‘mostly unfree’ country
Bangladesh News Desk: Bangladesh has dropped 17 notches in the Index of Economic Freedom 2022, breaking a five-year trend of expanding economic freedom.
Among the 177 countries ranked this year, Bangladesh ranked 137, a significant decline from the 120th position last year.
The country had been witnessing an upward trend in terms of economic freedom for the last five years, ranking 122nd in 2020, 121st in 2019, and 128th in 2018 and 2017.
Bangladesh scored 52.7 out of 100 in the index this year, losing 2.3 points from the score of 55 in 2017, falling in the lower half of the mostly unfree category.
According to the report, the country ranked 29th among the 39 Asia-Pacific countries this year, scoring 52.7 which is below the 58.5 regional and 60 world average.
The World Heritage Foundation evaluates countries based on four aspects: rule of law, government size, regulatory efficiency and open markets–over which governments typically exercise policy control.
The index measures 12 components while assessing the categories, which include property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, and business, labour, monetary, trade, investment and financial freedom.
Shahidullah Azim, vice-president of the BGMEA said that though there are some problems in various economic infrastructures in the country, they are also being solved.
“However, the position of other industries on the issue of labour freedom may be different, but the readymade garments industry of the country can be imitated by all over the world. According to QIMA, Bangladesh is the second most ethical manufacturing country in the world.
“In order to develop the economy of the country, it is necessary to develop the ease of doing business by identifying the problems that exist in the industries and taking action accordingly,” he added.
Bangladesh scored poorly in the rule of law, scoring 36.3 in property rights, 28.1 in judicial effectiveness and 22.2 in government integrity.
“Enforcement of property rights is uneven. Poor record-keeping systems can complicate land and property transactions,” the report said.
“The judiciary is slow and lacks independence,” it added.
According to the report, the procedures for contract enforcement and dispute settlement are inefficient and corruption is pervasive at all levels of society.
Weak rule of law, limited bureaucratic transparency and political polarization undermine government accountability and impede economic growth, it said.
Meanwhile, the country’s score in terms of labour freedom dropped by nearly half to 36.6 in 2022 compared to the 2021 score of 68.8.
Labour freedom, a sub-category of Regulatory Efficiency, is a measure of how a labour market’s legal and regulatory framework deals with concerns of minimum wage, associational rights, laws inhibiting layoffs, labour productivity, etc.
The report said despite the abundance of low-skilled cheap labour, productivity is low.
Moreover, “enforcement of labor law is lax,” it added.
Meanwhile, in terms of the country’s regulatory efficiency, the report said: “Regulations governing business are unclear, inconsistent, or little publicized. Registration and regulatory process interactions by businesses often require under-the-counter payments to bureaucrats.”
Bangladesh also did poorly in the government size category, with the report saying: “The top individual income tax rate has been reduced to 25%, but the top corporate tax rate has been increased to 32.5%.”
“The overall tax burden equals 7.7% of total domestic income. Government spending has amounted to 15% of total output (GDP) over the past three years, and budget deficits have averaged 5.2% of GDP. Public debt is equivalent to 38.9% of GDP,” its added.
Bangladesh has ranked the fourth most economically free nation in South Asia this year. It ranked second in 2021.
The country lags behind Bhutan, India and Sri Lanka.
Bhutan scored 59.3, making its economy the freest in South Asia. It ranked 94 in the index, the only South Asian country to rank below 100.
Meanwhile, India stands second at 131 with a score of 53.9 followed by Sri Lanka with a score of 53.3 and global ranking of 132.
Moreover, Maldives, Pakistan and Nepal ranked 161, 153 and 148, respectively.
The global economy remained “moderately free” this year according to the index.
The global average economic freedom score dipped slightly by 1.6 points, currently standing at 60. It was 61.6 last year.
The report attributed unwise policies to address the Covid-19 pandemic to the overall drop in economic freedom across the world.
Singapore, Switzerland, Ireland, New Zealand and Luxembourg topped the index, scoring 80 or more, while 27 countries, including Finland, Denmark, South Korea, the United Kingdom and the United States, were marked “mostly free” with scores between 70 and 79.9.
As many as 54 economies, including Japan, Malaysia, Thailand, Philippines and Vietnam, were classified as “moderately free” with scores ranging from 60 to 69.9.
Moreover, 89 economies received scores below 60 and were classified as “mostly unfree” or “repressed.”
North Korea, followed by Venezuela and Cuba remained the least economically free nations.
Saddam Hossain also contributed to this report
