The cost of doing business

Mahmudur Rahman | Saturday, 22 December 2018

Within months of Glaxo SmithKline Beecham (GSK) pulling its Pharma unit from Bangladesh comes the news of their world-wide merger with Pharma giant Pfizer. The new merged unit now commands an enviable $ 12 billion business that will send investors rubbing their hands as they head to the festive season holidays. What does that have to do with Bangladesh? Plenty!

Pfizer was one of the first multinationals to pull out of Bangladesh citing the very same cost of business that the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI) is talking about today. Pharmaceuticals are a thrust sector with a growing surge of companies seeking and getting international certification. That GSK chose to leave sends an ominous message. If they were uncompetitive, was it fair competition that they lost out on?

The FBCCI's President Shafiul Islam Mohiuddin has set the cat among the pigeons by raising the issue of cost of doing business as being too high in Bangladesh. On the same occasion Commerce Minister Tofail Ahmed urged businesses to reduce their costs of production. The two statements bring to fore an almost conflict-like situation. Any business worth its salt seeks to cut costs wherever possible and managers know where it pinches when KPIs (Key Performance Indicators) contain cost cuts. Some companies seek continuous cost reductions though reality suggests such moves only end up in carving some of the fat out of expenses in a zero budgeting environment.

Mr. Mohiuddin's appeal is tied to his reference to the very low index rating of Bangladesh in ease of doing business. That is suggestive of red-tapism, graft and cumbersome processes for businesses for all the buccaneering chants of one-stop services. The Minister might want to do a survey of how the one-stop has actually delivered against expectations. Mohiuddin's comment is the closest we have come to suggestive of the subtle extortion funds that are forced out of business to hold expensive and expansive events that glitter but aren't gold. He took the matter further by suggesting the only reason businesses exist is because of high profits. In other words, in spite of high cost of doing business profit levels allow doing business. Where that comes from isn't classified. A motley of under- and over-invoicing, tax evasion, graft and subtle extortion is a powerful brew.

Small businesses and even street vendors also have their own world of cost of doing business - essentially a fairly happy coexistence of extortion that involves various groups. No wonder they can't be moved from the streets for too long.

GSK were unable to battle the unethical, that's why they pulled the plug. New businesses have given their view through the ease of doing business indexing. Money changes hands pretty swiftly

Businesses throughout the world fund politics and do so through a fairly transparent process that is acceptable in Income Tax returns and audited reports. Bangladesh doesn't work that way but maybe should. Perhaps now is the time, given that the FBCCI has officially endorsed the Awami League as their preferred next government. It's a good sign that just needs an official process of authentication reflected in the books.

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