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Bangladesh should continue its effort to reduce its cost of doing business and also take immediate measures to eliminate the hidden cost on a priority basis to increase its competitive edge compared to other countries, according to a survey report prepared by the Japan External Trade Organisation (Jetro).
Jetro is the Japan government's overseas organisation who is working to promote mutual trade and investment between Japan and the rest of the world.
The 18th survey report released on Tuesday is based on the data on 32 cost-components gathered from 30 countries through questionnaires.
It said cost of investment in Bangladesh is not getting cheaper as all the cost components have increased to 2.45 per cent in 2008 from 2.44 per cent in 2007, indicating a rise in cost of investment to a nominal extent.
Hidden cost, which is non-figurative but exists in matters related to procedure, policy, law and infrastructure, has high correlation with the cost of doing business and cost of investment in a country.
In addition to the cost components considered in the survey it is also necessary for Bangladesh to address and eliminate the impediments that are responsible for the high cost of investment.
The report said hidden costs and loopholes in policies are eating up Bangladesh's FDI (foreign direct investment) future.
It said to attract the coveted FDI, Bangladesh needs to take necessary measures to listen to the existing investors and assess their level of satisfaction.
'Existing Japanese investors feel that hidden costs still remain one of the key elements for escalation of cost of investment, which is making Bangladesh less attractive to both existing and prospective Japanese investors,' it added.
Introducing the budget 2008-09, the government reduced the corporate tax to 37.5 from its previous 40 percent, will help Bangladesh to achieve the competitive edge to some extent, the Jetro said.
It said Bangladesh is still holding the second highest position in terms of this particular cost component of investment among the Asian countries that are also welcoming foreign investment.
'To be more competitive, immediate attention should be given to the cost components that still remain less competitive, especially in container transportation, land price of industrial estate, initial internet connection fee, monthly basic internet connection fee, telephone installation fee, mobile phone subscription fee, corporate income tax etc.,' the Jetro report disclosed.
In the survey the cost-components included wages, plot of industrial estate, office space, telecommunications-both land phone and mobile phone, internet connectivity, utilities covering electricity, water and gas, container transportation, energy covering gasoline and diesel and tax covering personal, corporate, VAT, interest remitted to Japan, dividend remitted to Japan etc.
Particularly, the monthly basic payment for Broadband Internet Service in Bangladesh is continuously holding the highest position among all the participating countries in this survey, the report said.
Regarding the container transportation, the survey said cost of container transportation is a big element affecting the export competitiveness of a commodity. Bangladesh is the most expensive country in case of container transportation from Chittagong Port to Yokohama Port, the survey report said.