Corruption is the next big problem, with the customs and tax departments being the most corrupt. Environmental and labour and social security agencies are also high on the corruption matrix.

The WB study titled 'Improving the Investment Climate in Bangladesh' also identifies problematic tax administration, cost of and access to financing and uncertainty in economic policy as the other hurdles.

The surveyed firms include garments, textiles, food and food processing, leather and leather products, electronics, chemicals and pharmaceuticals located in Dhaka and Chittagong. The survey was done in end-2002.

The WB report, based on a survey of 1,000 manufacturing firms, says each of them on an average paid Tk 55,000 to the customs in bribes last year and Tk 20,000 to the tax authorities. Environmental agencies took Tk 4,800 in bribes and social security agencies about Tk 4,500 last year from each firm.

Moreover, firms have to pay speed money for utility connections.

For gas connection, a firm has to pay about Tk 1 lakh, for electricity Tk 30,000 and for telephone connection Tk 11,000.

The WB reports that more than half the firms surveyed said corruption is a major obstacle to their growth.

It said the firms received frequent visits from the customs and tax departments -- a total of about 17 a year. And dealing with each visit can be very costly.

"More than one-third of the firms report using facilitators to help with regulatory issues, at an average annual cost of more than Tk 600,000," it said.

"These costs are measured not just in terms of fees and payments, but also in terms of the firms' resources needed to satisfy inspections," notes the report to be released next month.

The survey said most firms experience about 250 days of power outages and surges a year, which affect their production.

"On average, firms report losing more than three per cent of their production due to problems from the electricity grid," the WB report notes.

To deal with power outages, most firms invest in generators spending as much as $ 500,000.