On the other hand, inefficient bureaucracy, policy instability, lack of access to finance, inadequately educated workforce and inflation are still 'lead determining factors' in business environment.

These were revealed in the World Economic Forum's (WEF) Global Competitiveness Report (GCR) 2006-2007and the Centre for Policy Dialogue's (CPD) Bangladesh Business Environment Study 2006 launched in Dhaka yesterday.

Crime and theft that was the fifth determining factor in 2005 became eighth in 2006.

"In 2006, corruption is the most important determining factor affecting the business environment," said CPD Executive Director Dr Debapriya Bhattacharya at the launching ceremony at CPD office.

Poor infrastructure came out as the second most important factor for business environment, followed by inefficient bureaucracy and policy instability, he said.

Bangladesh ranked 99th out of 125 countries in the GCI 2006-07 while it was 98th among 117 countries in 2005. If the same set of countries as in 2005 is considered, Bangladesh's position remains unchanged (two countries have gone up and one country has come down).

The country's major progress was in macroeconomic management and health and primary education but these could not help improve the GCI ranking because of major weaknesses in public institutions and infrastructure.

The CPD in collaboration with the WEF has been assessing business competitiveness environment in Bangladesh since 2001, and the assessment this year is the sixth in the series.

Public trust about financial honesty of politicians was found to be very low as less than one percent responded positively, Debapriya said. There is no improvement in the graft situation. Firms very often make extra payments or bribe people from top (politicians and senior government officials) to bottom, he added.

Around 83 percent respondents thought that illegal donations to political parties are very common. Effectiveness of national parliament is seriously questioned by more than 75 percent of respondents, the CPD executive director noted.

"Unrecorded economic activities have increased, possibly because of increasing flow of black money in the economy, and the situation has been deteriorating over time."

Quality of electricity supply in the country is worse than in most other countries as perceived by more than 95 percent of respondents. They are also concerned about deteriorating port facilities, Debapriya said.

The survey covered relatively large companies that have total assets of not less than Tk 10 crore. The number of respondents has increased by 27 percent this year, and 93 percent of them is in Dhaka and 90 percent companies are owned by domestic entrepreneurs.

Ninety-five percent businessmen strongly disapproved centralised policy making in the country and government control over almost all important decisions. Independence of the judiciary is strongly questioned as 80 percent of the respondents thought the judiciary is not free from political influence of the government.

"Deteriorating trend in the domestic business environment, threat of terrorism, political unrest and its potential negative impact on business have badly eroded the confidence of the entrepreneurs," Debapriya said.

Entrepreneurs earlier had a positive outlook about growth of their business but they have now become concerned about the negative factors at the national level, the renowned economist observed.

Eighty-eight percent of the respondents strongly maintained that current political unrest in the country imposes significant costs on businesses.

Bangladesh's ranking in terms of business competitiveness index (BCI) has been deteriorating over time and a substantial fall occurred in 2006 (108th) compared to 2005 (97th). The fall is 11 percent. If only the set of countries in 2005 is considered, even then Bangladesh's position came down to 106th from 97th.

In growth competitiveness index, Bangladesh's position has come down to 121th in 2006 from 110th in 2005. New countries such as Barbados, Burkina Faso, Burundi, Lesotho, Mauritania, Nepal, and Suriname, included this year, remain above Bangladesh in this index.

Bangladesh's position has been at the bottom of 125 countries in the public institutions index and corruption sub-index of GCI, it was also at the bottom out of 117 countries in 2005.

Sectoral distribution of companies shows that 47 percent respondents were from manufacturing sector, 15 percent from financial, eight percent from ICT, seven percent from real estate and construction and the rest 23 percent from other sectors. The WEF's GCR 2006-07 was globally launched on September 27.

Those present at the launching ceremony yesterday included Prof Mustafizur Rahman, CPD research director, Dr Fahmida Akter Khatun, senior research fellow, Dr Khondaker Golam Moazzem, research fellow and other researchers.