Doing Business 2019 Bangladesh Economy Profile Bangladesh Page 1 Doing Business 2019 Bangladesh Economy Profile of Bangladesh Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Bangladesh About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Bangladesh Ease of Doing Business in Region South Asia DB 2019 Rank 190 1 Bangladesh Income Category Lower middle income 176 DB 2019 Ease of doing business score Population 164,669,751 0 100 City Covered Dhaka , Chittagong 41.97 DB 2019 Ease of Doing Business Score 0 100 67.23: India (Rank: 77) 61.22: Sri Lanka (Rank: 100) 56.71: Regional Average (South Asia) 55.31: Pakistan (Rank: 136) 41.97: Bangladesh (Rank: 176) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Bangladesh 1 28 55 82 89 Rank 109 138 138 136 151 153 161 163 176 179 183 189 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Bangladesh 100 80.82 80 60.82 Score 60 55.00 56.13 40 30.81 31.76 28.91 28.20 25.00 22.21 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Bangladesh Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a also collected for the second largest business city. business or to leave the home to register the - The entire office space is approximately 929 square meters (10,000 square feet). company - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 - Does not qualify for investment incentives or any special benefits. procedures cannot start on the same day) - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final The owners: document is received - Have reached the legal age of majority. If there is no legal age of majority, they are • No prior contact with officials assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Bangladesh Starting a Business - Dhaka Standardized Company Legal form Private Limited Liability Company Paid-in minimum capital requirement BDT 0 City Covered Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Procedure – Men (number) 9 7.6 4.9 1 (New Zealand) Time – Men (days) 19.5 13.7 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 21.2 11.0 3.1 0.0 (Slovenia) Procedure – Women (number) 9 7.8 4.9 1 (New Zealand) Time – Women (days) 19.5 13.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 21.2 11.0 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 0.2 8.6 0.0 (117 Economies) Figure – Starting a Business in Dhaka and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 87.87: Sri Lanka (Rank: 83) 81.89: Pakistan (Rank: 130) 80.96: India (Rank: 137) 80.82: Chittagong 80.82: Dhaka Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Bangladesh Figure – Starting a Business in Dhaka – Procedure, Time and Cost Time (days) Cost (% of income per capita) 18 16 Cost (% of income per capita) 15 14 12 Time (days) 10 10 8 6 5 4 2 0 0 1 2 3 4 5 *6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Bangladesh Details – Starting a Business in Dhaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Verify the uniqueness of the proposed company name on the website of the Less than one day BDT 600 without VAT Registrar of Joint Stock Companies and Firms (online procedure) (paid at a designated Agency : Registrar of Joint Stock Companies and Firms Bank) The search for the availability of a company name was computerized in 2003. After checking that the proposed company name is available for registration, the entrepreneur then applies for name clearance through the Registrar of Joint Stock Companies and Firms (RJSC) website. The status of the application can be checked online and is usually accepted or rejected within 1 working day. If accepted, the company name is reserved for 6 months. A print out of the name clearance certificate must be submitted to the RJSC, along with the other required documents for incorporation. In addition to the BRAC Bank, the name reservation fee may be paid at the following designated banks: One Bank and Mutual Bank. 2 Register at the Registrar of Joint Stock Companies and Firms Less than one day paid in procedure 3 Agency : Registrar of Joint Stock Companies and Firms (online procedure) To register a company, the following documents must be submitted to the registrar: (1) Name clearance certificate (2) Memorandum and Articles of association (3) Forms I (Declaration on the registration of the company); Form VI (Notice of the registered office); Form IX (Consent to act as directors); Form X (The list of persons consenting to act as directors); and Form XII (Particulars of the Directors, Managers, and Managing Agents) Once the registration application is filed, the system generates a payment slip that should be printed and paid at a designated bank. This payment slip includes the registration fees, registration filing fees, stamp duties, and certified copies fees. Registration fees can be calculated online at http://123.49.32.37:7781/psp/fee_calculator 3 Pay all applicable registration fees and duties at a designated bank 1 day BDT 11,900 (without Agency : Designated bank VAT) registration fees The fees are as follows: + BDT 2,400 (without i. Registration fees. VAT) registration filing For the authorized share capital of up to BDT 20,000, the fee is BDT 700. fees + BDT 2,220 An additional fee of BDT 350 is applicable for every BDT 10,000 or part from the first BDT 20,000 up until BDT 50,000; (without VAT) for the An additional fee of BDT 100 is applicable for every BDT 10,000 or part from the certified copies of first BDT 50,000 up until BDT 1,000,000; Memorandum and An additional fee of BDT 50 is applicable for every BDT 10,000 or part from the Articles of first BDT 1,000,000 up until BDT 5,000,000; Association, Form 12 An additional fee of BDT 100 is applicable for every BDT 10,000 or part from the and Digital Certificate first BDT 5,000,000. + BDT 4,150 for stamp duties ii. Registration filing fees. For filing 6 documents (5 filled in forms and the memorandum & articles of association, the fee is BDT 400.00 per document): BDT 2,400 iii. Certified copies. Certified Copy MoA+Form XII+Digital Certificate: BDT 2,220 iv. Stamp duties. BDT 4,150 4 Make a company seal 1 day BDT 30-50 Agency : Sealmaker Business founders can make a company seal at the Seal maker for BDT 30-50. A better quality seal can be more expensive at BDT 250-300. 5 Obtain a Tax Identification Number Less than one day no charge Agency : National Board of Revenue (online procedure) In order to start business operations, every company must register for taxes at the appropriate taxation authority (Deputy Commission of Taxes of Company Circle, Zonal Taxation Department) under the National Board of Revenue (NBR) and obtain a tax identification number. Obtaining TIN number can now be done online at http://incometax.gov.bd/TINHome in less than one day. 6 Open a Bank Account 1 day (simultaneous no charge Agency : Bank with previous In order to register for VAT, the company must first open a bank account. procedure) Page 8 Doing Business 2019 Bangladesh 7 Obtain a trade license 1 week BDT 4,500 without Agency : City Corporation VAT Companies obtain a trade license from the City Corporation. Recently, the City Corporation (Dhaka) was divided into 2 zones: the North Zone and the South Zone. The company has to file its application at the nearest City Corporation. The trade license filled-in application form must be accompanied by the following documents: (1) A certified copy of the memorandum and articles of association (2) A copy of the certificate of incorporation (3) Tax Identification Number certificate (5) A copy of the lease agreement of the registered office 8 Apply for VAT registration 1 day no charge Agency : National Board of Revenue For VAT purposes, companies register with the Customs, Excise, and VAT Commission under the National Board of Revenue. The company's VAT is regulated by the Customs, VAT and Excise Department of the region in which it operates. When an enterprise submits a VAT Registration application to the VAT authority an application must accomplish or enclosed the following papers & Documents: - Fill-up an application form. - Enterprise Trade License. - Bank Solvency Certificate. - Owners 02 photograph. - National ID/Passport copy of owners. - IRC/ERC if enterprise dong import and Export Business. - Article & Memorandum (if enterprise is Limited Company.) - TIN Certificate. - Location MAP of Enterprise premises. Online platform for VAT registration was recently launched at https://vat.gov.bd/sap/bc/ui5_ui5/sap/zmcf_pri/index.html#/Welcome. However, majority of taxpayers prefers to register in person 9 Receive physical inspection of the business premises by a government 1 week no charge agent and Obtain the VAT registration certificate Agency : National Board of Revenue As of 2010, businesses receive physical inspection by a government agent in order to verify that the company is real before obtaining their VAT registration certificates. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 Bangladesh Starting a Business - Chittagong Standardized Company Legal form Private Limited Liability Company Paid-in minimum capital requirement BDT 0 City Covered Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Procedure – Men (number) 9 7.6 4.9 1 (New Zealand) Time – Men (days) 19.5 13.7 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 21.2 11.0 3.1 0.0 (Slovenia) Procedure – Women (number) 9 7.8 4.9 1 (New Zealand) Time – Women (days) 19.5 13.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 21.2 11.0 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 0.2 8.6 0.0 (117 Economies) Figure – Starting a Business in Chittagong and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 87.87: Sri Lanka (Rank: 83) 81.89: Pakistan (Rank: 130) 80.96: India (Rank: 137) 80.82: Chittagong 80.82: Dhaka Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2019 Bangladesh Figure – Starting a Business in Chittagong – Procedure, Time and Cost Time (days) Cost (% of income per capita) 18 16 Cost (% of income per capita) 15 14 12 Time (days) 10 10 8 6 5 4 2 0 0 1 2 3 *4 5 *6 7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 Bangladesh Details – Starting a Business in Chittagong – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Verify the uniqueness of the proposed company name on the website of the Less than one day BDT 600 (paid at a Registrar of Joint Stock Companies and Firms (online procedure) designated Bank) Agency : Registrar of Joint Stock Companies and Firms The search for the availability of a company name was computerized in 2003. After checking that the proposed company name is available for registration, the entrepreneur then applies for name clearance through the Registrar of Joint Stock Companies and Firms (RJSC) website. The status of the application can be checked online and is usually accepted or rejected within 1 working day. If accepted, the company name is reserved for 6 months. A print out of the name clearance certificate must be submitted to the RJSC, along with the other required documents for incorporation. 2 Register at the Registrar of Joint Stock Companies and Firms Less than one day paid in procedure 3 Agency : Registrar of Joint Stock Companies and Firms (online procedure) To register a company, the following documents must be submitted to the registrar: (1) Name clearance certificate (2) Memorandum and Articles of association (3) Forms I (Declaration on the registration of the company); Form VI (Notice of the registered office); Form IX (Consent to act as directors); Form X (The list of persons consenting to act as directors); and Form XII (Particulars of the Directors, Managers, and Managing Agents) Once the registration application is filed, the system generates a payment slip that should be printed and paid at a designated bank. This payment slip includes the registration fees, registration filing fees, stamp duties, and certified copies fees. Registration fees can be calculated online at http://123.49.32.37:7781/psp/fee_calculator 3 Pay all applicable registration fees and duties at a designated bank 1 day BDT 11,900 (without Agency : Designated bank VAT) registration fees The fees are as follows: + BDT 2,400 (without i. Registration fees. VAT) registration filing For the authorized share capital of up to BDT 20,000, the fee is BDT 700. fees + BDT 2,220 An additional fee of BDT 350 is applicable for every BDT 10,000 or part from the first BDT 20,000 up until BDT 50,000; (without VAT) for the An additional fee of BDT 100 is applicable for every BDT 10,000 or part from the certified copies of first BDT 50,000 up until BDT 1,000,000; Memorandum and An additional fee of BDT 50 is applicable for every BDT 10,000 or part from the Articles of first BDT 1,000,000 up until BDT 5,000,000; Association, Form 12 An additional fee of BDT 100 is applicable for every BDT 10,000 or part from the and Digital Certificate first BDT 5,000,000. + BDT 4,150 for stamp duties ii. Registration filing fees. For filing 6 documents (5 filled in forms and the memorandum & articles of association, the fee is BDT 400.00 per document): BDT 2,400 iii. Certified copies. Certified Copy MoA+Form XII+Digital Certificate: BDT 2,220 iv. Stamp duties. BDT 4,150 4 Make a company seal 1 day BDT 30-50 Agency : Sealmaker Business founders can make a company seal at the Seal maker for BDT 30-50. A better quality seal can be more expensive at BDT 250-300. 5 Obtain a Tax identification number Less than one day no charge Agency : National Board of Revenue (online procedure) In order to start business operations, every company must register for taxes at the appropriate taxation authority (Deputy Commission of Taxes of Company Circle, Zonal Taxation Department) under the National Board of Revenue (NBR) and obtain a tax identification number. Obtaining TIN number can now be done online in less than one day. 6 Open a Bank Account 1 day (simultaneous no charge Agency : Bank with previous In order to register for VAT, the company must first open a bank account. procedure) Page 12 Doing Business 2019 Bangladesh 7 Obtain a trade license 1 week BDT 4,500 Agency : City Corporation Companies obtain a trade license from the City Corporation (Chittagong). The trade license filled-in application form must be accompanied by the following documents: (1) A certified copy of the memorandum and articles of association (2) A copy of the certificate of incorporation (3) Tax Identification Number certificate (4) Photograph of the Managing Director (5) A copy of the lease agreement of the registered office 8 Apply for VAT registration 1 day no charge Agency : National Board of Revenue For VAT purposes, companies register with the Customs, Excise, and VAT Commission under the National Board of Revenue. The company's VAT is regulated by the Customs, VAT and Excise Department of the region in which it operates. When an enterprise submits a VAT Registration application to the VAT authority an application must accomplish or enclosed the following papers & Documents: o Fill-up an application form. o Enterprise Trade License. o Bank Solvency Certificate. o Owners 02 photograph. o National ID/Passport copy of owners. o IRC/ERC if enterprise dong import and Export Business. o Article & Memorandum (if enterprise is Limited Company.) o TIN Certificate. o Location MAP of Enterprise premises. 9 Receive physical inspection of the business premises by a government 1 week no charge agent and Obtain the VAT registration certificate Agency : National Board of Revenue As of 2010, businesses receive physical inspection by a government agent in order to verify that the company is real before obtaining their VAT registration certificates. Takes place simultaneously with previous procedure. Page 13 Doing Business 2019 Bangladesh Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its topographical experts. completion - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering - Will be used for general storage activities, such as storage of books or stationery. information - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted as procedures. Cost required to complete each procedure (% of - Will take 30 weeks to construct (excluding all delays due to administrative and income per capita) regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be • Quality control before construction (0-1) installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 14 Doing Business 2019 Bangladesh Dealing with Construction Permits - Dhaka Standardized Warehouse Estimated value of warehouse BDT 6,239,350.60 City Covered Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Procedures (number) 16 15.2 12.7 None in 2017/18 Time (days) 281 165.5 153.1 None in 2017/18 Cost (% of warehouse value) 1.8 13.2 1.5 None in 2017/18 Building quality control index (0-15) 10.0 9.2 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Dhaka and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 73.81: India (Rank: 52) 72.18: Sri Lanka (Rank: 65) 63.58: Chittagong 60.04: Dhaka 53.59: Pakistan (Rank: 166) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Dhaka – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 1 250 Cost (% of warehouse value) 0.8 200 Time (days) 0.6 150 0.4 100 0.2 50 0 0 1 2 *3 4 5 *6 *7 *8 9 10 11 12 13 14 15 * 16 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 15 Doing Business 2019 Bangladesh Figure – Dealing with Construction Permits in Dhaka and comparator economies – Measure of Quality 15 14.0 12.3 Index score 10.0 10.0 10 9.2 6.0 5 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Details – Dealing with Construction Permits in Dhaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain cadastral survey map from Land Settlement Office 3 days BDT 350 Agency : Land Settlement Office BuildCo needs to obtain a cadastral map from the Land Settlement office. The fee to obtain the smallest area map, equivalent to a neighborhood, is 350 Takas. 2 Obtain Land Use Clearance 45 days BDT 1,000 Agency : RAJUK (Capital Development Authority) and City Corporation To obtain clearance, BuildCo must present proof of land ownership and the cadastral maps showing the exact site location. An anticorruption drive of the interim government of Bangladesh stemmed from massive violations of building regulations on one hand and collapse of buildings with casualties on the other hand impacted the work of some areas of construction regulation. 3 Obtain soil test report 24 days BDT 59,500 Agency : Private Company An external firm is generally hired for conducting a soil test. 4 Obtain project clearance from the local authority (Ward Commissioner, 3 days no charge Dhaka City Corporation) Agency : Dhaka City Corporation To obtain the local authority’s approval, BuildCo must submit an application with the proposed design plans. The approval may take anywhere from 3 to 7 days. 5 Obtain project clearance from the Environmental Directorate 30 days BDT 4,500 Agency : Environmental Directorate The Environmental Directorate of Rajuk issues three types of clearances based on the type of establishment: green (nonpolluting), orange (low polluting), and red (high polluting). For the green category, the environmental clearance is issued for a fee of USD 25.00. If unofficial payments are made, the environmental clearance can be obtained in a week. For other categories, the cost and time to obtain a clearance are higher. To obtain a project clearance, the following documents are required, depending on the environmental category: • Approval from the Ward Commissioner, Dhaka City Corporation • Project profile, feasibility report, and drawings • Land ownership documents • Cadastral survey map and location map • Trade license (copy) • Registration of the Board of Investment (copy) • EIA/ IEE/ EMP Report • Fees payable to DOE Fees by total project cost USD 0–0.08 million: USD 25.00 USD 0.08 million–0.16 million: USD 50.00 USD 0.16 million–0.8 million: USD 80.00 USD 0.8 million–1.6 million: USD 160.00 USD 1.6 million–32 million: USD 400.00 USD 32 million–80 million: USD 800.00 USD 80-million and above: USD 1,600.00 Renewal fees by total project cost USD 0–0.08 million: USD 5.00 USD 0.08 million–0.16 million: USD 12.00 USD 0.16 million–0.8 million: USD 20.00 USD 0.8 million–1.6 million: USD 40.00 USD 1.6 million–32 million: USD 125.00 USD 32 million–80 million: USD 250.00 USD 80-million and above: USD 400.00 6 Obtain fire safety clearance 15 days BDT 8,000 Agency : Fire Department Page 16 Doing Business 2019 Bangladesh 7 Obtain clearance from Dhaka Electricity Supply Co (DESCO) 15 days no charge Agency : Dhaka Electricity Supply Co (DESCO) BuildCo must obtain the clearance from Dhaka Electricity Supply Co (DESCO) for the electrical plans. 8 Obtain water and sanitation clearance 15 days no charge Agency : Dhaka Water and Sewerage Authority (WASA) The plumbing plans must be cleared by the relevant agencies. 9 Request and receive inspection from the City Development Authority 60 days no charge (RAJUK) Agency : City Development Authority (RAJUK) Before the building permit is issued, the authorized officers must visit the site to ascertain its location according to the drawings and maps. However, with only a handful of officers and a massive number of applications, it is extremely difficult to comply with the original 30-day time limit established by the government. The procedure still takes 2 -- 5 months on average. 10 Request and obtain project clearance and building permit from the City 105 days BDT 8,300 Development Authority (RAJUK) Agency : City Development Authority (RAJUK) The approving panel of the City Development Authority (RAJUK) meets weekly to discuss cases. In early 2007, officials in the Ministry of Works imposed a 30-day time limit on the process. Applicants must obtain all relevants clearances, water, sanitation, electricity and a fire safety clearance certificate before applying for the building permit. Each agency that provides approval is given a 7-day time limit, but it is generally not complied with. The required documents are: (1) proof of ownership, (2) land use clearance from RAJUK, (3) clearances from Fire Department and Environment for non residential construction 11 Receive random inspection from the City Development Authority (RAJUK) 1 day no charge Agency : City Development Authority (RAJUK) According to the 2006 National Building Code, Section II, chapter 3, all inspections during construction are carried out by a structural engineer who must sign the certificate of supervision. There are one or two random inspections for an average project. However, a building officer from the City Development Authority may carry out one random inspection during construction to verify that the work is being done according to the approved plans 12 Submit notice of completion and obtain Occupancy Permit 21 days BDT 1,000 Agency : City Development Authority (RAJUK) According to the 2006 National Building Code, chapter 3, section 3.3.4, the completion notice must be signed by the structural engineer who has supervised the entire construction phase. The notice of completion certifies that the building has been built in compliance with the existing regulations. The authorities may or may not inspect the building. It is only after receipt of this completion notice that the certificate of conformity can be issued. 13 Request water and sewerage connection 10 days BDT 30,000 Agency : Dhaka Water and Sewerage Authority (WASA) BuildCo must first submit an application to get a new water connection from the Dhaka Water and Sewerage Authority. 14 Receive Site Inspection for Water Connection 1 day no charge Agency : Dhaka Water and Sewerage Authority A utilities inspection is required before water and sewerage connections can be approved in order to verify feasibility of connection to water grid. 15 Obtain Water Connection 1 day no charge Agency : Dhaka Water and Sewerage Authority The Dhaka Water and Sewerage Authority will install the water meter and connect the construction to the water and sewerage grid once all conditions have been met. Receive inspection by tax inspector from Dhaka City Corporation upon 1 day no charge 16 completion of construction Agency : Dhaka City Corporation A tax inspector from the Dhaka City Corporation visits the site to assess the completed building. No appointment is necessary and there are no fees paid. The tax authority then sends the annual tax bill which will arrive 30 days later. Takes place simultaneously with previous procedure. Page 17 Doing Business 2019 Bangladesh Details – Dealing with Construction Permits in Dhaka – Measure of Quality Answer Score Building quality control index (0-15) 10.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Unscheduled inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, in-house 2.0 with the approved plans and regulations? (0-2) engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 0.0 Which parties (if any) are held liable by law for structural flaws or problems in the building No party is held 0.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) liable under the law. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the University degree 1.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) in architecture or engineering; Being a registered architect or engineer; Passing a certification exam. Page 18 Doing Business 2019 Bangladesh What are the qualification requirements for the professional who supervises the construction University degree 1.0 on the ground? (0-2) in engineering, construction or construction management; Being a registered architect or engineer. Page 19 Doing Business 2019 Bangladesh Dealing with Construction Permits - Chittagong Standardized Warehouse Estimated value of warehouse BDT 6,239,350.60 City Covered Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Procedures (number) 15 15.2 12.7 None in 2017/18 Time (days) 247 165.5 153.1 None in 2017/18 Cost (% of warehouse value) 1.7 13.2 1.5 None in 2017/18 Building quality control index (0-15) 10.0 9.2 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Chittagong and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 73.81: India (Rank: 52) 72.18: Sri Lanka (Rank: 65) 63.58: Chittagong 60.04: Dhaka 53.59: Pakistan (Rank: 166) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Chittagong – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 1 Cost (% of warehouse value) 200 0.8 Time (days) 150 0.6 100 0.4 50 0.2 0 0 1 2 3 *4 *5 *6 *7 8 9 10 11 12 13 14 * 15 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 20 Doing Business 2019 Bangladesh Figure – Dealing with Construction Permits in Chittagong and comparator economies – Measure of Quality 15 14.0 12.3 Index score 10.0 10.0 10 9.2 6.0 5 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Details – Dealing with Construction Permits in Chittagong – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain cadastral survey map and proof of ownership from Land Records 3 days BDT 350 Department Agency : Land Records Department BuildCo needs to obtain a cadastral map from the Land Settlement office. The fee to obtain the smallest area map, equivalent to a neighborhood, is 350 Takas. 2 Obtain project approval from Ward Commissioner 4 days no charge Agency : Chittagong City Corporation Due to the location of the Doing Business case study warehouse (which would be near the port), BuildCo is required to obtain the approval of the land commissioner for the project, in addition to the building permit from the Development Authority. An application must therefore be submitted, along with the design plan. 3 Obtain land use clearance (LUC) from the Chittagong Development 50 days BDT 1,000 Authority Agency : Chittagong Development Authority (CDA) The land use clearance is obtained to ensure that the plot of land can be used for construction purposes. The applicants needs to submit documents to the Chittagong Development Authority so that officials analyze and check the request against their GIS system. If required they will visit to the premises. CDA will publish in a local newspaper approved, conditionally approved and denied requests for land use 4 Obtain fire safety license 15 days BDT 8,000 Agency : Fire Authority A fire safety license must be obtained from the fire authority to be compliant with the agency. This can be done while the land use clearance is being processed. 5 Obtain clearance from Bangladesh Power Development Board 15 days no charge Agency : Bangladesh Power Development Board BuildCo must first obtain the clearance from Bangladesh Power Development Board for the electrical plans before applying for the building permit. 6 Obtain water and sanitation clearance 15 days no charge Agency : Chittagong WASA The plumbing plans must be cleared by the relevant agencies. 7 Obtain soil test report 24 days BDT 59,500 Agency : Private Company A soil test study must be obtained prior to applying for the permit. A certified company provided by the government conducts the soil test. 8 Request and receive inspection from the Chittagong Development 60 days no charge Authority (CDA) Agency : Chittagong Development Authority (CDA) The Chittagong Development Authority (CDA) will then have to inspect the land physically and make its own independent assessment. The waiting time is about 3-6 months for inspectors to visit the site because of a backlog in requests. If the inspection is satisfactory, the inspector then submits a report to the CDA for the approval of the building permit. 9 Obtain building permit from the Chittagong Development Authority (CDA) 105 days BDT 8,300 Agency : Chittagong Development Authority (CDA) BuildCo submits an application for a building permit to the Authorization Committee of CDA along with design plans, legal documents proving ownership of land, land use clearance, identification documents and fee payment receipt. It can take as long as 3-6 months from the moment a satisfactory report on the inspection is issued to the time it takes CDA to issue the building permit.There are 14 internal steps at CDa during the approval of the permit. Page 21 Doing Business 2019 Bangladesh 10 Receive random inspection during construction 1 day no charge Agency : Chittagong Development Authority (CDA) A building officer will randomly inspect the construction site. 11 Submit completion certificate and receive certificate of conformity 1 day BDT 1,000 Agency : Chittagong Development Authority (CDA) According to the National Building Code, Chapter 3, Section 3.3.4, the completion notice must be signed by the structural engineer who has supervised the entire construction phase, certifying that the building has been built in compliance with the existing regulations. The authority may or may not conduct a final inspection of the building. It is only after receipt of this completion notice that the certificate of conformity is issued. 12 Request water connection at WASA 1 day no charge Agency : Chittagong WASA BuildCo must first submit an application to get a new water connection. 13 Receive inspection for water assessment works 1 day no charge Agency : Chittagong WASA The sales division will then visit the site and assess the feasibility of the work. If feasible, they will issue a demand note containing the cost estimate for the excavation and the pipes. If there is road crossing involved, an extra permit from the city would be required. 14 Obtain water connection 21 days BDT 30,000 Agency : Chittagong WASA Receive inspection by tax inspector from Chittagong City Corporation upon 1 day no charge 15 completion of construction Agency : Chittagong City Corporation A tax inspector from the Chittagong City Corporation visits the site to assess the completed building. No appointment is necessary and there are no fees paid. The tax authority then sends the annual tax bill, which will arrive 30 days later. Takes place simultaneously with previous procedure. Page 22 Doing Business 2019 Bangladesh Details – Dealing with Construction Permits in Chittagong – Measure of Quality Answer Score Building quality control index (0-15) 10.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Unscheduled inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, in-house 2.0 with the approved plans and regulations? (0-2) engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 0.0 Which parties (if any) are held liable by law for structural flaws or problems in the building No party is held 0.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) liable under the law. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the University degree 1.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) in architecture or engineering; Being a registered architect or engineer. What are the qualification requirements for the professional who supervises the construction University degree 1.0 on the ground? (0-2) in engineering, construction or construction management; Being a registered architect or engineer. Page 23 Doing Business 2019 Bangladesh Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property Cost required to complete each procedure (% of because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy • Tools to monitor power outages (0–1) consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 24 Doing Business 2019 Bangladesh Getting Electricity - Dhaka Standardized Connection Price of electricity (US cents per kWh) 9.2 Name of utility Dhaka Electric Supply Company Ltd. (DESCO) City Covered Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Procedures (number) 9 5.4 4.5 3 (25 Economies) Time (days) 148 98.3 77.2 18 (3 Economies) Cost (% of income per capita) 2233.8 1054.7 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 0 2.1 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Dhaka and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 89.15: India (Rank: 24) 74.37: Sri Lanka (Rank: 84) 44.75: Pakistan (Rank: 167) 37.31: Chittagong 28.98: Dhaka Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 25 Doing Business 2019 Bangladesh Figure – Getting Electricity in Dhaka – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1600 140 1400 Cost (% of income per capita) 120 1200 100 Time (days) 1000 80 800 60 600 40 400 20 200 0 0 1 *2 3 *4 5 6 *7 8 9 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Dhaka and comparator economies – Measure of Quality 8 7 6.5 6 6 Index score 5 4 3 2.1 2 1 0 0 0 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Page 26 Doing Business 2019 Bangladesh Details – Getting Electricity in Dhaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain permission for installation of underground cable 21 calendar days BDT 0 Agency : City Corporation Once the clearance has been obtained from the City Corporation office for the excavation works, the customer must also inform the local police station for the road works 2 Hire electrical contracting firm to purchase substation equipment, get it 15 calendar days BDT 1,800,000 tested and carry out installation and earthing Agency : Outside firm All electrical equipment, the distribution transformer, etc, must be purchased and tested by the Bangladesh University of Engineering and Technology (BUET), before submitting the application for a new electricity connection to the utility. Usually, all these equipment are readily available in Dhaka. 3 Apply for license from Electrical Licensing Board (ELB) 28 calendar days BDT 5,000 Agency : Ministry of Power This is the official clearance required in order to set up the warehouse and obtain the electrical connection (not just for internal wiring). Documents required • Application form • Technical specifications of equipment and test report • Land registration deed (on which warehouse is located) • RAJUK approval/mutation certificate • Fire service permission (for underground cabling) • Architectural approval 4 Receive an inspection from the Electrical Licensing Board (ELB) 1 calendar day BDT 0 Agency : Electrical Licensing Board (ELB) In order to obtain the license from the Electrical Licensing Board for the new connection, an inspection carried out by the board is completed. 5 Submit application to Dhaka Electric Supply Company (DESCO) and await 45 calendar days BDT 352,460.76 estimate Agency : DESCO 1. List of documents to be provided with application • Two duly certified passport size photos • Copy of land deed paper and copy of mutation certificate where necessary. • Copy of land tax payment to the municipal/union parishad. • Copy of the agreement paper between the landowner and developer, if building is constructed by real estate developer. • Design of the building, duly approved by RAJUK/Municipal Corporation. • Clear location of the meter room, including the S/S in the plan, duly approved by RAJUK/Municipal Corporation. • Certified copy of test result on electrical equipment. • Copy of approved/duly certified single line diagram and earthwork diagram of the S/S. • Copy of the layout diagram of S/S from the Office of Chief Electrical Inspector. • Copy of the license received from Office of Chief Electrical Inspector. • Detailed description of present connection status. • Copy of the last paid bills. 2. The applicant needs to bear all the cost of 11.4kV S/S and to be connected with the nearby 11kV supply of DPDC through underground cable. 3. On submission of application, DESCO will calculate the load requirement for solar panel 6 Have electrical contracting firm carry out external works 20 calendar days BDT 270,000 Agency : Outside firm The customer must hire an electrical contracting firm to carry out the external works, which involves the setting up of the substation on the warehouse premises. All equipment already purchased, electrical contractor firm and builder does the site construction and installation of equipment 7 Receive installation of solar panels by private firm 14 calendar days BDT 310,000 Agency : Private solar panel installation company As per the Ministry’s directive to all the utilities, all new connections with demand above 2KW will now require installation of solar panels. For domestic purposes, solar energy should meet at least 2 percent of the demand, for commercial 7 percent and for industrial 10 percent. 8 Have electrical contracting firm purchase meter 14 calendar days BDT 50,000 Agency : Outside firm The meter can be collected once the estimate has been paid, and the utility sends communication to the stores department, and stores department then issues an account number, and the meter is then available for pickup. Page 27 Doing Business 2019 Bangladesh 9 Receive meter testing and installation, final inspection and electricity flow 20 calendar days BDT 0 Agency : DESCO The utility conducts final internal as well as external inspection, tests the meter and electricity starts flowing. Takes place simultaneously with previous procedure. Page 28 Doing Business 2019 Bangladesh Details – Getting Electricity in Dhaka – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online www.berc.org.bd Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 29 Doing Business 2019 Bangladesh Getting Electricity - Chittagong Standardized Connection Price of electricity (US cents per kWh) 9.3 Name of utility BPDB, Chittagong City Covered Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Procedures (number) 7 5.4 4.5 3 (25 Economies) Time (days) 158 98.3 77.2 18 (3 Economies) Cost (% of income per capita) 1879.8 1054.7 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 0 2.1 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Chittagong and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 89.15: India (Rank: 24) 74.37: Sri Lanka (Rank: 84) 44.75: Pakistan (Rank: 167) 37.31: Chittagong 28.98: Dhaka Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 30 Doing Business 2019 Bangladesh Figure – Getting Electricity in Chittagong – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1200 140 Cost (% of income per capita) 1000 120 800 100 Time (days) 80 600 60 400 40 200 20 0 0 1 2 *3 4 5 *6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Chittagong and comparator economies – Measure of Quality 8 7 6.5 6 6 Index score 5 4 3 2.1 2 1 0 0 0 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Page 31 Doing Business 2019 Bangladesh Details – Getting Electricity in Chittagong – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Hire electrical contracting firm to purchase substation equipment and carry 30 calendar days BDT 1,400,000 out installation and earthing Agency : Outside firm All electrical equipment, the distribution transformer, etc, must be purchased and tested by a testing lab before submitting the application for a new electricity connection to the utility. Usually, all these equipment are readily available in Chittagong. 2 Apply for license from Electrical Licensing Board (ELB) 28 calendar days BDT 5,000 Agency : Ministry of Power, Energy and Mineral Resources The client must apply for the certificate of connection from the Electricity License Board. This is the official clearance required in order to set up the warehouse and obtain the electrical connection (not just for internal wiring). Documents required: • Application form • Technical specifications of equipment and test report • Land registration deed (on which warehouse is located) • CCC approval/mutation certificate • Fire service permission (for underground cabling) • Architectural approval 3 Receive an inspection from the Electrical Licensing Board (ELB) 1 calendar day BDT 0 Agency : Electrical Licensing Board (ELB) A customer must receive an inspection from the Electrical Licensing Board (ELB) 4 Submit application to BPDB Chittagong and await estimate 50 calendar days BDT 360,738.23 Agency : BPDB, Chittagong List of documents to be provided with application: • Two duly certified passport size photos • Copy of land deed paper and copy of mutation certificate where necessary. • Copy of land tax payment to the municipal/union parishad. • Copy of the agreement paper between the landowner and developer, if building is constructed by real estate developer. • Design of the building, duly approved by CDA. • Clear location of the meter room, including the S/S in the plan, duly approved by CDA • Certified copy of test result on electrical equipment. • Copy of approved/duly certified single line diagram and earthwork diagram of the S/S • Copy of the layout diagram of S/S from the Office of Chief Electrical Inspector. • Copy of the license received from Office of Chief Electrical Inspector. • Detailed description of present connection status. • Trade license • Land documents • Copy of the last paid bills. 2. The applicant needs to bear all the cost of 11.4kV S/S and to be connected with the nearby 11kV supply of DPDC through underground cable. The long duration noted for this procedure is due to the delay in the customer receiving the demand notice from the utility. 5 Have electrical contracting firm carry out external works 30 calendar days BDT 270,000 Agency : Customer's electrical contracting firm The customer must hire an electrical contracting firm to carry out the external works, which involves the setting up of the substation on the warehouse premises. All equipment already purchased, electrical contractor firm and builder carries out the site construction and installation of equipment. 6 Receive installation of solar panels by private firm 14 calendar days BDT 310,000 Agency : Private solar panel installation firm As per the Ministry’s directive to all the utilities, all new connections with demand above 2KW will now require the installation of solar panels. For domestic purposes, solar energy should meet at least 2 percent of the demand, for commercial 7 percent and for industrial 10 percent. 7 Receive meter testing and installation, final inspection and electricity flow 20 calendar days BDT 0 Agency : BPDB, Chittagong After the installation of all electrical equipment, an authorized inspector from the PDB license board will inspect all installations and equipment. If the inspection is successful, a certificate of conformity will be issued, with an official seal. Company will then re-submit the certificate to PDB and electricity will start flowing. Takes place simultaneously with previous procedure. Page 32 Doing Business 2019 Bangladesh Details – Getting Electricity in Chittagong – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages No exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.berc.org.b d/index.php?id=101 Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 33 Doing Business 2019 Bangladesh Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past 10 years. • Each procedure starts on a separate day - - Is registered in the land registry or cadastre, or both, and is free of title disputes. though procedures that can be fully completed online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, any kind. duties and taxes). - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 34 Doing Business 2019 Bangladesh Registering Property - Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Procedures (number) 8 6.8 4.7 1 (4 Economies) Time (days) 264 114.1 20.1 1 (New Zealand) Cost (% of property value) 7.1 6.9 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 6.5 8.8 23.0 None in 2017/18 Figure – Registering Property in Dhaka and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 51.87: Sri Lanka (Rank: 140) 45.63: Pakistan (Rank: 161) 43.55: India (Rank: 166) 28.93: Dhaka 28.86: Chittagong Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Dhaka – Procedure, Time and Cost Time (days) Cost (% of property value) 8 250 7 Cost (% of property value) 200 6 Time (days) 5 150 4 100 3 2 50 1 0 0 1 2 *3 4 5 6 7 *8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 35 Doing Business 2019 Bangladesh Figure – Registering Property in Dhaka and comparator economies – Measure of Quality 30 25 Index score 20 15 8.7 9.5 8.8 10 6.5 5.5 6.5 5 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Details – Registering Property in Dhaka – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Verifying the current Khatian (record of rights) at the Directorate of Land 20 days no charge Records and Surveys (DLRS) Agency : Directorate of Land Records and Surveys (DLRS) Various departments of two Ministries manage the core functions of land administration: 1. The Ministry of Land (MoL): land-related activities including survey, the collection of land development tax, arbitration process. The following agencies are under the Ministry of Land: 1.1 Directorate of Land Records and Surveys (DLRS): Conducts cadastral surveys, from which it produces mouza (revenue village) maps showing individual plots of land and khatian (individual land record certificates) 1.2 AC (Land) Office: Manages the mutated Khatian. 1.2.1Tehsil office: the local administrative division that has the function of record keeping. 2. The Ministry of Law, Justice and Parliamentary Affairs (MLJP): Records land mutation and transfers. 2.1 The Department of Land Registration (DLR): Records land mutations arising through sale, inheritance or other forms of transfer, reports changes to the Ministry of Land, and collects the immovable property transfer tax (IPTT). 2.2.1 Sub-registrar’s office: the local administrative division that has the function of registration. For a property transfer, first, the company will obtain a proof of land ownership titles (called Porcha or Khatian) at the Directorate of Land Records and Surveys (DLRS). It contains the names of owners, percentages of ownership of each person, the plot number, the type of property (residential, commercial), and its size. However, the Khatian requested at the DLRS is not conclusive evidence of ownership, and merely provide a basis of possession at the recording time. 2 Conduct first mutation and obtain an updated record of rights (Khatian) at 53 days BDT 1,170; the Assistant Commissioner of Lands (AC Land) - Tahsil (Application fee Agency : Assistant Commissioner of Lands (AC Land) - Tahsil (Court fee) 20 Taka; The current land system in Bangladesh produces multiple khatians.The khatian is Notice issue fee 50 administered separately by the Directorate of Land Records and Surveys Taka; Record (DLRS), the DC Record Room, the Assistant Commissioner of Lands and the Tahsil Office. The khatian managed by DLRS may differ from the mutated correction fee 1000 khatian managed by the AC (Land) Office. In that case, If the name of the Taka; Khatian fee 100 transferor is not found in the latest Khatian or his/her name is not mutated, the Taka) Sub Registrar will refuse to register the transfer deed. Therefore, it is mandatory to mutate the name of the transferor in the latest Khatian. The mutation is the process for updating the ownership and obtain a certificate of the land record. This certificate is one of the documents needed to register the property transfer. Typically, properties have missing information in the records, or the seller legal owner may not be correct. The interest parties will always verify with AC Land the history of ownership to see if the Khatian information is correctly corresponding to the actual land. This situation is common because, in at least 50% of cases, the records are not correct. Sometimes, due to problems caused at the AC Land Office, such as incorrectly recording names and other details of the land. 3 The Assistant Commissioner of Lands conducts an inspection for updating 53 days Included in Procedure the record of rights (Khatian) 2 Agency : Assistant Commissioner of Lands (AC Land) - Tahsil The Assistant Commissioner of Lands (Tahsil) will carry a physical inspection to provide the updated record of rights (Khatian). Officials visit the plot to check if there are no irregularities, such as informal buildings, and if the size of the land plot is correct, etc. Page 36 Doing Business 2019 Bangladesh 4 Obtain the non-encumbrance certificate from the relevant Sub-registry 8 days BDT 150 office Agency : Land Registration Directorate - Sub-registry office The buyer checks the legal status of the land (mortgaged or leased or ownership) at the relevant Sub-registry. From January 2012 both Sub-registry and Land Revenue Office provide non-encumbrance certificates. Sometimes a land report is required. A land report gives an idea about the current situation and ownership of the land that may include the chain of ownership, land tax, land record, registry status etc. A non-encumbrance certificate is used in property transactions as an evidence of free title/ownership. 5 A lawyer or a deed writer draft the deed transfer 1 day BDT 6,000; (Lawyer Agency : Lawyer fees) In most of the cases, a lawyer or a deed writer draft the transfer deed that should be signed by the interested partied. 6 Pay stamp duty, capital gains tax, registration fee and other taxes at 1 day BDT 437,094.54; (3% designated bank of the property value Agency : Designated Bank (stamp duties) + 2% The parties should pay all registration fees at the designated commercial bank. of property value (registration fees) + 2% of property value (local government fee) + BDT 100 (endorsement fee of 100) + BDT 240 (mandatory copy) Per methodology, VAT and source tax (capital gains) are not recorded.) 7 Apply for registration at the relevant Sub-registry 180 days Already paid in Agency : Land Registration Directorate - Sub-registry office Procedure 6 The buyer applies for registration at the Sub-registry office, presenting the following documents: - Records to prove land ownership - Porcha or Khatian – (obtained in procedure 1) - The mutation proof - mutated Khatian (obtained in procedure 2) - Certificate of non-encumbrance (obtained in procedure 4) - Transfer deed (obtained in procedure 5) - Proof of payment of fees at a bank (Obtained in procedure 6) A certified registration document is obtained within a week for the buyer’s record. The original sale deed/certificate requires about 6 months to be obtained. 8 Conduct second mutation to change the ownership at the Assistant 53 days BDT 1,170; Commissioner of Lands (AC Land) - Tahsil (Application fee Agency : Assistant Commissioner of Lands (AC Land) - Tahsil (Court fee) 20 Taka; The change of ownership must be registered at the Assistant Commissioner of Notice issue fee 50 Lands (AC Land). The property is recorded under the name of the new owner, Taka; Record who is responsible for paying the land taxes from the day it is transferred. correction fee 1000 The purpose of the 1st mutation (procedure 1) is to update the records under the Taka; Khatian fee 100 seller’s name. The purpose of the 2nd mutation (current procedure) is to update Taka) the records under the buyer’s name. Takes place simultaneously with previous procedure. Page 37 Doing Business 2019 Bangladesh Details – Registering Property in Dhaka – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 0.0 What is the institution in charge of immovable property registration? Sub-Registry office In what format are the majority of title or deed records kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Directorate of Land Records and Survey (DLRS) In what format are the majority of maps of land plots kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 3.5 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: https://land.gov.b d/pages/mutation Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: https://land.gov.b d/pages/mutation Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://lawjusticedi v.portal.gov.bd/sit e/page/5b23e6f0- 4a9c-4e41-a97c- 093e87272e59/C itizen-Charter Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2017: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the official fee Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Page 38 Doing Business 2019 Bangladesh Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 3.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of identity documents? No 0.0 For a standard land dispute between two local businesses over tenure rights of a property Dhaka Joint worth 50 times gross national income (GNI) per capita and located in the largest business District Judge city, what court would be in charge of the case in the first instance? Court How long does it take on average to obtain a decision from the first-instance court for such a More than 3 0.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 39 Doing Business 2019 Bangladesh Registering Property - Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Procedures (number) 8 6.8 4.7 1 (4 Economies) Time (days) 295 114.1 20.1 1 (New Zealand) Cost (% of property value) 7.2 6.9 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 6.5 8.8 23.0 None in 2017/18 Figure – Registering Property in Chittagong and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 51.87: Sri Lanka (Rank: 140) 45.63: Pakistan (Rank: 161) 43.55: India (Rank: 166) 28.93: Dhaka 28.86: Chittagong Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Chittagong – Procedure, Time and Cost Time (days) Cost (% of property value) 8 7 250 Cost (% of property value) 6 200 Time (days) 5 150 4 3 100 2 50 1 0 0 1 2 *3 4 5 6 7 *8 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 40 Doing Business 2019 Bangladesh Figure – Registering Property in Chittagong and comparator economies – Measure of Quality 30 25 Index score 20 15 8.7 9.5 8.8 10 6.5 5.5 6.5 5 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Details – Registering Property in Chittagong – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Verifying the current Khatian (record of rights) at the Directorate of Land 30 days no charge Records and Surveys (DLRS) Agency : Directorate of Land Records and Surveys (DLRS) Various departments of two Ministries manage the core functions of land administration: 1. The Ministry of Land (MoL): land-related activities including survey, the collection of land development tax, arbitration process. The following agencies are under the Ministry of Land: 1.1 Directorate of Land Records and Surveys (DLRS): Conducts cadastral surveys, from which it produces mouza (revenue village) maps showing individual plots of land and khatian (individual land record certificates) 1.2 AC (Land) Office: Manages the mutated Khatian. 1.2.1Tehsil office: the local administrative division that has the function of record keeping. 2. The Ministry of Law, Justice and Parliamentary Affairs (MLJP): Records land mutation and transfers. 2.1 The Department of Land Registration (DLR): Records land mutations arising through sale, inheritance or other forms of transfer, reports changes to the Ministry of Land, and collects the immovable property transfer tax (IPTT). 2.2.1 Sub-registrar’s office: the local administrative division that has the function of registration. For a property transfer, first, the company will obtain a proof of land ownership titles (called Porcha or Khatian) at the Directorate of Land Records and Surveys (DLRS). It contains the names of owners, percentages of ownership of each person, the plot number, the type of property (residential, commercial), and its size. However, the Khatian requested at the DLRS is not conclusive evidence of ownership, and merely provide a basis of possession at the recording time. 2 Conduct first mutation and obtain an updated record of rights (Khatian) at 53 days BDT 1,170; the Assistant Commissioner of Lands (AC Land) - Tahsil (Application fee Agency : Assistant Commissioner of Lands (AC Land) - Tahsil (Court fee) 20 Taka; The current land system in Bangladesh produces multiple khatians.The khatian is Notice issue fee 50 administered separately by the Directorate of Land Records and Surveys Taka; Record (DLRS), the DC Record Room, the Assistant Commissioner of Lands and the Tahsil Office. The khatian managed by DLRS may differ from the mutated correction fee 1000 khatian managed by the AC (Land) Office. In that case, If the name of the Taka; Khatian fee 100 transferor is not found in the latest Khatian or his/her name is not mutated, the Taka) Sub Registrar will refuse to register the transfer deed. Therefore, it is mandatory to mutate the name of the transferor in the latest Khatian. The mutation is the process for updating the ownership and obtain a certificate of the land record. This certificate is one of the documents needed to register the property transfer. Typically, properties have missing information in the records, or the seller legal owner may not be correct. The interest parties will always verify with AC Land the history of ownership to see if the Khatian information is correctly corresponding to the actual land. This situation is common because, in at least 50% of cases, the records are not correct. Sometimes, due to problems caused at the AC Land Office, such as incorrectly recording names and other details of the land. 3 The Assistant Commissioner of Lands conducts an inspection for updating 30 days Included in procedure the record of rights (Khatian) 2 Agency : Assistant Commissioner of Lands (AC Land) - Tahsil The Assistant Commissioner of Lands (Tahsil) will carry a physical inspection to provide the updated record of rights (Khatian). Officials visit the plot to check if there are no irregularities, such as informal buildings, and if the size of the land plot is correct, etc. Page 41 Doing Business 2019 Bangladesh 4 Obtain the non-encumbrance certificate from the relevant Sub-registry 30 days BDT 200; (80 takas office for the copy + 10 Agency : Land Registration Directorate - Sub-registry office takas multiplied by 12 The buyer checks the legal status of the land (mortgaged or leased or ownership) years of search) at the relevant Sub-registry. From January 2012 both Sub-registry and Land Revenue Office provide non-encumbrance certificates. Sometimes a land report is required. A land report gives an idea about the current situation and ownership of the land that may include the chain of ownership, land tax, land record, registry status etc. A non-encumbrance certificate is used in property transactions as an evidence of free title/ownership. 5 A lawyer or a deed writer draft the deed transfer 1 day BDT 6,000 Agency : Lawyer or deed writer In most of the cases, a lawyer or a deed writer draft the transfer deed that should be signed by the interested partied. 6 Pay stamp duty, capital gains tax, registration fee and other taxes at 1 day BDT 439,754.54; (3% designated bank of the property value Agency : Designated Bank (stamp duties) + 2% The parties should pay all registration fees at the designated commercial bank. of property value (registration fees) + 2% of property value (municipality tax) + 3,000 takas (certified copy fee) Per methodology, VAT and source tax (capital gains) are not recorded.) 7 Apply for registration at the relevant Sub-registry 180 days Already paid in Agency : Land Registration Directorate - Sub-registry office Procedure 6 The buyer applies for registration at the Sub-registry office, presenting the following documents: - Records to prove land ownership - Porcha or Khatian – (obtained in procedure 1) - The mutation proof - mutated Khatian (obtained in procedure 2) - Certificate of non-encumbrance (obtained in procedure 4) - Transfer deed (obtained in procedure 5) - Proof of payment of fees at a bank (Obtained in procedure 6) A certified registration document is obtained within a week for the buyer’s record. The original sale deed/certificate requires about 6 months to be obtained. 8 Conduct second mutation to change the ownership at the Assistant 75 days BDT 1,170; Commissioner of Lands (AC Land) - Tahsil (Application fee Agency : Assistant Commissioner of Lands (AC Land) - Tahsil (Court fee) 20 Taka; The change of ownership must be registered at the Assistant Commissioner of Notice issue fee 50 Lands (AC Land). The property is recorded under the name of the new owner, Taka; Record who is responsible for paying the land taxes from the day it is transferred. correction fee 1000 The purpose of the 1st mutation (procedure 1) is to update the records under the Taka; Khatian fee 100 seller’s name. The purpose of the 2nd mutation (current procedure) is to update Taka) the records under the buyer’s name. Takes place simultaneously with previous procedure. Page 42 Doing Business 2019 Bangladesh Details – Registering Property in Chittagong – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 0.0 What is the institution in charge of immovable property registration? Office of the Sub- Registrar of Chittagong In what format are the majority of title or deed records kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Directorate of Land Records and Survey (DLRS) of Chittagong In what format are the majority of maps of land plots kept in the largest business city—in a Paper 0.0 paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 3.5 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2017: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the official fee Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a Yes, in person 0.0 specific time frame—and if so, how does it communicate the service standard? Page 43 Doing Business 2019 Bangladesh Link for online access: Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 3.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Is there a national database to verify the accuracy of identity documents? No 0.0 For a standard land dispute between two local businesses over tenure rights of a property Chittagong Joint worth 50 times gross national income (GNI) per capita and located in the largest business District Judge city, what court would be in charge of the case in the first instance? Court How long does it take on average to obtain a decision from the first-instance court for such a More than 3 0.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 44 Doing Business 2019 Bangladesh Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 45 Doing Business 2019 Bangladesh Getting Credit - Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Strength of legal rights index (0-12) 5 5.5 6.1 12 (5 Economies) Depth of credit information index (0-8) 0 4.0 6.7 8 (42 Economies) Credit registry coverage (% of adults) 3.2 4.8 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 0 18.5 65.3 100.0 (25 Economies) Figure – Getting Credit in Dhaka and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 80.00: India (Rank: 22) 45.00: Pakistan (Rank: 112) 40.00: Sri Lanka (Rank: 124) 25.00: Chittagong 25.00: Dhaka Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Dhaka and comparator economies 9 8 7 6 5.5 Index Score 5 5 5 4 3 2 2 2 1 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Page 46 Doing Business 2019 Bangladesh Details – Legal Rights in Dhaka Strength of legal rights index (0-12) 5 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Dhaka and comparator economies 8 7 7 7 6 6 Index Score 5 4.0 4 3 2 1 0 0 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Page 47 Doing Business 2019 Bangladesh Details – Credit Information in Dhaka Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative credit data distributed? No No 0 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No No 0 By law, do borrowers have the right to access their data in the credit bureau or No No 0 credit registry? Can banks and financial institutions access borrowers’ credit information online No No 0 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 0 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 2,722,617 Number of firms 0 797,619 Total 0 3,520,236 Percentage of adult population 0 3.2 Page 48 Doing Business 2019 Bangladesh Getting Credit - Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Strength of legal rights index (0-12) 5 5.5 6.1 12 (5 Economies) Depth of credit information index (0-8) 0 4.0 6.7 8 (42 Economies) Credit registry coverage (% of adults) 3.2 4.8 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 0 18.5 65.3 100.0 (25 Economies) Figure – Getting Credit in Chittagong and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 80.00: India (Rank: 22) 45.00: Pakistan (Rank: 112) 40.00: Sri Lanka (Rank: 124) 25.00: Chittagong 25.00: Dhaka Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Chittagong and comparator economies 9 8 7 6 5.5 Index Score 5 5 5 4 3 2 2 2 1 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Page 49 Doing Business 2019 Bangladesh Details – Legal Rights in Chittagong Strength of legal rights index (0-12) 5 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by No asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Chittagong and comparator economies 8 7 7 7 6 6 Index Score 5 4.0 4 3 2 1 0 0 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Page 50 Doing Business 2019 Bangladesh Details – Credit Information in Chittagong Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? No No 0 Are both positive and negative credit data distributed? No No 0 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No No 0 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No No 0 By law, do borrowers have the right to access their data in the credit bureau or No No 0 credit registry? Can banks and financial institutions access borrowers’ credit information online No No 0 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 0 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 2,722,617 Number of firms 0 797,619 Total 0 3,520,236 Percentage of adult population 0 3.2 Page 51 Doing Business 2019 Bangladesh Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. - Has a supervisory board in economies with a two-tier board system on which Mr. • Ease of shareholder suits index (0–10): Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand • Extent of ownership and control index (0-10): Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price Governance safeguards protecting shareholders is equal to 10% of Buyer’s assets and is higher than the market value. from undue board control and entrenchment - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 52 Doing Business 2019 Bangladesh Protecting Minority Investors - Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Extent of disclosure index (0-10) 6.0 5.8 6.5 10 (13 Economies) Extent of director liability index (0-10) 7.0 5.0 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 7.0 7.4 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 5.0 6.9 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 3.0 5.9 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 5.0 6.1 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Dhaka and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 80.00: India (Rank: 7) 71.67: Pakistan (Rank: 26) 66.67: Sri Lanka (Rank: 38) 55.00: Chittagong 55.00: Dhaka Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Dhaka and comparator economies – Measure of Quality Dhaka 5 7 6 3 5 7 Chittagong 5 7 6 3 5 7 India 8 7 8 8 10 7 Pakistan 7 7 6 9 8 6 Sri Lanka 7 5 8 6 7 7 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 South Asia 6.4 5.9 6.1 6.2 7.2 7.1 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 53 Doing Business 2019 Bangladesh Details – Protecting Minority Investors in Dhaka – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6.7 Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of 2.0 directors excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 7.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if negligent 1.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if unfair or 2.0 Buyer (0-2) prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if 1.0 negligently concluded Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying Yes 1.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) At the discretion 0.0 of the court Extent of shareholder governance index (0-10) 4.3 Extent of shareholder rights index (0-10) 5.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Page 54 Doing Business 2019 Bangladesh Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 3.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting No 0.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the No 0.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 55 Doing Business 2019 Bangladesh Protecting Minority Investors - Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Extent of disclosure index (0-10) 6.0 5.8 6.5 10 (13 Economies) Extent of director liability index (0-10) 7.0 5.0 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 7.0 7.4 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 5.0 6.9 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 3.0 5.9 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 5.0 6.1 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Chittagong and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 80.00: India (Rank: 7) 71.67: Pakistan (Rank: 26) 66.67: Sri Lanka (Rank: 38) 55.00: Chittagong 55.00: Dhaka Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Chittagong and comparator economies – Measure of Quality Chittagong 5 7 6 3 5 7 Dhaka 5 7 6 3 5 7 India 8 7 8 8 10 7 Pakistan 7 7 6 9 8 6 Sri Lanka 7 5 8 6 7 7 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 South Asia 6.4 5.9 6.1 6.2 7.2 7.1 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 56 Doing Business 2019 Bangladesh Details – Protecting Minority Investors in Chittagong – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6.7 Extent of disclosure index (0-10) 6.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of 2.0 directors excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 7.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if negligent 1.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if unfair or 2.0 Buyer (0-2) prejudicial Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if 1.0 negligently concluded Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying Yes 1.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) At the discretion 0.0 of the court Extent of shareholder governance index (0-10) 4.3 Extent of shareholder rights index (0-10) 5.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Page 57 Doing Business 2019 Bangladesh Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 3.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve No 0.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting No 0.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the No 0.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 58 Doing Business 2019 Bangladesh Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and mandatory contributions are measured at all levels of government. • Collecting information, computing tax payable • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be Total tax and contribution rate (% of commercial fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. • Dividend, capital gains, financial transactions discovered the error and voluntarily notified the tax authority. The value of the taxes underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 59 Doing Business 2019 Bangladesh Paying Taxes - Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Payments (number per year) 33 27.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 435 274.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 33.4 43.5 39.8 26.1% (32 Economies) Postfiling index (0-100) 44.38 41.78 84.41 None in 2017/18 Figure – Paying Taxes in Dhaka and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 65.36: India (Rank: 121) 59.79: Sri Lanka (Rank: 141) 56.13: Dhaka 56.11: Chittagong 47.05: Pakistan (Rank: 173) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Dhaka and comparator economies – Measure of Quality 100 80 Index score 60 49.31 49.31 44.38 44.31 41.78 40 20 10.49 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Page 60 Doing Business 2019 Bangladesh Details – Paying Taxes in Dhaka Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Corporate 5.0 144.0 35% taxable profit 30.37 income tax Municipal tax 1.0 7% rental value 2.25 (property tax) Capital gains 0.0 jointly 15% capital gains 0.76 tax Tax on 0.0 withheld 10% interest 0.26 included in interest income other taxes Value added 12.0 171.0 Variable rate value added 0.00 not included tax (VAT) (up to 15%) Vehicle tax 1.0 fixed fee 0.00 small amount depending on type of vehicle Personal 12.0 120.0 varies gross salaries 0.00 withheld income tax Stamp duty 1.0 varies type of 0.00 small amount on contracts contract Land 1.0 Fixed fee area of land 0.00 small amount development depending on tax (khajna) area of land and locality where situated Totals 33 435 33.4 Page 61 Doing Business 2019 Bangladesh Details – Paying Taxes in Dhaka – Tax by Type Taxes by type Answer Profit tax (% of profit) 31.1 Labor tax and contributions (% of profit) 0 Other taxes (% of profit) 2.3 Page 62 Doing Business 2019 Bangladesh Details – Paying Taxes in Dhaka – Measure of Quality Answer Score Postfiling index (0-100) 44.38 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 50% - 74% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 58.0 0 Time to obtain a VAT refund (weeks) 17.9 71.66 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 50% - 74% Time to comply with a corporate income tax correction (hours) 37.0 34.86 Time to complete a corporate income tax correction (weeks) 9.3 70.98 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 63 Doing Business 2019 Bangladesh Paying Taxes - Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Payments (number per year) 33 27.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 435 274.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 33.4 43.5 39.8 26.1% (32 Economies) Postfiling index (0-100) 44.31 41.78 84.41 None in 2017/18 Figure – Paying Taxes in Chittagong and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 65.36: India (Rank: 121) 59.79: Sri Lanka (Rank: 141) 56.13: Dhaka 56.11: Chittagong 47.05: Pakistan (Rank: 173) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Chittagong and comparator economies – Measure of Quality 100 80 Index score 60 49.31 49.31 44.31 44.38 41.78 40 20 10.49 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Page 64 Doing Business 2019 Bangladesh Details – Paying Taxes in Chittagong Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Corporate 5.0 144.0 35% taxable profit 30.37 income tax Municipal tax 1.0 7% rental value 2.25 (property tax) Capital gains 0.0 jointly 15% capital gains 0.76 tax Tax on 0.0 withheld 10% interest 0.26 included in interest income other taxes Value added 12.0 171.0 Variable rate value added 0.00 not included tax (VAT) (up to 15%) Vehicle tax 1.0 fixed fee 0.00 small amount depending on type of vehicle Personal 12.0 120.0 varies gross salaries 0.00 withheld income tax Stamp duty 1.0 varies type of 0.00 small amount on contracts contract Land 1.0 Fixed fee area of land 0.00 small amount development depending on tax (khajna) area of land and locality where situated Totals 33 435 33.4 Page 65 Doing Business 2019 Bangladesh Details – Paying Taxes in Chittagong – Tax by Type Taxes by type Answer Profit tax (% of profit) 31.1 Labor tax and contributions (% of profit) 0 Other taxes (% of profit) 2.3 Page 66 Doing Business 2019 Bangladesh Details – Paying Taxes in Chittagong – Measure of Quality Answer Score Postfiling index (0-100) 44.31 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 50% - 74% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 58.0 0 Time to obtain a VAT refund (weeks) 18.0 71.38 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 50% - 74% Time to comply with a corporate income tax correction (hours) 37.0 34.86 Time to complete a corporate income tax correction (weeks) 9.3 70.98 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 67 Doing Business 2019 Bangladesh Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. • Transport between warehouse and port/border Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 68 Doing Business 2019 Bangladesh Trading across Borders - Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Time to export: Border compliance (hours) 168 62.9 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 408 347.2 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 147 74.1 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 225 160.3 35.2 0 (20 Economies) Time to import: Border compliance (hours) 216 95.8 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 900 504.6 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 144 100.8 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 370 276.7 24.9 0 (30 Economies) Figure – Trading across Borders in Dhaka and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 77.46: India (Rank: 80) 73.29: Sri Lanka (Rank: 93) 60.12: Pakistan (Rank: 142) 31.76: Chittagong 31.76: Dhaka Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Dhaka – Time and Cost Time (hours) Cost (USD) 250 900 1000 216 200 800 Time (hours) 168 Cost (USD) 147 144 150 600 408 370 100 400 225 50 200 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 69 Doing Business 2019 Bangladesh Details – Trading across Borders in Dhaka Characteristics Export Import Product HS 61 : Articles of apparel and clothing HS 8708: Parts and accessories of motor accessories, knitted or crocheted vehicles Trade partner Germany India Border Chittagong port Chittagong port Distance (km) 263 263 Domestic transport time (hours) 18 18 Domestic transport cost (USD) 231 300 Details – Trading across Borders in Dhaka – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 96.0 151.9 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 72.0 256.3 Import: Clearance and inspections required 120.0 400.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 96.0 500.0 Page 70 Doing Business 2019 Bangladesh Details – Trading across Borders in Dhaka – Trade Documents Export Import Bill of Lading Bill of lading Commercial Invoice Cargo release order (Gate Pass) Customs Export Declaration Certificate of origin Packing List Commercial invoice Certificate of origin Customs import declaration Terminal Handling Receipts Packing list Technical standards certificate Technical standard/Cleanliness certificate Cargo release order Terminal handling receipts Customs Transit Document Letter of credit Foreign exchange authorization SOLAS certificate Pre shipment inspection - clean report of findings Utilized Declaration for garments Letter of Credit SOLAS certificate Page 71 Doing Business 2019 Bangladesh Trading across Borders - Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Time to export: Border compliance (hours) 168 62.9 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 408 347.2 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 147 74.1 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 225 160.3 35.2 0 (20 Economies) Time to import: Border compliance (hours) 216 95.8 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 900 504.6 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 144 100.8 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 370 276.7 24.9 0 (30 Economies) Figure – Trading across Borders in Chittagong and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 77.46: India (Rank: 80) 73.29: Sri Lanka (Rank: 93) 60.12: Pakistan (Rank: 142) 31.76: Chittagong 31.76: Dhaka Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Chittagong – Time and Cost Time (hours) Cost (USD) 250 900 1000 216 200 800 Time (hours) 168 Cost (USD) 147 144 150 600 408 370 100 400 225 50 200 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 72 Doing Business 2019 Bangladesh Details – Trading across Borders in Chittagong Characteristics Export Import Product HS 61 : Articles of apparel and clothing HS 8708: Parts and accessories of motor accessories, knitted or crocheted vehicles Trade partner Germany India Border Chittagong port Chittagong port Distance (km) 20 20 Domestic transport time (hours) 4 4 Domestic transport cost (USD) 77 85 Details – Trading across Borders in Chittagong – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 96.0 151.9 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 72.0 256.3 Import: Clearance and inspections required 120.0 400.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 96.0 500.0 Page 73 Doing Business 2019 Bangladesh Details – Trading across Borders in Chittagong – Trade Documents Export Import Bill of lading Bill of lading Commercial invoice Cargo release order (Gate Pass) Customs Export Declaration Certificate of origin Packing List Commercial invoice Certificate of origin Customs import declaration Terminal Handling Receipts Packing list Technical standards certificate Technical standard/Cleanliness certificate Cargo release order Terminal handling receipts Customs Transit Document Letter of credit Foreign exchange authorization SOLAS certificate Pre shipment inspection - clean report of findings Utilized Declaration for Garments Letter of Credit SOLAS certificate Page 74 Doing Business 2019 Bangladesh Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The seller enforces the judgment through a public sale of the buyer’s movable • Alternative dispute resolution (0-3) assets. Page 75 Doing Business 2019 Bangladesh Enforcing Contracts - Dhaka Standardized Case Claim value BDT 423,660 Court name Joint District Judge City Covered Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Time (days) 1442 1101.6 582.4 None in 2017/18 Cost (% of claim value) 66.8 29.8 21.2 None in 2017/18 Quality of judicial processes index (0-18) 7.5 7.0 11.5 None in 2017/18 Figure – Enforcing Contracts in Dhaka and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 43.49: Pakistan (Rank: 156) 41.19: India (Rank: 163) 41.16: Sri Lanka (Rank: 164) 22.21: Chittagong 22.21: Dhaka Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Dhaka – Time and Cost Time (days) Cost (% of claim value) 1600 80 1442 1442 1445 Cost (% of claim value) 1400 66.8 66.8 1318 70 1200 1071 1101.6 60 Time (days) 1000 50 800 40 31.0 582.4 29.8 600 22.8 30 21.2 20.5 400 20 200 10 0 0 Chittagong Dhaka India OECD Pakistan South Sri high Asia Lanka income Page 76 Doing Business 2019 Bangladesh Figure – Enforcing Contracts in Dhaka and comparator economies – Measure of Quality Dhaka 3 1 0.5 3 Chittagong 3 1 0.5 3 India 2.5 1.5 2 4.5 Pakistan 2 1.2 0.5 2 Sri Lanka 2.5 1 0.5 4.5 OECD high income 2.5 3.1 2.3 3.6 South Asia 2.4 1.1 0.8 3.1 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Dhaka Indicator Time (days) 1442 Filing and service 30 Trial and judgment 1047 Enforcement of judgment 365 Cost (% of claim value) 66.8 Attorney fees 40 Court fees 8.3 Enforcement fees 18.5 Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 1.0 Court automation (0-4) 0.5 Alternative dispute resolution (0-3) 3.0 Page 77 Doing Business 2019 Bangladesh Details – Enforcing Contracts in Dhaka – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.5 2.a. Does the law regulate the maximum number of adjournments that can be Yes granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? No 3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for No 0.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for No 0.0 use by lawyers? Court automation (0-4) 0.5 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.5 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 78 Doing Business 2019 Bangladesh 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 79 Doing Business 2019 Bangladesh Enforcing Contracts - Chittagong Standardized Case Claim value BDT 423,660 Court name Joint District Judge City Covered Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Time (days) 1442 1101.6 582.4 None in 2017/18 Cost (% of claim value) 66.8 29.8 21.2 None in 2017/18 Quality of judicial processes index (0-18) 7.5 7.0 11.5 None in 2017/18 Figure – Enforcing Contracts in Chittagong and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 43.49: Pakistan (Rank: 156) 41.19: India (Rank: 163) 41.16: Sri Lanka (Rank: 164) 22.21: Chittagong 22.21: Dhaka Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Chittagong – Time and Cost Time (days) Cost (% of claim value) 1600 80 1442 1442 1445 Cost (% of claim value) 1400 66.8 66.8 1318 70 1200 1071 1101.6 60 Time (days) 1000 50 800 40 31.0 582.4 29.8 600 22.8 30 21.2 20.5 400 20 200 10 0 0 Chittagong Dhaka India OECD Pakistan South Sri high Asia Lanka income Page 80 Doing Business 2019 Bangladesh Figure – Enforcing Contracts in Chittagong and comparator economies – Measure of Quality Chittagong 3 1 0.5 3 Dhaka 3 1 0.5 3 India 2.5 1.5 2 4.5 Pakistan 2 1.2 0.5 2 Sri Lanka 2.5 1 0.5 4.5 OECD high income 2.5 3.1 2.3 3.6 South Asia 2.4 1.1 0.8 3.1 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Chittagong Indicator Time (days) 1442 Filing and service 30 Trial and judgment 1047 Enforcement of judgment 365 Cost (% of claim value) 66.8 Attorney fees 40 Court fees 8.3 Enforcement fees 18.5 Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 1.0 Court automation (0-4) 0.5 Alternative dispute resolution (0-3) 3.0 Page 81 Doing Business 2019 Bangladesh Details – Enforcing Contracts in Chittagong – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 1.0 1. Time standards 0.5 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.5 2.a. Does the law regulate the maximum number of adjournments that can be Yes granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? No 3. Can two of the following four reports be generated about the competent court: (i) time to No 0.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for No 0.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for No 0.0 use by lawyers? Court automation (0-4) 0.5 1. Can the initial complaint be filed electronically through a dedicated platform within the no 0.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.5 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 82 Doing Business 2019 Bangladesh 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 83 Doing Business 2019 Bangladesh Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 84 Doing Business 2019 Bangladesh Resolving Insolvency - Dhaka Indicator Dhaka South Asia OECD high Best Regulatory income Performance Recovery rate (cents on the dollar) 29.2 32.7 70.5 None in 2017/18 Time (years) 4.0 2.6 1.7 0.4 (Ireland) Cost (% of estate) 8.0 9.9 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 4.0 6.6 11.9 None in 2017/18 Figure – Resolving Insolvency in Dhaka and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 59.86: Pakistan (Rank: 53) 45.05: Sri Lanka (Rank: 92) 40.84: India (Rank: 108) 28.20: Chittagong 28.20: Dhaka Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Dhaka – Time and Cost Time (years) Cost (% of estate) 4.5 4.3 12 4.0 4.0 4 9.9 10.0 9.3 10 Cost (% of estate) 3.5 9.0 8.0 8.0 Time (years) 3 2.6 2.6 8 2.5 6 2 1.7 1.7 4.0 1.5 4 1 2 0.5 0 0 Chittagong Dhaka India OECD Pakistan South Sri high Asia Lanka income Page 85 Doing Business 2019 Bangladesh Figure – Resolving Insolvency in Dhaka and comparator economies – Measure of Quality Dhaka 2 2 0 Chittagong 2 2 0 India 4.5 2 1 1 Pakistan 5.5 2.5 2 1.5 Sri Lanka 3 2.5 1 0.5 OECD high income 5.3 2.8 2.2 1.9 South Asia 3.6 2.1 0.9 0.9 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Dhaka and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 44.5 43.1 40 32.7 29.2 26.5 29.2 20 0 Dhaka India Pakistan Sri Lanka Chittagong South Asia Page 86 Doing Business 2019 Bangladesh Details – Resolving Insolvency in Dhaka Indicator Answer Score Proceeding foreclosure After 90 days of automatic stay, the Bizbank would initiate foreclosure through Artha Rin Adalat Bankruptcy Court which is established under the Artha Rin Adalat Act 2003 for banks and non- banking financial institutions (NBFIs). Artha Rin Adalat Bankruptcy Court would then review the case and makes decision on Mirages's application. Once a decree has been passed against the entity, the bank files for execution of the decree and the Court conducts a piecemeal sale of Mirage's assets in a public auction. Outcome piecemeal sale No, the hotel will stop operating and Mirage assets will be sold piecemeal in a public auction conducted by the Artha Rin Courts after granting the order on the BizBank's foreclosure application. Time (in years) 4.0 A foreclosure procedure will approximately take 4 years in total. BizBank would initiate foreclosure after the 90 days automatic stay, and after filing the application to the Artha Rin Bankruptcy Court, it usually takes another year to get a decree from the Artha Rin Bankruptcy Court (1-2 years). The execution of the decree until BizBank is repaid some or all of the money owed to it from the auction proceeds would take additional 1 to 2 years. Cost (% of 8.0 The costs associated with the case would amount to approximately 8% of the value of the debtor's estate) estate. Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (up to 5%), costs of notification and publication (1%), fees of accountants, assessors, inspectors and other professionals (1%), and auctioneer fees (1%). Recovery rate 29.2 (cents on the dollar) Page 87 Doing Business 2019 Bangladesh Details – Resolving Insolvency in Dhaka – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 4.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may 0.5 file for liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 2.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? No 0.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions No 0.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 88 Doing Business 2019 Bangladesh Resolving Insolvency - Chittagong Indicator Chittagong South Asia OECD high Best Regulatory income Performance Recovery rate (cents on the dollar) 29.2 32.7 70.5 None in 2017/18 Time (years) 4.0 2.6 1.7 0.4 (Ireland) Cost (% of estate) 8.0 9.9 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 4.0 6.6 11.9 None in 2017/18 Figure – Resolving Insolvency in Chittagong and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 59.86: Pakistan (Rank: 53) 45.05: Sri Lanka (Rank: 92) 40.84: India (Rank: 108) 28.20: Chittagong 28.20: Dhaka Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Chittagong – Time and Cost Time (years) Cost (% of estate) 4.5 4.3 12 4.0 4.0 4 9.9 10.0 9.3 10 Cost (% of estate) 3.5 9.0 8.0 8.0 Time (years) 3 2.6 2.6 8 2.5 6 2 1.7 1.7 4.0 1.5 4 1 2 0.5 0 0 Chittagong Dhaka India OECD Pakistan South Sri high Asia Lanka income Page 89 Doing Business 2019 Bangladesh Figure – Resolving Insolvency in Chittagong and comparator economies – Measure of Quality Chittagong 2 2 0 Dhaka 2 2 0 India 4.5 2 1 1 Pakistan 5.5 2.5 2 1.5 Sri Lanka 3 2.5 1 0.5 OECD high income 5.3 2.8 2.2 1.9 South Asia 3.6 2.1 0.9 0.9 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Chittagong and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 44.5 43.1 40 32.7 29.2 26.5 29.2 20 0 Chittagong India Pakistan Sri Lanka Dhaka South Asia Page 90 Doing Business 2019 Bangladesh Details – Resolving Insolvency in Chittagong Indicator Answer Score Proceeding foreclosure After 90 days of automatic stay, the Bizbank would initiate foreclosure through Artha Rin Adalat Bankruptcy Court which is established under the Artha Rin Adalat Act 2003 for banks and non- banking financial institutions (NBFIs). Artha Rin Adalat Bankruptcy Court would then review the case and makes decision on Mirages's application. Once a decree has been passed against the entity, the bank files for execution of the decree and the Court conducts a piecemeal sale of Mirage's assets in a public auction. Outcome piecemeal sale No, the hotel will stop operating and Mirage assets will be sold piecemeal in a public auction conducted by the Courts after granting the order on the BizBank's foreclosure application. Time (in years) 4.0 A foreclosure procedure will approximately take 4 years in total. BizBank would initiate foreclosure after the 90 days automatic stay, and after filing the application to the Artha Rin Bankruptcy Court, it usually takes another year to get a decree from the Artha Rin Bankruptcy Court (1-2 years). The execution of the decree until BizBank is repaid some or all of the money owed to it from the auction proceeds would take additional 1 to 2 years. Cost (% of 8.0 The costs associated with the case would amount to approximately 8% of the value of the debtor's estate) estate. Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (up to 5%), costs of notification and publication (1%), fees of accountants, assessors, inspectors and other professionals (1%), and auctioneer fees (1%). Recovery rate 29.2 (cents on the dollar) Page 91 Doing Business 2019 Bangladesh Details – Resolving Insolvency in Chittagong – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 4.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may 0.5 file for liquidation only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 2.0 Does the insolvency framework allow the continuation of contracts supplying essential goods No 0.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? No 0.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 0.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions No 0.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 92 Doing Business 2019 Bangladesh Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 93 Doing Business 2019 Bangladesh Labor Market Regulation - Dhaka Details – Labor Market Regulation in Dhaka Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 0.0 Ratio of minimum wage to value added per worker 0.0 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.5 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 100.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 17.0 Paid annual leave for a worker with 5 years of tenure (working days) 17.0 Paid annual leave for a worker with 10 years of tenure (working days) 17.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 17.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 5.0 Page 94 Doing Business 2019 Bangladesh Severance pay for redundancy dismissal for a worker with 5 years of tenure 25.0 Severance pay for redundancy dismissal for a worker with 10 years of tenure 50.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 26.7 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 112.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? n.a. Page 95 Doing Business 2019 Bangladesh Labor Market Regulation - Chittagong Details – Labor Market Regulation in Chittagong Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) No limit Maximum length of fixed-term contracts, including renewals (months) No limit Minimum wage applicable to the worker assumed in the case study (US$/month) 0.0 Ratio of minimum wage to value added per worker 0.0 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.5 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 100.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 17.0 Paid annual leave for a worker with 5 years of tenure (working days) 17.0 Paid annual leave for a worker with 10 years of tenure (working days) 17.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 17.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? Yes Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 5.0 Page 96 Doing Business 2019 Bangladesh Severance pay for redundancy dismissal for a worker with 5 years of tenure 25.0 Severance pay for redundancy dismissal for a worker with 10 years of tenure 50.0 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 26.7 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 112.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? n.a. Page 97 Doing Business 2019 Bangladesh Business Reforms in Bangladesh In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2018 Starting a Business: Bangladesh made starting a business more expensive by increasing the cost of business registration at the Registrar of Joint Stock Companies and Firms. This reform applies to both Chittagong and Dhaka. DB2017 Paying Taxes: Bangladesh made paying taxes more complicated for companies by increasing the time it takes to prepare VAT and corporate income tax returns. This reform applies to both Chittagong and Dhaka. DB2016 Getting Electricity: Bangladesh reduced the application processing time for new connections in both Dhaka and Chittagong thanks to an increase in the country’s network capacity. Paying Taxes: Bangladesh made paying taxes less costly for companies by reducing the corporate income tax rate. This reform applies to both Chittagong and Dhaka. DB2015 Trading across Borders: Bangladesh made trading across borders easier by introducing a fully automated, computerized customs data management system, ASYCUDA (Automated System for Customs Data) World. This reform applies to both Chittagong and Dhaka. DB2014 Starting a Business: Bangladesh made starting a business easier by automating the registration process and reducing the time required to obtain a trading license and to complete the tax and value added tax registration. DB2013 Getting Electricity: Bangladesh made getting electricity more difficult by requiring all customers to meet 7% of their electricity needs through solar energy, making it necessary to install solar panels. Getting Credit: Bangladesh improved access to credit information by establishing an online platform for sharing such information. DB2012 Getting Electricity: Bangladesh made getting electricity more difficult by imposing a moratorium on new electricity connections from April 2010 to March 2011 because of an electricity supply shortage. This moratorium has led to long delays for customers and has increased the time to obtain an electricity connection. DB2011 Starting a Business: Bangladesh made business start-up easier by eliminating the requirement to buy adhesive stamps and further enhancing the online registration system. Registering Property: Bangladesh reduced the property transfer tax to 6.7% of the property value. DB2010 Starting a Business: Bangladesh made starting a business easier by launching a full-fledged online business name clearance and registration process. Paying Taxes: Bangladesh made paying taxes less costly for companies by reducing the corporate income tax rate—though it also increased the capital gains tax rate. Trading across Borders: Bangladesh reduced the time required to clear goods by automating customs clearance procedures at the Chittagong port. DB2009 Starting a Business: Bangladesh simplified business registration formalities, reducing the time, cost and number of procedures to start a business. Registering Property: Bangladesh speeded up property registration by increasing efficiency at the municipal deed registry office. Page 98 Doing Business 2019 Bangladesh DB2008 Starting a Business: Bangladesh made starting a business more complicated by introducing an additional process for verifying the payment stamp duty Paying Taxes: Bangladesh made paying taxes more costly for companies by increasing the corporate income tax rate. Page 99 Doing Business 2019 Bangladesh Page 100