Making the case for a regulatory reform commission

For years, businesses in Bangladesh have struggled with an invisible but formidable opponent: a web of outdated, inconsistent and burdensome regulations. Navigating this bureaucratic maze, often justified in the name of oversight, has meant unpredictable delays, opaque procedures and uneven enforcement. As the new government seeks to revitalise the economy and attract fresh investment, regulatory reform is not merely timely. It is essential.

In response to mounting pressure from domestic business leaders and international development partners, the immediate past interim government discussed an ambitious reform agenda. Although it produced little in the way of a concrete action plan, I believe the centrepiece should be a “Regulatory Reform Commission” (RRC), tasked with overhauling archaic rules that constrain economic activity. Its role must be continuous and proactive: to monitor, evaluate and streamline the full spectrum of economic, especially business-related, regulations.

This is not Bangladesh’s first attempt. Against the backdrop of earlier efforts in 2005-2006, the caretaker government set up a commission in 2007, led by the late Akbar Ali Khan. It dissolved after 2008, largely because political continuity was lacking. That experience offers a clear lesson. From my engagement with the earlier “Better Business Forum”, which helped establish the original RRC, I can say business owners repeatedly stressed that leaving reform solely to line ministries would yield little progress. What is needed is a central authority with a clear mandate and strong political backing.

The case for reform is also borne out by data. Bangladesh continues to lag behind regional peers in measures of the business environment. In early 2025, the country scored 56.99 out of 100 in the regulatory framework pillar, placing it in the bottom quintile among 50 surveyed economies. Despite positive steps such as the digitalisation of trade documentation and one-stop service initiatives, entrepreneurs still face regulatory uncertainty that stifles innovation and deters investment. Foreign direct investment fell by 5 percent in FY24, a worrying signal for an economy that relies on private capital to drive growth.

Recent economic headwinds have sharpened the urgency. GDP growth has slowed, prompting the World Bank to revise its annual forecast to 4 percent. Domestic revenue rose by just 3.7 percent in the first quarter of FY25, compared with 17.7 percent a year earlier. In response, the government has secured more than $3 billion in World Bank funding, with a significant share earmarked for regulatory and structural reforms.

Analysts point to two persistent weaknesses. Many regulations are outdated or no longer fit for purpose. At the same time, Bangladesh lacks clear frameworks to govern emerging technologies and new business models. Policymakers are too often playing catch-up. This widening gap between regulation and reality strengthens the argument for a permanent reform commission.

If the RRC is to avoid becoming a token initiative, it must be established by law and insulated from political cycles. Drawing on past experience, a three-tier structure could prove effective: broad consultation to identify bottlenecks; expert-led design of reforms aligned with global best practice; and institutional mechanisms to ensure implementation. The earlier commission made tangible progress when backed by the Better Business Forum and strong leadership. It should again operate within a wider public-private ecosystem.

Bangladesh must move away from reactive, piecemeal regulation towards a strategic and forward-looking approach. A well-designed Regulatory Reform Commission can help achieve that goal, not only by cutting red tape but by making the economy more adaptive, inclusive and competitive in a fast-changing world.

The writer is an economic analyst and chairman at Financial Excellence Ltd