SMEs call for reform amid bureaucratic hurdles, unofficial costs
Muhammad Ayub Ali :
Entrepreneurs seeking to start a new business in Bangladesh face significant challenges in obtaining the necessary documents and clearances.
From banks to government offices, many report experiences of harassment and additional unofficial costs.
Md Hasanuzzaman, the owner of HZ Trading, shared his journey with The New Nation.
He initially obtained an exporter licence from Jashore Municipality but had to pay Tk 3,000 extra beyond the government-fixed fee.
Afterward, he secured his business identification number (BIN) and tax identification number (TIN), both essential for an export business.
To proceed, he required membership in a traders’ association, which cost him Tk 3,600 more than the official fee. He then sought an Export Registration Certificate (ERC) from the Export Promotion Bureau (EPB) and had to pay an additional Tk 4,000 over the official fee.
Lastly, obtaining an export permit from a bank proved difficult, with two banks rejecting his application due to his lack of connections.
Only on his third attempt did he succeed.
In total, Hasanuzzaman spent over Tk 50,000 to navigate the complex process of starting his export business. This struggle is not unique; many new entrepreneurs face similar hurdles.
A study by the SME Foundation involving 304 entrepreneurs from Dhaka, Chattogram, Sylhet, Khulna, and Rajshahi revealed that 57 per cent cited tax structures as the main obstacle to lawful business operation, while 54 per cent highlighted challenges in trade licence renewal procedures.
Additionally, 51 per cent pointed to excessive trade licence costs, and 44 per cent found government laws and regulations too complex.
The study, presented at the seminar ‘Informal SMEs in Bangladesh: Formalization Challenges and Way Forward’, jointly organised by the SME Foundation and German development organisation Friedrich-Ebert-Stiftung, highlighted that businesses in Bangladesh require at least 34 certificates from various departments, compared to just seven in India.
Ali Zaman, President of the Small and Medium Enterprises Owners’ Association of Bangladesh, emphasised the need for a one-stop service to eliminate harassment at every stage of the process.
Md Mirza Nurul Ghani Shavon, President of the National Association of Small and Cottage Industries of Bangladesh, recommended measures to support new entrepreneurs, such as a 50 per cent discount on licence issuance fees, tax holidays, and special incentives for women entrepreneurs.
He noted, “It is true that in Bangladesh, new entrepreneurs face numerous issues with VAT, taxes, trade licences, and regulations.
These challenges are unacceptable and pose a threat to our CMSME industry.”
With LDC graduation expected in 2026, the World Trade Organization (WTO) has predicted that Bangladesh’s export business could decline by nearly 14 per cent by 2027, underscoring the urgency for systemic reforms to support new businesses and boost the economy.