Some 57 percent of SME entrepreneurs mentioned the tax structure as the main obstacle to doing business in compliance with the law while 54 percent of entrepreneurs consider the trade license renewal process as an obstacle.
Some 51 percent of entrepreneurs see the additional cost of trade licenses as an obstacle whereas 44 percent say that the complexity of government laws and regulations is also one of the obstacles.
This information has emerged from a study by the SME Foundation.
Prof Dr Melita Mehjabeen of Dhaka University presented these findings on Sunday at a seminar titled ‘Informal SMEs in Bangladesh: Formalization Challenges and Way Forward’.
The seminar, organised by SME Foundation and German development agency Friedrich-Ebert-Stiftung (FES), Bangladesh, was held at the Agargaon Tourism Building. The event was chaired by Anwar Hossain Chowdhury, Managing Director of SME Foundation.
Industry Adviser Adilur Rahman Khan was the chief guest while Industries Secretary Zakia Sultana was the special guest.
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Dr. Felix Gerdes, Resident Representative of FES Bangladesh, and Gunjan Dallakoti, Program Head of International Labor Organization in Bangladesh, also spoke at the session.
Md. Nazim Hasan Sattar, General Manager of SME Foundation, delivered the welcome speech at the seminar.
The main article presented the detailed information of the research and further stated that more than 74 percent of the country's SME entrepreneurs want to do business in compliance with the government's laws and regulations.
However, in this case, there is a need to simplify the government's rules and regulations or introduce one-stop services, increase collateral-free loans and increase the facilities for doing business in compliance with the law.
This research was conducted on 304 entrepreneurs from Dhaka, Chattogram, Sylhet, Khulna and Rajshahi.
The entrepreneurs said that while in India only 7 certificates are required from various government departments to do business in compliance with the law, in Bangladesh they need certificates from at least 34 departments.
According to the 2013 Economic Survey of the Bureau of Statistics, there are more than 7.8 lakh CMSME establishments in the country, employing about 25 million people.
However, most of these institutions are informal or outside the government's laws, regulations and tax framework. In this situation, experts have recommended the government to prepare a comprehensive strategy paper to bring these institutions under the law, regulations and tax framework, formalize them step by step, simplify the rules and regulations, and provide financial and non-financial incentives to entrepreneurs.
SME entrepreneurs, representatives of various ministries and departments, SME chambers and associations, banks and financial institutions, researchers, economists and relevant stakeholders participated in the seminar.
The SME Foundation is implementing various programs in accordance with the government's National Industrial Policy 2022, SME Policy 2019, UN SDG 2030 and government directives to develop the SME sector through economic, social and environmental protection of the country.
Since its establishment in 2007, about two million small and medium entrepreneurs in the country have been beneficiaries of various programs of the SME Foundation.