Starting a business in some sectors of Bangladesh can require more than 30 licences, over 235 documents and nearly two years of regulatory approvals, helping keep almost two-thirds of the country’s economic units outside the formal economy, according to Business Initiative Leading Development (BUILD).
Simplifying the licensing regime could reduce business compliance costs by 30 per cent to 50 per cent, BUILD said at a consultation with the Ministry of Industries and the International Labour Organization (ILO) on Thursday, arguing that reform has become increasingly urgent as Bangladesh prepares for graduation from least developed country status.
About 65 per cent of economic units remain informal despite registered enterprises generating more than half of total employment, BUILD CEO Ferdaus Ara Begum said, citing Bangladesh Bureau of Statistics data.
Plastic waste management businesses require up to 31 licences, more than 235 documents and around 650 days to secure approvals, while light engineering firms need about 30 licences, over 200 documents and up to 600 days, according to BUILD’s research based on more than 50 stakeholder interviews.
Between 50 per cent and 60 per cent of required paperwork is repeatedly submitted to different government agencies, the study found. To address those bottlenecks, BUILD proposed introducing a single digital business identity number, a one-stop licensing platform and multi-year licence validity.
A high-level committee has been formed to accelerate regulatory reforms, Industries Secretary Abdun Naser Khan said, referring to a panel led by the adviser overseeing the ministries of industries, textiles, jute and commerce.
Reducing administrative burdens, particularly for SMEs, remains a government priority, he said, adding that work is under way with the Prime Minister’s Office to strengthen the One Stop Service platform. Khan also welcomed BUILD’s proposed 90-day deregulation action plan.
Achieving the government’s target of creating 10 lakh jobs will require at least one lakh new entrepreneurs, making regulatory simplification essential, BUILD Chairperson Abul Kasem Khan said.
He also launched BUILD’s business licensing guidebooks, describing them as practical references for investors navigating permits and approvals. He called for a unified utility connection application system, joint inspections and legally enforceable service level agreements to ensure agencies meet prescribed timelines.
Formalising the workforce is becoming increasingly important as Bangladesh prepares for LDC graduation and seeks to diversify exports, Peter Jr Bellen of the ILO said, noting that eight in 10 workers remain in the informal economy. He said the ILO would continue providing technical support to the government’s reform efforts.
Registering a company now takes less than 48 hours for a Tk2,500 fee when documentation is complete, Registrar of Joint Stock Companies and Firms Additional Secretary AKM Nurunnabi said.
Amendments to the Companies Act, 1994 are under way, while physical signatures for share transfers are being phased out in favour of digital processing, he added.
Trade licensing remains fragmented because more than 5,500 local government bodies issue licences independently without a central database, Local Government Division Joint Secretary Md Shamsul Hoque said. He supported further dialogue with BUILD, the ILO and the Ministry of Industries to streamline the system.
The 4 per cent interest cap on SME lending should be reviewed because it discourages banks from extending credit due to high monitoring costs, SME Foundation Deputy Managing Director Nazem H Sattar said, calling for alternative risk-sharing measures for collateral-constrained businesses.
Removing advance income tax on trade licence renewals, lowering mandatory audit costs for small businesses, introducing a simpler business exit mechanism and issuing trade licences in both Bangla and English would further improve the business environment, Women Entrepreneurs Network for Development President Nadia Binte Amin said.
A joint public-private task force reporting directly to the government could help remove regulatory bottlenecks, said Saifur Rahman, chairman of SKB Stainless Steel Mills. He also urged regulators to focus on product quality standards rather than prescribing production machinery through statutory regulatory orders.
BUILD and the ILO will consolidate the consultation’s recommendations into a reform package, while the Ministry of Industries plans follow-up meetings to translate the proposals into policy actions.
