Most entrepreneurs register their businesses three to 15 years after the startup to skip burdensome multiple compliance costs even before beginning operations, a latest finding reveals.
Entrepreneurs say they need to carry multiple expenditures and complex procedures, including tax, VAT and trade licensing, before starting full-fledged business.
Such observations from a focus-group discussion (FGD) in Bangladesh also say manual trade licence-application process is time-consuming and takes between five and seven working days to issue the licence book.
Women entrepreneurs have to spend three times higher for renewal of trade licences as 'speed money' becomes a 'culture' in many of the offices, the function was told.
"In some cases, it may involve more days for undocumented requirements," says one observation from the discussion on the alleged business hurdles that economists say stymie investment.
The findings on cumbersome process of trade licensing came after the focus-group discussion with entrepreneurs from Netrakona, Jashore, Sylhet, Chattrogram and Dhaka.
Women Entrepreneurs Network for Development (WEND) organised the FDG with the support of USAID wherein both male and female entrepreneurs participated.
Entrepreneurs noted that as the trade-licensing services are partly digitized, they were not getting its benefit.
"It's manual-like service for us as we have to visit the office to accelerate issuance of hard copy," said Dr Nadia Binte Amin, president of WEND.
She feels VAT-tax process needs to be simplified for small entrepreneurs.
"Women entrepreneurs are not tech-friendly yet, but in case of failure in online VAT submission every month system charges Tk 10,000 in penalty. It should be waived for small entrepreneurs," she says.
The WEND has also organized a roundtable discussion on trade-licensing process for women entrepreneurs with the support of USAID in a bid to educate them on rules and regulations of the services.
It has arranged several focus-group discussions and informal interviews with secretary of union parishad, licence officers and revenue officers of municipalities and city corporations.
Women entrepreneurs said FGD helped them understand trade-licence registration and renewal process in Union Parishads, Municipalities and city corporation areas.
Micro-and small entrepreneurs shared the sufferings faced at the time of obtaining or renewal process of trade licences.
The WEND president said the women entrepreneurs would have to understand the regulatory requirements, application and renewal process of trade licences to stay away from harassment.
"They would be able to interact smoothly with the service-providing entities of the government and avail benefit of the simplification of trade- licence process being properly aware of the pros and cons," she said.
Entrepreneurs said licence application and renewal forms are manual in Union Parishads and Municipalities. They also found decentralized trade- license registration and renewal process creating confusion and obstacle for the entrepreneurs to formalize business.
Commercial permission of business space is a burden for small entrepreneurs and there are several undocumented requirements by regulatory body, they said in the FGD.
The entrepreneurs found trade licence details-verification system time-consuming and only available option being visit to city corporation zonal offices.
Businesses working in different geographic locations are required to obtain a separate trade licence for each location.
They also said the one-year validity period for trade licence is too short for businesses.
Trade licences manual book is issued only for five years so when it's required to issue another book, then it needs to pay an extra amount as 'speed money' in the name of service charges to the regulatory body to issue the new book, which creates a burden to the small entrepreneurs.
A number of recommendations were made by WEND after holding the FGD, including full-fledged automation of trade-licensing services, bilingual versions of application, renewal forms and certificates, residential space permission for micro-and small entrepreneurs, multi-year, countrywide single trade licence and online licence book and building awareness.
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