New private firm registrations dropped 6.76 per cent year over year to 7,479 in FY24, according to official data, as trade leaders see a deteriorating investment climate since the pandemic that has discouraged new business formation.
During the recently concluded financial year, total firm registration logged a 4.39-percent YoY decline.
Annual data from the Registrar of Joint Stock Companies and Firms (RJSC) shows a broader and gradual decline in total firm registrations since FY 2019-20, marked by the coronavirus pandemic.
Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), identified several factors causing new businesses to hesitate: global uncertainties, a weakening economic situation and supply shortages of gas and power in industrial zones. According to Mr Alam, capital scarcity is another key deterrent.
Ashraf Ahmed, president of the Dhaka Chamber of Commerce and Industry (DCCI), echoed Mr Alam's views.
He thinks this situation may continue until both global and domestic conditions normalise.
M Masrur Reaz, chairman of the private-sector think-tank Policy Exchange of Bangladesh, sees the drop in new firm registrations as mirroring the current economic challenges.
He said businesses are naturally risk-averse during this period, given factors like high local currency depreciation, inflation, high costs of doing business, potentially rising salary costs, import restrictions and rising interest rates.
Mr Reaz also noted similar concerns regarding foreign direct investment (FDI) and the capital market.
"If we want to see a boost in the number of new enterprises, we have to address economic uncertainties, including currency devaluation, stabilise the balance of payments to ease import restrictions and tame the cost of doing business," he said.
Mr Reaz said persistent challenges in the overall investment climate and tax enforcement also discourage new businesses.
He advocated for creating an enabling policy and regulatory environment to attract new entrepreneurs, allow existing businesses to expand and incentivise informal businesses to formalise their operations.
Defying registration decline, RJSC revenue soars
The Registrar of Joint Stock Companies and Firms (RJSC) saw a revenue increase, Tk 2.87 billion in FY24 compared to Tk 2.70 billion in FY23, despite the decline in new firm registrations -- due mainly to the RJSC's fee hikes last year.
Last year, the RJSC increased a total of 37 types of fees, such as application charges for firm registration, name and location changes and branch opening or closing, by two to more than five times, while 22 services remained unchanged.
The RJSC has also introduced fees for three types of services that were previously provided free of cost.
Till June 30 this year, there were 293,139 companies registered with the RJSC. These include public and private limited companies, liaison offices of foreign companies, partnership firms, trade organisations, societies, and one-person companies.
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