The number of new firm registrations in Bangladesh continued to decline in the first quarter of the ongoing fiscal year, reflecting growing concern over economic growth and entrepreneurship.
The registration fell by 6.31 per cent during the July-October period in FY 2023-24, according to official figures, depicting an economic slowdown at home and abroad.
A total of 3,617 farms were registered during the period in question against 3,961 in FY23, data from the Office of the Registrar of Joint Stock Companies and Firms (RJSC).
On the other hand, the registration of private limited companies (PLCs) saw a more than 13-per cent decline during the period under review.
A total of 2,584 PLCs were registered from July to October this fiscal, whereas it was 2,921 in the same period in FY23, according to the RJSC data.
Not only that the registration of one-person company (OPC) witnessed a nearly 26-per cent decline during the period in question.
A total of 47 OPCs were registered from July to October in FY24, whereas 59 such companies were registered from July to October in FY23, reveals the data.
The RJSC office is obligated to furnish name clearances and conduct registrations for public companies, private companies, liaison offices or branches of foreign companies, trade entities, societies and partnership firms.
Until October 2023, the RJSC recorded a total of 286,930 registered companies.
This figure encompasses various business entities, including 3,631 public companies, 208,068 private companies, 1,107 liaison offices representing foreign companies, 56,810 partnership firms, 1,182 trade bodies, 15,779 societies and 311 OPCs.
The downward trend in new farm registrations follows a notable peak of 14,826 registrations in FY21.
However, this promising figure experienced a subsequent decrease to 13,485 in the following fiscal year, marking a distinct shift in the trajectory of new farm registrations.
Such decline in the registration of new companies indicates a downward trend in the investment in the country during the mentioned period.
According to official data, the investment proposals with the Bangladesh Investment Development Authority (BIDA) dropped to over Tk 209.62 billion from July to September over the same period last year.
BIDA received over Tk 316.10 billion in investment proposals in the same period of the previous year, according to the report.
Industry leaders and experts are attributing the decline in new farm registrations to a combination of factors, notably economic uncertainties, elevated business costs and diminished returns on investment.
The prevailing conditions in the business landscape have created an environment where new enterprises are increasingly reluctant to take on risks associated with establishing and registering farms, they said.
The economic challenges, coupled with high operational costs, pose significant barriers to entry for entrepreneurs.
The prospect of low returns on investment further discourages new players from venturing into the market, according to them.
Dhaka Chamber of Commerce and Industry (DCCI) president barrister Sameer Sattar feels that ongoing economic challenges may be influencing the decline in new firm registrations.
According to him, certain entrepreneurs may be opting for safer investments in property or other companies rather than forming new firms, which may contribute to the decrease.
Mr Sattar highlighted that private investments have also declined to some extent.
Despite the current scenario, he was optimistic that the situation might improve in the coming days, especially once the global economic challenges are over.
As Bangladesh navigates these economic challenges, the DCCI chief believes, the hope is for a more favourable environment for entrepreneurship and investment, fostering resurgence in new business registrations.
Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, highlights prevailing macroeconomic uncertainties such as fluctuations in foreign-exchange reserves, a decrease in FDI and declining private investment.
These critical economic factors, he notes, are acting as deterrents, dissuading potential new investors from entering the market.
"If there is no significant elevation in macroeconomic conditions and the establishment of a new economic equilibrium, prospective investors are likely to exercise caution when exploring new opportunities."
Prof Rahman also underscored the importance of addressing these macroeconomic challenges to foster a more conducive environment for investor confidence and engagement in the market.
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