Bangladeshi apparel exporters have to pay up to six times higher than the official fees for securing essential permits and renewal of licences, which also increases their business costs, according to a new study by the Center for Policy Dialogue (CPD).
The study found that apparel exporters paid 644% higher than the official rate for boiler licences. For bond licences, they paid 261% higher than the official rate, and as for fire licences, the cost stands at 114% higher than the official rate.
“In some cases, the amount is a little bit lower. For example, 36% higher payment than the official for factory establishment licence, 16% higher for trade licence and 12% higher for export registration certificate and import registration certificate,” Dr Khondaker Golam Moazzem, research director at the CPD, said during a seminar on Tuesday (14 May).
The official rate, however, was not mentioned during the seminar.
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), CPD and GIZ Bangladesh jointly organised the event on the “Business related barriers and possible way out.”
According to Dr Khondaker Golam Moazzem, the data was collected from various business enterprises.
Anecdotal information shows that costs for securing essential permits can range from Tk50,000-100,000 more than the official fees, he said in his keynote presentation.
Renewal of these licences, however, incurs additional expenses varying from Tk500 to several thousand, he added.
“Businesses frequently encounter unofficial and unregulated fees, leading to financial strain and unpredictability in operational expenses,” he said.
These undocumented payments are perceived as necessary to expedite the licensing process, creating ethical and compliance dilemmas, he added.
“High levels of corruption can impact all business sectors, with 100% of large companies, 66.67% of medium-sized enterprises, and 61.9% of small and micro enterprises reporting it as a major issue.”
He also said about 58.6% of businesses report that bribes are common in awarding public contracts and licences.
The timeline for obtaining and renewing licences often exceeds the official period, leading to significant delays.
For example, a trade licence renewal, which officially takes no more than seven business days, often spans 10 to 15 days due to inefficiencies and additional fees, according to the CPD research director’s presentation.
Delays disrupt business operations, hinder expansion plans, and reduce investor confidence, he noted.
Due to complications, many businesses used to hire third-party agents to navigate bureaucratic hurdles and manage which also increased the cost of business, said Dr Moazzem.
The economist also recommended making the process transparent with digitisation, as it could be utilised to reduce such corruption and undocumented payments.
Ahsanul Islam Titu, state minister for Commerce, was the chief guest of the event and Lokman Hossain Mia, executive chairman of the Investment Development Authority (BIDA) attended as special guest. FBCCI President Mahbubul Alam chaired the seminar.
Credit RMG Bangladesh