Business slows, company registration drops

Amid the ongoing economic slump, entrepreneurs have been showing less interest in the formation of companies over the past couple of years as the average number of company registration with the Registrar of Joint Stock Companies and Firms (RJSC) dropped to 18 a day from to 33 a day in two years ago.

RJSC sources said the number of company registrations dropped by one-third in a year to 8,021 in the 2022-23 fiscal from 12,125 in the 2020-21 fiscal.

Currently 18 firms on average are being registered daily.

A total of 2,648 companies received registration in the first five months (July-November) of 2023-24 fiscal, which is less than one-third of the companies received registrations in the corresponding period of the previous fiscal. About 3,500 firms were registered in the first five months of the previous fiscal.

Several businesspersons said economy, commerce and trade all together are somewhat in a bad condition now, which is why entrepreneurs are not showing interest in new investments.

Mahbubul Alam, president of the country’s apex trade body Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told Prothom Alo the commerce and trade is slightly less than the previous time. Import of capital machinery and raw materials also dropped because of the persisting dollar crisis; besides, there is a liquidity shortage in the currency market. Perhaps, nobody is interested in making new investments amid such a situation, and that is why company registration might drop, he added.

Former FBCCI president Jasim Uddin also echoed his successor. Jasim Uddin thinks the pace of business has been sloth in the past couple of years, which is why businesspersons are less interested in new investments.

He told Prothom Alo that the economy is under pressure because of various reasons including Covid-19 pandemic, Russia-Ukraine war and dollar crisis. Besides, there is no option to sit idle by taking a company resignation. Tax officials see who receives company resignation and whether they submit tax returns, and for these reasons, company registration drops slightly, he added.

According to the latest data from RJSC, there are currently 208,637 private companies in the country. But, an investigation of the National Board of Revenue (NBR) found last year that only 78,000 of those companies have a taxpayer's identification number (TIN) certificate and only 28,000 companies filed the mandatory tax return regularly. Many firms had taken registration, but did not start business, and they exist in papers now.

The NBR investigation revealed that 1,400 companies got registered using the address of two buildings in Karwan Bazar, but those firms existed in papers only.

A RJSC official told Prothom Alo on condition of anonymity that none is stepping forward to form a new firm amid such bad condition of the country’s economy, resulting in a drop in company registration.

Previously, the RJSC received 1,200-1,300 applications for company registration in a month, and the figure has dropped to 700-800 a month. Besides, many companies received registrations, but are yet to start operation, the official added.

*This report appeared in the print and online editions of Prothom Alo and has been rewritten in English by Hasanul Banna