“Many entrepreneurs struggle in setting up factories because they do not have a clear idea about the policies, procedures and other required certificates as well as where to go to obtain these. In the contemporary business environment, people in businesses will lose lucrative opportunities if the correct information is not used at the right time. Therefore, this website’s flowcharts can be quite beneficial for businesses and their relevant stakeholders”. These views have been expressed by the business leaders while launching of the new web portal “factorysetupbd.com”
To ease the information constraints for setting up factories, the Centre for Policy Dialogue (CPD), in partnership with GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit) conducted a study on “Setting up a Factory in Bangladesh: Institutional, operational and Legal Requirements in RMG, Pharmaceutical, Leather, and Food Processing Sector.”
To present the findings of the study and launch the Web portal, CPD and GIZ jointly organised the event titled “Launching Web Portal on Setting up Factories: Licensing, Registration and Certification” on Sunday, 2 October 2022, at The Westin, Dhaka.
This study aims to identify and share the document-related conditions and requirements on registration, licensing and certification from various public agencies for setting up factories in RMG, food processing, pharmaceuticals, leather and footwear sectors. The study has been conducted from the perspective of social, labour and environmental compliance issues. These include building safety; labour and environmental safety; and fire safety. It does not cover the entire process from a commercial point of view. The study has two parts: preparing a study report and preparing a website.
The web portal illustrates the process of acquiring permits, licenses, certificates, and registration for setting up a new factory in the Ready-made Garments Industry, Pharmaceutical Industry, Food Processing Industry and Leather Processing Industry. In addition, it also provides checklists for obtaining relevant associations’ membership, factory inspection documents, and policies of the respective industry, especially for entrepreneurs.
Mr Faruque Hassan, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the business sector is already facing a lot of challenges because the factories are not being able to operate at full capacity. Some of the main challenges are load shedding, low gas pressure and fuel price hike. Along with these, new and promising businesses are not being able to emerge due to not having a clear idea about business setup procedures.
Mr Mohammad Hatem, Executive President, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, “The website will be more helpful for the businessmen if the total business processes are included not just from a social and environmental perspective, but also from a commercial perspective.”. He clarified that before setting up a factory, they need to start a business which will require some standard documents. Keeping a separate checklist for it will help the entrepreneurs understand the process better.
Commenting on the responsibilities of government officials, Mr Syed Nasim Manzur, President, Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh (LFMEAB) said that the ease of doing business will not improve if such officials focus more on following regulations than helping businessmen. There are several unnecessary steps in the procedures of setting up a factory, which makes the process lengthy. He suggested that attempts should be made to shorten the time frame required to process factory setup related documents, just like his Vietnamese investors.
“The government needs to recognise that it is difficult to start a business in Bangladesh because the expenditures related to gathering information and certification are unfeasible for entrepreneurs,” said Mr Abdullah Al Mamun, Vice President, Bangladesh Textile Mills Association (BTMA). Although the website will make this process easier, adequate support from government agencies is still pivotal.
“It is difficult for foreign organisations to start a business and set up a factory in Bangladesh because most of the information related to these are inaccessible to them,” said the distinguished panelist, Mr Syed Moazzem Hossain, Director, Federation of Bangladesh Chambers of Commerce & Industries (FBCCI). He clarified that most of such information is documented in Bangla. Since they are not available on one platform, these foreign organisations spend months on licensing, registration and certification before establishing their businesses.
In her keynote presentation, Ms Helen Mashiyat Preoty, Research Associate, CPD, recommended that government agencies should undergo capacity development and implement their responsibilities. “Each related Ministry should provide an assessment of current resources and capabilities and compare that to the capacities needed to effectively implement their roles.” said the Research Associate.
Commenting on the website’s structure, the Distinguished Discussant, Ms Ferdaus Ara Begum, Chief Executive Officer, Business Initiative Leading Development (BUILD), suggested that the flow charts shown on the website should include the intermediaries that the businesses need to collaborate and the time frame. Including such details will help business enterprises, especially entrepreneurs, to understand the whole process more clearly. She also suggested that businesses should attempt to reduce the number of steps needed to set up factories through business process reengineering.
In his introductory remarks, Dr Michael Klode, Project Manager, GIZ, said, “The aim of this study can be a conversation starter to make the laws, regulations, frameworks for setting up factories more transparent, realistic, and understandable”. He added that if these laws and regulations are unrealistic, then the businessmen will not abide by them. The study aims to analyse such regulations with a layer of common sense and try to make them as lucid as possible.
Dr Khondaker Golam Moazzem, Research Director of CPD, chaired the session and said that it is difficult to find reliable information for setting up factories. Although the information related to licensing, certification, and registration is available in government offices, those are mostly found to be inadequate and non-comprehensive. This causes the businessmen, especially foreign investors, to invest more time in gathering information, which makes the process even more cumbersome.
In the open floor discussion, participants recommended that government officials must oversee all the factory setup-related issues every fortnight. They also requested that guidance be provided in the case of managing factories being established in the areas that RAJUK disapproves. Also, initiatives should be taken to reduce the expenses related to the factory setup paperwork.
Business professionals, academics, researchers, and print and electronic media professionals attended the event and participated actively.