Business leaders' role in corruption is also questionable: Debapriya
A study finds that 74% of SME entrepreneurs were directly affected by corruption in the post-Covid period
Along with government officials' involvement in irregularities, the role of business leaders in corruption in business affairs is questionable in many cases, eminent economist Debapriya Bhattacharya said on Sunday.
"After taking charge of any trade bodies, the leaders get loyal to the ruling party instead of being accountable to businessmen. It started by coming to the posts of trade bodies not through elections but through nomination. Due to this, business representatives must come through elections," he said at a roundtable organised by the Center for Governance Studies (CGS).
At the event, the CGS published a study report that said 74% of small and medium enterprises (SMEs) were victims of direct corruption while taking services in the post-Covid period.
Debapriya, also a distinguished fellow at the Centre for Policy Dialogue (CPD), further said, "We can't expect any change in the situation until these institutions come under accountability through a framework. For this, however, it is necessary to build an organised movement among small and medium entrepreneurs."
"By corruption, we generally mean the waste of public money in public management. However, it cannot be said that there is no corruption in corporate institutions, non-governmental organisations (NGOs), or the media. These types of corruption exacerbate confidence crises, create poverty, and destroy the investment climate and society," he added.
The economist commented that although corruption has reduced in some areas of the government after the introduction of the digital system, there are still irregularities in the government procurement system.
The CGS study on the nature of corruption in Bangladesh's SME sector has also found that the incidences of corruption in the service delivery of entrepreneurs in the SME sector have increased in the post-Covid era.
The research report was prepared on the basis of interviews conducted between 27 June to 10 September last year, representing 194 SME entrepreneurs in eight sectors and the people involved in the SME sector.
According to the respondents of the study, the types of corruption in the SME sector are bribery at 69%, political influence at 61%, extortion at 48%, nepotism at 57%, and unethical patronage at 52%.
Additionally, nine out of 10 respondents believe that corruption is endemic in the SME sector in Bangladesh. A large majority of people believe that corruption can give them a competitive advantage. Due to this advantage and the complicated bureaucracy relating to acquiring and renewing trade licences, many choose to operate without a licence.
According to the respondents of the study, the biggest vector of corruption in the SME sector is in acquiring trade licences. This is due to complicated bureaucracy and the need for certain types of enterprises to visit 14 or 15 different regulatory body offices to acquire a licence. The lack of a one-stop service leads to many bottlenecks and increases the scope for corrupt practices, such as paying bribes to acquire a licence faster.
The second biggest vector of corruption can be seen in the culture of tax avoidance. New SMEs, particularly women entrepreneurs, find it excessively difficult to get loans from banks due to a lack of paperwork and good internal governance. Many have to resort to paying bribes in order to clear loans or maintain good relations with banks by giving gifts.
Syndication between customs offices and import-export businesses is also widespread and normalised, and corruption through under-invoicing is also considered an essential part of doing import-export business.
Md Mofizur Rahman, managing director of the SME Foundation, stated the difficulties the SME foundation is facing in providing services to SMEs due to a lack of manpower and resources.
Anwar-ul Alam Chowdhury, president of the Bangladesh Chamber of Industries and former president of the Bangladesh Garments Manufacturers and Exporters Association, said currently, no one is providing policy support to SMEs in Bangladesh.
"That is why the SME sector in Bangladesh is underperforming compared to many other prosperous nations," he added.
He also highlighted the lack of actionable data on the SME sector and the lack of skills and marketing expertise among SMEs, causing them to fall behind.
He also stated that the National Board of Revenue (NBR) system is the biggest challenge for all business sectors in Bangladesh.
Muhammad Abdul Majid, former chairman of the NBR, talked about the endemic nature of corruption in Bangladesh at every level. As corruption has spread all the way to the top, the only way to stop it is through a top-down approach.
He talked about the need for a new SME ministry and a new SME bank to give specialised and accountable services to SMEs.