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Easier, faster, friendlier

Reefat Imam
IT was a typical government office in Bangladesh; where every time you enter you curse the red tape that slows things to a snail's pace. It was a large dingy room; poorly lighted, hot, dusty and dirty: one could hear buzzing -- the confused sound of many excited voices. One could see people squeezing their way through the small aisles between tables. Others stood in a queue so long that it snaked out of the room and ended near the stairs outside the office, where a big signboard in Bangla read: "Office of the Registrar of Joint Stock Companies and Firms, Government of Bangladesh." This is the office where people come for business registration in Bangladesh.
The Registrar of Joint Stock Companies and Firms (RJSC) is the sole authority that registers companies. The office stores a wide range of ownership related information as prescribed by laws. The main business sendees of the office include: Name clearance, registration, returns filing, issuance of certified copies, and winding up and striking off companies. This office is the authority where one can
register the name of tire business, file annual returns and apply for liquidation of a company.
A year has passed since I first visited this office. Since then I have visited it numerous times to help in the automation and streamlining of its processes. The office has now, quite literally, seen the light. Some cosmetic changes have been made. Now there are new, better furnished counters where first time applicants come to submit their applications for business registration.
More significantly, the business registration process has been automated. Early this year, the new registrar of RJSC decided to introduce an online registration process, in line with the Digital Bangladesh vision. As a result, online name clearance and registration was launched at the end of February and middle of March respectively. The next major action taken was the introduction of a "fast-track," or same day, name clearance and registration service.
All the counters at RJSC are now computerised. Hand delivered applications are immediately scanned and uploaded to the central data system. This system also scans registered documents, which
can be retrieved quickly. It also has a networking module, which allows Instant access to documents. Then there is the search model, which facilitates the searching of documents on different parameters. This search module has reduced the time required for locating relevant documents.
The automation has significantly cut the hassle during payment of the fee at the bank. Now online tracking of an application is available, which has limited the scope for persuasion and corruption. Access to on-line company information will also help banks, credit institutions, courts and any other organisation that needs or uses information about the business sector, as well as improve the transparency of the business environment.
"I have been coming to this office for the last 7 years. It used to be difficult to even stand in one place for long because of the huge crowd near the counters. Now, so much has changed," says Nazmul Islam, a client who provides company formation related legal assistance to a multi-national mobile operating company in Bangladesh.
Computerisation of this department has not just been a benefit to the businesses but has also benefited employees of the department. One of the RJSC employees says: "After computerisation, crowds have been reduced drastically. And with the help of computers, we can now verify and check documents properly."
Now it takes less than three days for name clearance and less than five days for registration. And, if one uses the fast track system, it takes only one day to get name
clearance and registration.
Between March and May 2009, more than 1,000 companies received the same day name clearance and around 1,500 companies got it within 24 hours of submitting their application. During the same period, for 284 companies, tire registration process was completed within 24 hours.
During March to September 2008, a total of 2,289 companies and 71 societies got registration. After the automation of the registration process kicked off in the middle of March 2009, the number of registration doubled. Between March 16 and September 8, a total of 4,484 companies and 1,100 societies got registration.
The World Bank's Doing Business 2010 Report, which has just come out, did not fail to spot this achievement of Bangladesh. The report highlights the fact that the implementation of the "modern electronic company registration system (has) cut the time (for registration) by almost half."
Formal incorporation of companies has a number of benefits. The Doing Business 2010 refers to the World Bank's Enterprise Surveys of 2008 where, among 388 informal firms interviewed in Cote d'Ivoire, Madagascar and Mauritius, 85 percent mentioned better access to finance and 68 percent mentioned better access to markets as die main reasons for having their companies registered with the company registration authorities in their respective countries.
Doing Business 2010 also quoted from another Enterprise Survey Data conducted by Benn Eifert in 2008 that a "ten day reduction in startup time was associ-
ated with an increase of 0.4 percentage points in the growth rate and 0.27 percentage points in the investment rate." These are suggestive evidence on the positive impact of business registration reforms.
Opaque and tedious requirements for business registration influence entrepreneurs in their decision to register or not. This is especially so for small and medium enterprises since they tend to lack the administrative resources to deal with slow and prolonged requirements. Entrepreneurs in general and SMEs in particular express
frustration at the overly bureaucratic regulations.
The focus of business registration reform should be on market results. The bottom line for the success of reform is not whether a government adopts reforms but whether the market is responding with a large number of new registered firms, which are making new investment, creating new jobs and competition, and enjoying an appropriate level of protection.
Reefat Imam is consultant for Bangladesh Investment Climate Fund.