Almost 74% of entrepreneurs in the Small and Medium Enterprises (SME) sector have directly experienced corruption, according to a study where the sample respondents in the regional forum were asked.
According to the survey, the two most common types of corruption cited by respondents overall were bribery and the use of political power.
The study, titled "Call to Action Against Corruption (CAAC)," was undertaken by the Center for Governance Studies (CGS) in partnership with the US-based group Center for International Private Enterprise (CIPE) and released on Tuesday at the National Summit in the capital.
The survey also showed that SMEs struggle to secure trade licenses due to high bureaucracy and permit requirements from multiple regulatory agencies, forcing them to pay bribes.
Moreover, bribes are commonly exchanged during compliance inspections owing to inspectors' abuse of power, as well as during the securing of bank loans, as banks do not consider SMEs profitable, therefore they frequently resort to bribery to acquire loans.
The major issues and obstacles that SMEs encounter on a regular basis are related to infrastructure, institutions and information.
In his remarks as the guest of honour, US Ambassador to Bangladesh Peter Haas stated that corruption is one of the gaps that must be remedied as Bangladesh strives to achieve developed-country status by 2041.
“We all know that corruption exists in every corner of the globe, including in the United States and I think we're all too familiar with what it looks like,” he added.
He also said that corruption is like really a parasite that feeds on the resources of a society and drains it of its strength. It can devastate every level of business and government.
“The US Department of Justice trains investigators and attorneys in the Anti-Corruption Commission on topics on money laundering, using electronic evidence and investigating financial crimes,” he added.
One of the things it could do is think about how to empower institutions to tackle corruption and promote transparency and accountability in governance and in business.
It's also imperative to recognize the role of a vibrant civil society and of free media as they are a critical player in exposing and investigating incidents of corruption, he added.
“Think about what advantages fighting corruption can have in attracting foreign direct investment to Bangladesh and unleashing the potential of Bangladesh businesses, including SMEs,” he added.
He also stated that American business leaders have choices about where to invest and will choose the country with the lowest levels of corruption, the fewest bureaucratic impediments, the highest respect for the rule of law and the best logistics infrastructure for their firms.
Thus Bangladesh must do so in order to attract more investment and keep the country on the path of economic progress.
Zillur Rahman, executive director of the CGS marked the opening remarks, and Andrew Wilson, executive director of CIPE, marked the welcome remarks.
Dr Mohammad Saleh Johur, a professor at the University of Chittagong presented the final CAAC Report.
Dr Ali Riaz, a distinguished professor at the Illinois State University of USA presented the joint resolution.
In his explanation, he put recommendations to various stakeholders of the SME sector including the government, private sector enterprises, non-government agencies and the trade body.
He urged the government to create an enabling environment to discourage corruption, ensure accountability within the government, create the atmosphere for citizens to report corruption without fear, streamline the licenses and certificate processes and provide incentives to SMEs.
He advised the business sector to create an internal reporting system, a private sector coalition to combat corruption and chambers to commit to anti-corruption efforts.
He suggested that non-governmental organizations fight on existing legislation and collaborate with the government while urging trade organizations to adopt specific plans to address SME sector problems, develop R&D and enforce a stringent code of conduct.
The study discovered that the absence of an effective penal mechanism against corruption, inefficiency and organizational weakness were the root causes of the growth of corruption.
Therefore, current anti-corruption policies are insufficient to support SMEs.
In the panel discussion, Zillur Rahman, Ali Riaz, former Cabinet Secretary, Ali Imam Majumder; former NBR Chairman Muhammad Abdul Mazid; CPD Executive Director Fahmida Khatun; former FBCCI vice-president Md Helal Uddin discussed the challenges and potentials of the SME sector.
The SME sector contributes 31% to the GDP and employs nearly 25 million people.