Formalization of F-commerce in Bangladesh: Implications for Female-owned SMEs

Caption: Nadia Rahman painting life on a canvas

Facebook commerce, or F-commerce, offers women an opportunity for self-employment. As one example, Nadia Rahman, a student and a painter, loves to sketch life and nature using sarees and kurtis (Bangladeshi tops) as canvases.  She lives in the busy metropolitan city of Rajshahi. To turn her passion into a business, she created a Facebook page and started selling hand-painted clothes. 

Nadia could have opened a brick-and-mortar outlet, but considering the benefits of a virtual store, she opted for F-commerce. “One reason for choosing F-commerce is because it is hassle-free. You do not need big investments, trade licences, [to pay] maintenance costs, or [to] pay taxes, unlike brick outlets. Moreover, it is easy to reach out to customers all over Bangladesh, and sometimes cross-border from remote Rajshahi,” Nadia said. This business has enabled Nadia to generate savings while completing her studies, and she aspires to grow her business in the future.

The F-commerce industry in Bangladesh hosts approximately 3 million small and medium enterprises (SMEs), half of which are operated by women.1 F-commerce especially appeals to well-educated homemakers and stay-at-home mothers for whom their businesses are an important source of income. In a study conducted by BRAC Institute of Governance and Development (BIGD), 99.18% of female F-commerce entrepreneurs surveyed held a bachelor degree or higher, 57% ran their F-commerce site as their sole occupation, and 38.52% contributed to their family income from their business.2

In some ways, the COVID-19 pandemic paved the way for these women, as online shopping was the only option during the nationwide lockdown. Shops were closed and residents were required to stay home. In response, online sellers began providing home delivery services, while buyers leaned into online shopping. According to Meta, 70% of women-owned businesses in Bangladesh launched Facebook pages since the beginning of the pandemic.3

While the prevalence of F-commerce soared, so did that of online scams. In a study conducted by Cyber Crime Awareness Foundation, the proportion of sampled customers that were scammed while buying products online rose from approximately 7% in 2018 to over 11% by 2020.4 These scams included  delivering low-quality products, displaying images of one product and sending another, and collecting payment for a product that was never sent. 

In response to these rising complaints of fraud, the government now seeks to regulate F-commerce. A new policy introduced by the Ministry of Commerce in December 2021 requires all online entrepreneurs to register with the government to be issued a unique business identification number (UBIN) against a trade licence. The Bangladesh Telecommunication Regulatory Commission (BTRC) will shut down the business pages that fail to register.5

Additionally, beginning in fiscal year 2022-23, the government has made it mandatory for all online businesses, including F-commerce, to file income tax returns. This policy applies across the board, including to individuals with low and non-taxable income.6

While this policy will generate tax revenue and enable entrepreneurs to seek formal financing, it will also disproportionately disrupt female entrepreneurs. 

Bangladeshi women face many cultural barriers that render registration burdensome. Many Bangladeshi families abide by conservative and patriarchal norms. As such, women often lack decision-making power over anything beyond household chores. For example, a woman may have the right to decide what food will be prepared for meals, but have no voice in which apartment she will live in. Women also face mobility constraints. Many women operate their businesses from the comforts of home, but male family members conduct errands outside of the house, such as buying products from the market. Finally, many women lack access to their own bank accounts and rely on male relatives to conduct financial transactions. 

F-commerce, due to its hassle-free nature, once offered an opportunity to circumvent these challenges. But now, the process of creating a bank account, opening a tax identification number (TIN) and getting a trade licence is time consuming, complicated, and uncomfortable for a woman who faces pressure to prioritise activities within the home. It is likely that a female F-commerce entrepreneur, especially one whose profit margin is low and lacks family support, will find this process a major obstacle to running her business; she may even close it down altogether.  

According to Dr. Stefan Dercon, Professor of Economic Policy at The University of Oxford, regulation affects [disadvantaged] people – which in many contexts includes women – disproportionately and paperwork traffics the process. In this regard, his advice, as shared at BIGD’s international conference on “Digitalization and New Frontiers of Service Delivery: Opportunities and Challenges”, is to “innovate first, regulate later.7” 

Not only does rigid regulation stand to dis-empower Bangladeshi women, it simply does not make economic sense. We have already seen the impacts of aggressive taxation policy play out in neighbouring India. India introduced the Goods and Services Tax (GST) to spur the rapid formalisation of SMEs. The GST was an attempt to create a unified market across the nation, to encourage entrepreneurship and job creation, and to expand the tax base. But the plan backfired – stringent regulation prompted SMEs to either exit the market, stay small, or avoid the GST registration.8

According to The Print, an Indian English daily, due to the complex nature of registering for the GST,  only 13 million out of 63 million SMEs joined the GST system8.  Anecdotal evidence suggests that the GST has even artificially stunted economic growth. As per The Print, “an increasing number of small businesses are either de-registering, and/or trying to remain small by not letting their sales turnover increase the threshold of Rs 20 lakh for services firms and Rs 40 lakh for manufacturing entities, above which GST registration is mandatory.9

Bangladesh would be wise to learn from India’s example. The government should move slowly and gradually with the process of formalisation, rather than abruptly introduce red tape that stands to economically dis-empower entrepreneurs, especially women. 


1.Islam, A. (2020). Bangladesh: More women create online businesses during pandemic. Deutsche Welle.

2.Rabbani,M.,Zahan, I., Matin,M. (2020). How resilient are female online entrepreneurs? BRAC Institute of Governance and Development.

3.The Daily Star (2022). 70% of female-led Facebook businesses in Bangladesh set up since pandemic: Meta.

4.Jahan, N.,M., et al. (2021). Cyber Crime Trends in Bangladesh-2021. Cyber Crime Awareness Foundation.

5.Liaquat, B.,Z. (2021). Mandatory UBIN registration for online businesses from this month. Dhaka Tribune.

6.Hossain, R. (2022). Tax return must for online sellers. The Business Standard.

7.Dercon. S. (2022). Inaugural Session—Digitalization for Inclusive Development: Opportunities and Challenges. BRAC Institute of Governance and Development.

8.Singh, K., R. (2022). How GST is killing small businesses with inspector raj and suffocating compliance. The Print.

9.Soni, S. (2022). Budget 2022: Women MSMEs seek better credit support, relief in GST and income tax, lower interest rates. Financial Express.

Raihana Sayeeda Kamal is a Manager- Research Communications at BRAC Institute of Governance and Development (BIGD) and Sadia Chowdhury is a Research Associate at BIGD