18,000 businesses may lose trade licence

The government drive to force commercial establishments out of residential areas in Dhaka has not only created fears of job loss but also raised questions as to how those establishments operated with government clearance when rules clearly say they cannot.

Since the fourth week of July, the Rajdhani Unnayan Kartripakkha (Rajuk) has been closing down businesses that have been running in residential areas for years.

Dhaka North City Corporation (DSCC) and Dhaka South City Corporation (DSCC) have also warned businesses, which do not operate in Rajuk-approved commercial buildings or in commercial areas, that their trade licences would be cancelled, officials said.

The DSCC is giving businesses a seven-day deadline to move out.

A staggering 18,000 businesses in the capital, 13,500 of them under the DNCC, could lose their trade licences, according to data from the two city corporations.

The High Court in June 2012 declared all commercial operations in Dhanmondi Residential Area illegal, with the exception of authorised commercial establishments on Mirpur Road, Satmasjid Road, Dhanmondi Road-2 and Dhanmondi Road-27. It directed the authorities to remove those establishments. The Appellate Division on August 1 upheld the HC verdict.

Utility service providers, like Dhaka Electric Supply Company (Desco), have started issuing notices on commercial establishments in residential areas seeking their occupancy certificates, said business owners.

The notices also warned of disconnecting power lines of the establishments. 

Most of these businesses -- restaurants, hotels, guesthouses and various retailers -- are in Dhanmondi, Gulshan, Banani and Uttara. The number of guesthouses and hotels would be about 500, according to an estimate of a hotel and restaurant owners' association.

They all face closure unless they relocate to commercial areas.

However, businesses asked why government agencies, such as the city corporations, utility service providers and VAT offices, issued them trade licences, supplied electricity and provided other services at commercial rates when they were not allowed to do business in residential areas in the first place.

Some questioned Rajuk's silence when the business establishments started running in its residential neighbourhoods.

“It was the duty of the government agencies to stop the opening of any commercial entities at the very beginning. People may have a tendency to violate rules but there are authorities to enforce the law,” said an in-charge of a store near Gulshan-1 intersection, wishing to remain unnamed. “A huge number of people will lose their jobs.”

The reaction came a day after a Rajuk mobile court closed a couple of retailers on Gulshan South Avenue for failure to produce permits for commercial activities.

“This will be a burden on the enterprise as the overall income will decline. Sales at other showrooms will not pick up even if all of us worked there,” said Nani Gopal Bhowmik, store in-charge of Shatarupa Department Store Gulshan outlet.  

He said the outlet on Gulshan South Avenue had an average daily sale of Tk 40,000.

In the face of Rajuk drive, some businesses went to the High Court seeking stay orders against the eviction notices.

Rajuk said its drive had nothing to do with the July 1 Gulshan siege and the security concerns that followed.

Instead, the crackdown is the result of the government's previous decisions, including the one made by the cabinet on April 4, taken in the face of mushrooming commercial establishments in residential areas.

The city corporation authorities issued 3.5 lakh trade licences and a large chunk of the businesses operate in residential areas, according to data from the DNCC and the DSCC.

Prior to the cabinet decision, Rajuk had launched a drive in January against buildings in Uttara, Dhanmondi, Gulshan and Banani areas using their designated parking space for other purposes.

Rajuk has listed over 2,000 illegal structures in residential areas, mainly in Gulshan, Banani, Baridhara, Uttara and Dhanmondi. The list is not complete, said Rajuk Chairman M Bazlul Karim Chaudhury.

Helal Uddin, former president of Dhaka City Shop Owners Association, welcomed the authorities' move to force commercial establishments out of residential areas.

Helal, also director of the Federation of Bangladesh Chambers of Commerce and Industry, said, “It must be stopped. Once it is done, no one will think of running business in residential areas in future.”

But he said the government should give at least six months for the businesses that have trade licences to relocate.

Rajuk should be held accountable as well, as these businesses have grown under the regulator's watch, Helal said. 

Saif Ahmed, president of Bangladesh Hotel and Guest House Owners Association, said Rajuk itself had flouted rules and turned Gulshan into a commercial area like Motijheel.

A hotel owner, wishing to remain unnamed, said a number of banks have headquarters in Gulshan instead of Motijheel. Many apparel buying houses have offices in Gulshan, Banani, Baridhara and Uttara areas.

The hotel owner said many foreigners, who prefer budget deals, would be in trouble if small hotels and boutiques were shut down.

The hotelier said commercial establishments were not supposed to be in residential areas, but questioned: “Why did utility agencies provide me with connections at commercial rates? Why have they given me everything to run the business? How would I know that my business here is illegal?

“It will be unwise to close the businesses overnight because a lot of investment, jobs and bank loans are involved in the hotel and restaurant sector.”

There are 500 hotel, guesthouses and restaurants in Gulshan, Banani, Baridhara and Uttara areas with nearly Tk 5,000 crore in investments, according to Hotel, Guest House and Restaurant Owners Association of Bangladesh.

“Before relocation, demolition of these establishments will not only affect investment and jobs, but also affect loan repayments and government revenue collection,” said MH Rahman, an adviser to the association.

Fahmida Khatun, a resident of Gulshan- 2, said the infiltration of commercial establishments in residential areas not only increases pressure on utility services but also compromises security.

“I do not think the policy of relocating businesses from residential areas is bad. But it should be done gradually so that livelihoods of so many people are not threatened,” she said.

She said security should be the highest priority but it was also necessary to consider the needs of groceries and of foreigners who in general prefer eating out to cooking at home.

The Rajuk chairman said knocking down of illegal establishment was a continuous effort of the city developer.

“We have not given any permission for non-residential buildings in residential areas ... It is clearly defined which one is residential and which one is commercial area. If anyone builds a non-residential building in a residential area, Rajuk will not take that responsibility,” he said.

As to why Rajuk did not take action when such establishments sprouted, he said it was true that Rajuk had weaknesses.

“It may be that Rajuk should have taken action. But it is also the question of abiding by the law. Those who have done this have done knowingly. They did not come to us at that time,” he said.

He admitted that it was not right for other agencies to give utility connections without examining the occupancy certificates from Rajuk or issue trade licences.

“It is true that we have a number of deviations. But will these continue? We should stop it and all should cooperate so that we can,” he said.

Bazlul said Rajuk nearly a month ago placed proposals to declare some of the roads in Gulshan and Uttara as commercial areas. “Discussion is on at the policy level. We may consider more [areas] in future,” he said. 

Asked if businesses, especially the small ones, would be given time to relocate, he said Rajuk would go by the law. 

Desco Managing Director Md Shahid Sarwar said Desco launched a drive in November-December last year against those using electricity for commercial purposes but had a residential plan.

“We now ask building users for occupancy certificates issued by Rajuk as we see many non-residential establishments such as hotels, restaurants in residential areas,” said Shahid.

As to why Desco provided connections for commercial purposes in residential buildings, he said it had initially given connections to residential establishments but imposed commercial tariff after finding out that the structures were used for commercial purposes.

If Desco moves to disconnect power supply, a section of users will go to court seeking stay orders, he said. 

As to why Desco did not cut the lines for violation of rules or did not ask for occupancy certificates before imposing commercial tariff, Shahid said many of the connections were given when the now-defunct Dhaka Electric Supply Authority was responsible for issuing the connections. “Now we are not giving such connections.” 

Besides, it was the duty of Rajuk to look into how such commercial activities went on, he said.

ATM Shamsul Huda, president of Gulshan Society, said what was happening in Gulshan, Banani and parts of Baridhara was complex.

“As a society we want to see residential area as residential area. This is our prime goal so that residents can live peacefully. It is also the goal of Rajuk. But the problem arises when various contradictions exist,” he said.