[🇧🇩] Monitoring Bangladesh's Economy

[Krishna with Flute]

Next budget to focus more on revenue

Revenue generation will continue to get priority in the next budget as the interim government wants to pull up the country’s falling tax-GDP ratio.

www.newagebd.net

Next budget to focus more on revenue
Shakhawat Hossain 25 January, 2025, 23:24

View attachment 13648

Economists want curb on corruption in NBR

Revenue generation will continue to get priority in the next budget as the interim government wants to pull up the country’s falling tax-GDP ratio.

Finance ministry officials said that they had focused on half a dozen areas to increase the revenue generation in the coming financial year of 2025–26 beginning from July 2025.

Rationalisation of income tax waivers will get top focus along with imposing 15 per cent Value Added Tax on most of the consumer goods, they said referring to the proposed revenue mobilisation target at Tk 5.5 lakh crore in FY2025–26.

Economists said that the finance adviser should also come up with specific proposals to curb revenue leakages and corruption by the tax officials which, according to them, significantly contributes to the falling tax-GDP ratio.

The National Board of Revenue in a report released in December 2024 has calculated that Tk 1,15,056 crore was exempted in direct taxes during FY2021–22, almost 2.9 per cent of the GDP in that financial year.

Of that exempted amount, Tk 71,394 crore or more than 60 per cent is linked to the exemption of corporate income tax.

The overall amount of revenue losses due to exemptions reached over Tk 1,50,000 crore in the past FY2023–24, said the finance ministry officials.

The interim government like the ousted Awami League regime is committed to the International Monetary Fund to reduce the tax exemption under the on-going $4.7 billion loan programme.

Tax exemption has been identified as a major reason for the country’s tax-GDP ratio falling over the last ten years with it dropping below 8 per cent in FY2023–24 from 9 per cent in 2013–14.

The low revenue has been a persistent headache for the successive governments, said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development.

Resource crunch has constrained the government’s ability to allocate adequate fund for social protection amid high inflation prevailing persisting over the past three years, he said, adding that public expenditures on health and education were decreasing.

Revenue shortages also forced the government to rely on borrowing sending public debt to an unsustainable level, according to the ‘Medium-term macroeconomic policy statement from 2024–25 to 2026–27’ report by the finance division.

Economists said that revenue mobilisation measures were taken in the past also but failed to bring much results due to corruption by the tax officials and revenue leakages.

Unless the interim government could effectively curb corruption, there is no guarantee that the proposed tax measures would pay, said former World Bank Dhaka office chief economist Zahid Hussain.

He suggested automation of revenue collection as a step to check corruption helping generate more revenues.

The recently prepared ‘White Paper on the state of the Bangladesh economy’ calls the revenue board’s automation measures half-hearted and says that the half-baked steps are a major barrier to effective revenue generation, deepening inefficiencies and fostering a climate of non-compliance.

One of the most glaring examples in this regard is the lack of integration between the NBR and other relevant government agencies that severely limits the effectiveness of the taxation system, continues the White Paper prepared by the interim government to review the state of the economy for the period of 2009–2024, the tenure of the now ousted Awami League government.

The paper also identifies corruption and weak governance undermining tax revenue, stalling reform and service delivery.

Low tax revenue in the country is driven by weak governance, widespread corruption and a lack of trust in how tax revenue is used. Corruption, particularly in tax administration, has led to widespread tax evasion and poor compliance, adds the White Paper.​

That is one part but what about textile business quitting BD for India?

 

[Bilal9]

That is one part but what about textile business quitting BD for India?

What about it?

Back in August of last year - Indian trade rags were claiming

"India could gain 6-8% of Bangladesh’s monthly ready made garment (RMG) export orders in the short term and 10% in the long term, presenting an opportunity of increments of $200-250 million and $300-350 million respectively, rating agency CareEdge Ratings said Thursday."

Read more at:
India set for export order increase on the back of Bangladesh turmoil

But Bangladeshi exporters weren't sitting around.

"(Bangladesh) garment exports from July to November increased by 16.25 percent compared to the same period last year to $16.11 billion. According to industry insiders, garment exports will increase in the new year 2025."

2025 starts with a great vibe for Textile and Apparel industry - RMG Bangladesh

The year 2024 was a critical one for the country’s garment industry. As the market starts to recover, there is a new ray of hope in the new year. Energy and dollar crises, supply chain disruptions, workers’ demands for higher wages, political uncertainty, and lax law and order—all of these...

rmgbd.net

In fact the pent up demand for Bangladesh apparel exports caused a bounce back beyond expectations. There is a reason why Bangladesh has second place globally in all this, and India has 7th place. Apparel Factories in Bangladesh are huge places, their scale surpasses India's sweatshops in any state. India does not have the wage structure to compete with Bangladesh.

"Despite the unrest and dissatisfaction, Bangladesh’s ready-made garment sector has achieved growth in production and exports in the last 6 months. In the first half of the current 2024-25 fiscal year (July-December), garment exports from Bangladesh were worth $19.8877 billion."

Apparel exports exceed $19bn in July to Dec’24 - RMG Bangladesh

Despite the unrest and dissatisfaction, Bangladesh’s ready-made garment sector has achieved growth in production and exports in the last 6 months. In the first half of the current 2024-25 fiscal year (July-December), garment exports from Bangladesh were worth $19.8877 billion. Earlier, apparel...

rmgbd.net

 

[Saif]

Foreign loan surge in December brings some relief

A big chunk of foreign funds was provided as budgetary support from the World Bank and the Asian Development Bank (ADB) in December released $1.1 billion, leading to a rise in foreign aid disbursement and providing some relief to the government.

www.thedailystar.net

Foreign loan surge in December brings some relief

A big chunk of foreign funds was provided as budgetary support from the World Bank and the Asian Development Bank (ADB) in December released $1.1 billion, leading to a rise in foreign aid disbursement and providing some relief to the government.

In the last month, the government received around $2 billion while the average for the previous five months was only around $309 million.

In the six months from July to December, total foreign loan disbursement amounted to $3.53 billion whereas it stood at $1.54 billion at the end of November.

The highest amount of loans during the six-month period came from the ADB, amounting to $1.05 billion, of which $600 million came as budget support in December. The World Bank also provided $800 million, of which $500 million came as budget support in December.

Besides, Russia disbursed $532 million, mainly for the Rooppur Power Plant project, while Japan disbursed $441 million, China $268 million, and India $72 million during the six months.

However, despite such a big chunk being disbursed in December, it was not enough to stave off a year-on-year drop of 13 percent in foreign loan disbursement from $4.06 billion.

However, the rise was somewhat offset by the fact that Bangladesh's foreign debt servicing rose 27 percent year-on-year in the first six months of FY25.

From July to December of FY25, the country paid $1.98 billion in principal and interest, up from $1.57 billion in the same period of FY24 due to an expanded foreign loan portfolio and higher global interest rates.

In local currency, the payments increased to Tk 23,675 crore from Tk 17,240 crore, intensifying pressure on public finances.

According to the breakdown, the value of principal payments climbed 33 percent to $1.23 billion while interest payments rose 16 percent to $747 million.

Adding to the fiscal pressures, foreign assistance commitments have fallen precipitously.

In the first six months of FY25, total commitments for grants and loans fell sharply, plunging 67 percent to $2.29 billion compared to $6.98 billion in the previous year.

Loan commitments fell from $6.58 billion to $2 billion while grant commitments reduced to $289 million from $410 million.

With the obligations mounting and foreign commitments diminishing, economists called to renegotiate repayment periods and interest rates as well as prioritise foreign-funded projects.

This combination of rising debt obligations and declining foreign commitments is presenting a huge challenge for Bangladesh's fiscal management amid the lower domestic revenue collection.

"The debt-servicing cost was expected as we are approaching the loan repayment since the grace period is ending," said Mustafuzur Rahman, a distinguished fellow at the Centre for Policy Dialogue, a local think-tank.

"This will definitely create pressure on the foreign currency reserves," he said.

"Although it will be challenging, we should try to renegotiate in terms of both interest rates and repayment periods. The government is also trying to address the issue now," he said, mentioning recent negotiations with China.

However, Rahman added that a more sustainable route was to attract foreign direct investment alongside strengthening the negotiating capacity.

However, Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh, does not believe the burden of debt servicing will pose any risk for the country.

"The debt servicing scenario still does not pose any serious risk as exports and remittances offer a safe cushion that can help the treasury meet its immediate international debt obligations," he said.

As things now stand, payments for the first six months only account for 5.6 percent of foreign exchange earnings from exports and remittances in the corresponding period, which should not be a cause for concern for the interim government, he said.

In the current fiscal year, foreign exchange earnings from exports and remittances are likely to cross $75 billion, which means even if debt servicing obligations reach $4-5 billion, it poses no significant debt default risk for Bangladesh, he said.

Nonetheless, given that the exchange rate is likely to depreciate against the US greenback, the domestic fiscal burden of additional international debt servicing is going to increase, which necessitates that the Ministry of Finance keeps streamlining domestic resource mobilisation initiatives that can offer the government more fiscal space to manage this additional pressure.

However, domestic revenue mobilisation does not offer much hope.

During the July-December period of FY25, revenue collection logged nearly a 0.98 percent negative growth year-on-year, according to sources at the National Board of Revenue.​

 

[Saif]

Bangladesh badly needs economic reforms: Salehuddin

Bangladesh badly needs economic reforms at this moment, said Finance Adviser Salehuddin Ahmed yesterday.

www.thedailystar.net

Bangladesh badly needs economic reforms: Salehuddin

Bangladesh badly needs economic reforms at this moment, said Finance Adviser Salehuddin Ahmed yesterday.

"We are talking about reforms in areas like political reforms, economic reforms, and the electoral process. All are important. But at this moment, we badly need economic reforms," he said.

He made these remarks while speaking at an event marking International Customs Day at the National Board of Revenue (NBR) headquarters in the capital's Agargaon.

Acknowledging the "complexity" of implementing economic reforms, Ahmed said while the task was difficult due to numerous procedural laws and regulations, their proper and transparent application was critical for progress.

"We have some updated systems, but we can't use them properly," he said, pointing to inefficiencies in governance.

The adviser also expressed dissatisfaction with the delayed implementation of the National Single Window, a project initiated in 2017 but only partially launched last month.

He also urged businesses to actively cooperate in enabling revenue collections.

"We don't expect any illogical or illegal demands from you (businesses). You just pay your taxes. I assure you, no one will make unjustified or illegal demands, either officially or through unofficial means under the table," he said.

Ahmed called on the NBR officials to strengthen their efforts to meet revenue collection targets.

"This year is a challenging one, so we want to move forward," he said.

Addressing criticism over rising commodity prices, Ahmed said, "When rice prices increase, it is as if people think they have reached Tk 1,000."

"Prices of some items go up while others decrease. The government is putting in the efforts to address these issues," he said.

Ahmed urged for balanced criticism, adding, "Criticise our shortcomings, but also acknowledge the good work we do."

NBR Chairman Md Abdur Rahman Khan highlighted the agency's use of customs as a trade facilitation tool.

Khan pointed out the reluctance of businesses to maintain proper transaction records to avoid paying the full amount of taxes.

"While rural people and RMG workers have swiftly adopted mobile financial services, businesses are avoiding automation to evade value added tax (VAT) and tax by not keeping transaction records," he said, criticising businesses for their reluctance to adopt automation.

Addressing import-related challenges, Khan highlighted concerns over widespread misdeclaration at the import stage, describing it as a persistent issue.

"Misdeclaration during imports is a significant problem, and we are determined to eliminate this malpractice," he said.

Khan also acknowledged reports of misconduct among some revenue officials and assured that strict measures would be taken to address such behavioural issues.

"We are committed to ensuring accountability, and any misconduct by officials will be met with firm action," he added.

The event was attended by Md Hafizur Rahman, administrator at the Federation of Bangladesh Chambers of Commerce and Industry, and Finance Secretary Khairuzzaman Mozumder.​

 

[Saif]

Experts urge policy reforms to position Bangladesh as regional business hub

Speakers at a dialogue on Sunday expressed optimism that Bangladesh could unlock its full potential as a regional business hub and continue to build on its impressive economic trajectory with the right policy alignment. They sought joint efforts both from the government and private sector to

thefinancialexpress.com.bd

Experts urge policy reforms to position Bangladesh as regional business hub
UNB
Published :
Jan 26, 2025 22:02
Updated :
Jan 26, 2025 22:02

Speakers at a dialogue on Sunday expressed optimism that Bangladesh could unlock its full potential as a regional business hub and continue to build on its impressive economic trajectory with the right policy alignment.

They sought joint efforts both from the government and private sector to collaborate in creating a more favorable environment for Foreign Direct Investment (FDI).

The American Chamber of Commerce in Bangladesh (AmCham) hosted the dialogue on "Policy Alignment to Enhance the Trade and Investment Climate" at a city hotel.

They observed that Bangladesh has made significant strides in improving its trade and investment climate; there is still room for further reforms.

The speakers stressed the need for enhanced coordination between the private and public sectors to address challenges and capitalize on emerging opportunities, especially in sectors like technology, manufacturing, and infrastructure.

Key discussion points included payment issues/compliance between the government and stakeholders, improvements in investment policy, return on investment, turnover tax, tax redemption at the source, the needs of the recycling industry, and creating a more favorable tax environment compared to virgin material imports.

During the discussion, they shared their challenges and suggestions for policy alignment in the foreign trade and investment climate.

Finance Adviser Dr Salehuddin Ahmed, who spoke as the chief guest Chairman, National Board of Revenue (NBR) Md Abdur Rahman Khan attended as special guest.

Executive Director of the Centre for Policy Dialogue (CPD) Dr Fahmida Khatun presented the keynote paper at the dialogue.

The event was consisted with a high level panel discussion with the Finance Adviser, NBR Chairman, Forrest E. Cookson, economist and former AmCham President, Ala Uddin Ahmad, Director - FICCI and CEO, MetLife Bangladesh, Sabbir Ahmed, Country Manager, Bangladesh, Nepal and Bhutan, VISA Worldwide Singapore Pte. Ltd. , Shah Mohammad Mahboob, Executive Member, BIDA, Syed Nasim Manzur, MD - Apex Footwear Ltd. and President, LFMEAB.

Senior officials from Ministry of Power, Energy and Mineral Resources, Ministry of Foreign Affairs, Ministry of Commerce, Ministry of Environment, Forest and Climate Change, Information and Communication Technology Division, NBR, Bangladesh Trade and Tariff Commission, EPB, Petro Bangla, Bangladesh Bank, Dhaka Mass Transit Company Limited, BIDA, BSTI, Bangladesh Power Development Board, BEI, and other regulatory bodies, distinguished guests from the international organizations, and renowned economists attended the roundtable.

AmCham Vice President Eric Walker, Treasurer Mr. Al Mamun M. Rashel and Executive Committee Members Md. Moinul Huq, Rubaba Dowla, and Mirza Shajib Raihan attended the dialogue event, along with several other AmCham members.

Vice President of AmCham Bangladesh and President, Chevron Bangladesh mentioned Bangladesh needs to improve its business environment, infrastructure, and policies to enhance trade and investment competitiveness and align with global sustainability trends.

Fahmida Khatun emphasized revising policies, simplifying taxes, ensuring exchange rate stability, and improving infrastructure to boost trade and prepare for LDC graduation.

Dr Ahmed, in his opening remarks, emphasized the interim government's commitment to fostering an exclusive environment conducive to investment, particularly focusing on FDI.

He outlined how aligning policies across sectors can simplify processes and create a more predictable business environment that attracts international investors.

Khan stressed the NBR's efforts in streamlining tax policies and improving the ease of doing business in Bangladesh, emphasizing ongoing reforms to attract foreign investment and foster an entrepreneurial ecosystem for economic growth.

Additionally, he recommended shifting the focus from customs revenue as the primary income source to more sustainable taxation systems, such as income taxes and VAT.

Ala Uddin Ahmad, Director FICCI and CEO MetLife Bangladesh highlighted that as global trade relationships realign after the new US administration taking office, Bangladesh should look for new opportunities that could never be imagined before.

He also called for treating existing foreign investors equitably so that they do the investment promotion for Bangladesh.

Sabbir Ahmed, Country Manager for Bangladesh, Nepal and Bhutan at VISA Worldwide Singapore Pte, highlighted the need for policy changes to promote digital transactions suggesting that the NBR should align proof of tax return submission requirement with consumer loan and credit card limits above 300,000 BDT.

During the roundtable, Muhammad Imrul Kabir, Corporate Affairs Director at Chevron Bangladesh, highlighted Chevron's 60% contribution to the country's low-cost natural gas and 80% of condensate, addressing a significant amount payment shortfall and seeking support for Petrobangla payment and their onshore development proposal.

The dialogue focused on key topics such as the need for transparent, consistent, and well-coordinated policies across various industries.

Experts and business leaders discussed how policy misalignments often create barriers to investment, particularly for foreign enterprises.

The conversation underscored the importance of aligning fiscal, trade, and regulatory policies to ensure that Bangladesh remains competitive in the global market.

Syed Mohammad Kamal, Country Manager of MasterCard Singapore Holding Pte. Ltd. and former Vice President of AmCham Bangladesh moderated the discussion.​

 

[Saif]

Pathways to economic resilience & growth

Bangladesh, once hailed as the "Next Asian Tiger" and having made remarkable progress in poverty alleviation, export growth, and social development, now faces unprecedented challenges ranging from global economic uncertainty to domestic structural inefficiencies. Over the last 15 years under the pr

thefinancialexpress.com.bd

Reimagining Bangladesh
Pathways to economic resilience & growth
Mahmud Hossain
Published :
Jan 27, 2025 21:13
Updated :
Jan 27, 2025 21:13

Farmers carry bundles of rice grain stalks during the rice harvesting season in Natore, Bangladesh on May 4, 2024 Photo : Xinhua

Bangladesh, once hailed as the "Next Asian Tiger" and having made remarkable progress in poverty alleviation, export growth, and social development, now faces unprecedented challenges ranging from global economic uncertainty to domestic structural inefficiencies. Over the last 15 years under the previous regime, rising inflation, a widening trade deficit, declining remittances, and vulnerabilities in key sectors like RMG and agriculture have placed the economy at a crossroads.

Critics argue that excessive government intervention, protectionist measures, and a focus on large-scale infrastructure projects at the expense of social welfare programs hindered private sector development and limited competition. Furthermore, allegations of corruption and cronyism within the government and its associated businesses are said to have diverted resources away from productive sectors, hindering economic efficiency and discouraging foreign investment. This, coupled with a lack of transparency and accountability in economic decision-making, is seen as having contributed to a less-than-optimal economic environment for Bangladesh.

Amidst these challenges, there lies a promising opportunity to rethink and restructure Bangladesh's economic model for a more sustainable and inclusive future. By embracing innovation, fostering public-private collaboration, diversifying exports, and investing in human capital, Bangladesh can turn adversity into a platform for transformative growth. This article focuses on three major areas to revitalise the economy in this connection, offering a beacon of hope for the future.

SMARTER FARMERS, STRONGER NATION: Being an agrarian country, Bangladesh has made commendable strides in food production over the past few decades. Yet, challenges such as population growth, shrinking arable land, and climate change pose significant threats to achieving long-term food security. Thailand, on the other hand, has emerged as a global leader in agricultural efficiency, leveraging science, technology, and collaboration to transform its farming sector. Bangladesh can benefit immensely by learning from Thailand's experience to achieve self-sufficiency in food production and boost agricultural exports.

Agriculture contributes around 13 per cent to Bangladesh's GDP and employs approximately 40 per cent of the labour force (Bangladesh Bureau of Statistics, 2023). Despite being the fourth-largest producer of rice globally, Bangladesh still relies on imports for key crops such as wheat, pulses, and edible oils. Moreover, inefficient farming practices, limited access to modern technologies, and post-harvest losses-estimated at 25-30 per cent annually (FAO, 2022)-undermine the sector's potential.

Lessons from Thailand's Agricultural Success. Thailand has earned global recognition as the "Kitchen of the World," exporting various agricultural products, including rice, fruits, vegetables, and seafood. The country's success stems from scientific cultivation, innovation, and market-oriented policies. Key lessons for Bangladesh include:
Embracing Technology and Innovation. Thailand's farmers widely use precision farming techniques, a modern farming approach that involves using technology such as satellite imagery, drones, and IoT-enabled sensors to monitor soil health and optimise water usage. In contrast, only 12 per cent of Bangladeshi farmers have access to advanced farming tools (World Bank, 2023). Introducing affordable precision agriculture tools in Bangladesh can increase yields by 20-30 per cent.

Diversification of Crops. While Bangladesh primarily focuses on rice, Thailand has diversified into high-value crops like fruits (durian, mangoes), spices, and flowers, boosting export revenues. Encouraging Bangladeshi farmers to diversify into cash crops such as jute, fruits, and spices can enhance incomes and reduce overreliance on rice.
Public-Private Partnerships. Thailand's government collaborates closely with private enterprises to provide farmers access to markets, financing, and training. In Bangladesh, scaling up PPP initiatives could address infrastructure and supply chain management gaps, making business leaders feel engaged and integral to the economic development process.

Export-Oriented Policies. Thailand has established robust quality control, branding, and certification systems to meet international export standards. Bangladesh's agricultural exports accounted for only 3 per cent of total exports in 2023. This figure could increase significantly by investing in quality assurance and global market access.
Collaboration Opportunities with Thailand. Bangladesh and Thailand share similar agro-climatic conditions, making technology and knowledge transfer highly feasible. Potential areas of collaboration include joint research and development, farmer training programs, agro-processing and value addition, and investment in agribusiness.

ENHANCING FOREIGN CURRENCY REMITTANCE: Our economy relies heavily on remittances from its labour force working abroad, which is a critical foreign currency source. However, most of these workers are unskilled or semi-skilled, and their limited proficiency in English and Arabic often places them at a disadvantage compared to labourers from neighbouring countries. Consequently, they typically earn minimum wages, which reduces their potential contribution to the country's foreign currency reserves.

According to data from the Bureau of Manpower, Employment, and Training (BMET), over 70 per cent of Bangladeshi migrant workers fall into the unskilled or semi-skilled category. While they are industrious and willing to work hard, their lack of communication skills in English or Arabic makes it challenging to secure better-paying jobs. In contrast, workers from countries like India, the Philippines, and Sri Lanka often earn significantly higher wages due to their proficiency in these languages and better training.

For example, a 2022 report by the International Labour Organization (ILO) indicated that Bangladeshi workers earn approximately 20-30 per cent less than their Indian or Filipino counterparts in the Gulf Cooperation Council (GCC) countries. This wage disparity stems largely from the lack of language and soft skills, making it harder for Bangladeshi workers to transition to higher paying roles or to negotiate better terms of employment.

A mandatory three-month condensed training program for outbound workers could bridge the gap. The program would focus on three core areas:

(a) Basic Language Skill. Providing essential communication training in English and Arabic enables workers to communicate effectively with supervisors and co-workers. (b) Skill Refinement. Including a refresher course to polish basic technical or trade-related skills relevant to their job categories, such as construction, caregiving, or hospitality.
(c) Etiquette and Manners. Teaching workplace etiquette, cultural sensitivity, and professional conduct to help workers adapt better to foreign environments.

Since we have a decent facility in our Hajj Camp adjacent to our International Airport, which remains unoccupied during most of the other months of the Hajj season, thee training program could be arranged in the Hajj Camp immediately, leveraging the facility unstill separate institute with proper infrastructure is built.

A well-designed training program could significantly increase the earning potential of Bangladeshi workers abroad. For instance, if such a program helps raise average monthly earnings by 50 per cent, the cumulative impact on national remittance figures would be transformative. In 2023, Bangladeshi migrant workers sent home approximately $22 billion in remittances, according to the Bangladesh Bank. With a 50 per cent increase in average wages facilitated by improved skills and language proficiency, annual remittance inflows could rise to $33 billion.

REVAMPING BIMAN: Bangladesh, with its burgeoning economy and rapidly growing aviation infrastructure, stands at a pivotal moment to transform its national airline, Biman Bangladesh Airlines, into a symbol of national pride and a key regional player. Drawing inspiration from the resounding success of Ethiopian Airlines, this article outlines a roadmap for Biman's revitalisation by leveraging strategic alliances, enhancing operational efficiency, and tapping into nationalistic and diaspora sentiments.

Bangladesh's aviation market is experiencing unprecedented growth. With the completion of new terminals at Hazrat Shahjalal International Airport and other ongoing infrastructure upgrades, the nation is poised to handle approximately 250 million international passengers annually, with an expected annual growth rate of 10 per cent.
However, Biman's market share remains underwhelming, with many passengers opting for foreign carriers due to perceived shortcomings in service quality, fleet modernisation, and network connectivity. So, a comprehensive reform plan centred around aligning with Star Alliance and following the Ethiopian Airlines model could be designed.

Assuming a 10 per cent annual increase in passenger numbers and a gradual market share capture from foreign carriers, Biman's financial outlook over the next five years could be lucrative. For instance, if the market share grows from 20 per cent to 25 per cent within a year, Biman will handle 50 million passengers and its revenue will reach at $1.25 billion (average revenue per passenger of $250).

CONCLUSION: Addressing these key areas requires a multi-pronged approach, encompassing government policies, private sector investment, and international collaboration. Bangladesh can overcome current challenges by embracing innovation, fostering public-private partnerships, and investing in its human capital and embark on sustainable and inclusive economic growth.

The lessons from global success stories-Thailand in agriculture, the Philippines in labour export, and Ethiopia in aviation-provide a roadmap for Bangladesh. With decisive action and a collective vision, Bangladesh can solidify its position as a thriving regional and global economic hub, ensuring prosperity for generations to come.

Mahmud Hossain is CEO, Millennium​

 

[Saif]

Unlocking Bangladesh’s trade and investment potentials

Bangladesh must design and implement robust policy measures to encourage increased trade and investment.

www.thedailystar.net

Unlocking Bangladesh’s trade and investment potentials

VISUAL: REHNUMA PROSHOON

Trade and investment are interlinked, and they can reinforce each other, fostering economic growth, creating employment opportunities, and driving social progress. They also act as critical components of economic framework by generating higher revenues, which can be channelled into developmental initiatives and social protection programmes for underprivileged communities. Therefore, countries must design and implement robust policy measures to create conducive environments, that encourage increased trade and investment.

Bangladesh has transitioned from an aid-dependent economy to a trade-dependent economy over the past decades. The share of foreign aid has declined to less than two percent at present while the shares of export and import are 13.1 percent and 15.7 percent, respectively. However, the opportunities for higher trade remain largely untapped. On the other hand, despite claims of high economic growth by the previous government, investment levels have stagnated over the last decade.

In the fiscal year (FY) 2023-24, private investment constituted 23.5 percent of GDP—lower than the 23.7 percent in FY 2015-16. Public investment showed a modest increase from 6.5 percent of GDP in FY 2015-16 to 7.5 percent in FY 2023-24. Foreign direct investment (FDI) remains a critical concern, as it has consistently accounted for less than 1 percent of GDP since FY 2015-16. In FY 2023-24, FDI was little over 0.3 percent of GDP. These figures highlight the need for urgent actions to unlock the full potential of trade and investment in Bangladesh.

A broad spectrum of factors, that determine export competitiveness and economic attractiveness for investors, influence Bangladesh's trade and investment climate. These factors include the soundness of macroeconomic policies, the strength of economic and political institutions, the functioning of the legal and regulatory framework, the quality of infrastructure and services, the skill sets of human resources, and the level of technological adoption.

The lack of sound macroeconomic policies, a cornerstone for creating a stable and conducive environment for trade and investment, has weakened Bangladesh's macroeconomic stability over the years. It is currently reflected in the country's fiscal and monetary policies, exchange rate, financial and debt situation, affecting growth performance. Governments stimulate aggregate demand and economic activity through a well-managed fiscal policy; for instance, generating employment and enhancing logistics through public infrastructure projects, thus contributing to overall economic efficiency. However, in Bangladesh, the effectiveness of fiscal policy has eroded because of the abysmally low tax collection and mostly questionable, inefficient government spending.

Monetary policy is another vital component. Effective management of money supply and interest rates is crucial for controlling inflation and promoting sustainable economic growth. However, the previous governor of the Bangladesh Bank did not use monetary policy tools to control inflation. He decided to keep the interest rate fixed even when the inflation rate was high to benefit a certain group of businesses and express loyalty to them by sacrificing professional duty. Additionally, exchange rate policies by the Bangladesh Bank during the ousted government's regime were wrong and inadequate, which significantly impacted trade competitiveness and foreign investment. Stable currency management, particularly through a market-driven exchange rate, is crucial to reduce uncertainties, bolster investor confidence and increase exports.

Financial stability is indispensable for macroeconomic resilience. But Bangladesh's financial sector, dominated by banks, has been grappling with various inefficiencies and poor governance. It is reflected in the sector's overall poor performance and high non-performing loans. Currently, the banking sector is undergoing various reforms, but it will take several years to overcome the challenges of the sector. Besides, there is also a lack of diverse financing options and products, including venture capital and credit for small businesses, which can enable economic participation across all sectors.

Moreover, prudent debt management is critical for Bangladesh as its domestic and external debt are increasing. Megaprojects' implementation through foreign loans has not followed the rationale spending path, but has instead led to high corruption, and wastage. As a result, projects became much more expensive than in other comparable countries and the economic return is costly.

All these impact economic growth, which was illogically inflated by the previous government, leading to the weakening of the macro fundamentals, reflected in the lower growth of gross domestic product (GDP). The World Bank has projected Bangladesh's growth to be 4.1 percent in FY 2024-25. Sustained economic growth is essential for job creation and poverty reduction. Therefore, without addressing these issues, Bangladesh's macroeconomic foundation will continue to erode, hampering its trade, investment and development.

Bangladesh also faces significant institutional weaknesses that hinder trade and investment. Institutions such as the Bangladesh Bank and the National Board of Revenue, the Bangladesh Investment Development Authority, the Bangladesh Securities and Exchange Commission severely suffered from political interference all these years, reducing their efficiency and independence. Political institutions captured these economic institutions preventing any meaningful reforms. Besides, overlapping regulations, bureaucratic delays, high compliance costs and a complex, multi-layered legal system deter new businesses and foreign investors and cause inefficiencies.

There are also issues of policy consistency and alignment. Unified and coordinated policies are needed to improve the trade and investment climate. Existing trade and investment policies should be revisited to address gaps and redundancies. There is an anti-export bias in Bangladesh which is reflected through high tariffs. On the other hand, the National Industrial Policy 2022 protects the import-competing industries through various tax exemptions and tax holidays—facilities that are provided even to inefficient sectors. This policy should be reviewed for proper trade promotion.

In addition, the complexity of tax laws should be reduced, so that their predictability would attract long-term investments. Also, Bangladesh should now transition towards a market-based exchange rate system to boost trade competitiveness. Access to finance should be enhanced by diversifying financial products and ensuring affordable interest rates to support both domestic and foreign investors. The infrastructure deficits must be met by increasing energy availability, improving port operations, and upgrading road networks to reduce logistical challenges. As Bangladesh is set to graduate from the least developed country category in 2026, preparation for a smooth graduation should be expedited. The National Tariff Policy 2023 should be implemented to streamline tariff structures and rationalise tariffs.

The export sector should be strengthened through compliance improvements, green transitions, and continued support. The stabilisation of law and order and protection of both domestic and export-oriented industries are urgently needed. Investment in education and skills development is required to overcome the shortage of skilled labour. E-governance through digitalisation should be enhanced in public services and logistics to reduce costs and improve efficiency. It is also important to establish clarity, consistency and continuity of policies to build investor confidence.

Finally, businesses do not start and cannot thrive in an environment lacking sound regulation and market-supporting laws, that are implemented fairly. These are essential "public goods"—which the government must provide to enable trade and business. Corruption, which has become all-encompassing, must be eradicated. Public offices should not be used for private gain—rather they should enable a conducive business environment and meet the needs of the economy and people.

Dr Fahmida Khatun is executive director at the Centre for Policy Dialogue (CPD) and non-resident senior fellow at the Atlantic Council.​

 

[Saif]

Growth of economic units slows amid capital shortages

The growth in the number of economic units in Bangladesh has slowed over the past decade, primarily due to capital shortages among rural entrepreneurs, according to the latest Economic Census of the Bangladesh Bureau of Statistics.

www.thedailystar.net

Growth of economic units slows amid capital shortages

The growth in the number of economic units in Bangladesh has slowed over the past decade, primarily due to capital shortages among rural entrepreneurs, according to the latest Economic Census of the Bangladesh Bureau of Statistics.

An economic unit is defined as a single establishment or economic household engaged in economic activities for profit, household gain, or indirect benefit to the community.

The total number of economic units in the country stood at 1.18 crore in 2024, marking a 52 percent increase from 78 lakh units in the previous census, conducted between 2001 and 2013.

This is significantly lower than the growth rate of 110 percent that was reported in the previous census, according to the preliminary report of the Economic Census 2024, released yesterday.

This was driven by a slowdown in the growth in the number of economic units in rural areas over the last decade, which dropped by nearly two-thirds compared to the previous decade.

Between 2013 and 2024, rural economic units grew by 49 percent, reaching 83 lakh. In contrast, the previous census saw a much higher growth rate of 141 percent.

Meanwhile, urban economic growth remained almost unchanged, standing at 58.38 percent in 2024 compared to 58 percent in 2013, reflecting stagnation.

The share of economic units in the manufacturing industry saw a downturn, reducing from 11.54 percent in the past census to 8.77 percent in the latest. In turn, the share of economic units in the services sector saw an uptick, increasing from 88.46 percent to 91.23 percent.

Additionally, the latest survey found that around 94 percent of the unit heads are male while just 6.46 percent are female, down from 7.21 percent in the previous survey.

For the first time, the BBS has introduced some new indicators that highlight problems faced by economic units.

Among the nine challenges identified, nearly 86 percent of entrepreneurs cited a lack of capital as a major problem.

Additionally, 34 percent reported difficulties in accessing easy loans.

"The number of entrepreneurs is higher in rural areas than in urban areas. But rural entrepreneurs face discrimination in accessing capital," Planning Adviser Wahiduddin Mahmud said while speaking as the chief guest at the report launch event in Agargaon.

He explained that while urban business tycoons secure loans and often default, rural entrepreneurs struggle to access financing for their businesses.

He used Beximco Group as an example.

"They have grown rich overnight based on loans. They have nothing other than loans. Now most of the factories are closed. The government is running their operations," he said.

"There is no shortage of entrepreneurs in Bangladesh, but access to capital remains a real challenge," he added.

Furthermore, job opportunities in rural areas have shrunk over the 11 years since 2013, reflecting a lack of growth in non-farm activities.

The census reveals that 56.82 percent of 3.07 crore people were engaged in economic activities in rural areas in 2024, down from 61.23 percent in 2013.

However, the number of people involved in economic activity increased overall during this period as the economy expanded, leading to an increase in the number of economic units, the BBS stated while launching the census at its office yesterday.

On the other hand, urban areas have created more economic opportunities since 2013. The BBS reported that 43.18 percent of people were engaged in economic activities in urban areas in 2024, up from around 39 percent in 2013.

In urban areas, the number of people involved in economic activities stood at 1.32 crore in 2024, with Dhaka Division accounting for 89 percent of the total. Chattogram ranked second, followed by Rajshahi.

Overall, the BBS found that 70.27 percent of economic units operate in rural areas, while 29.73 percent are located in urban areas.

Dhaka Division hosts the highest number of economic units, totaling 32.1 lakh, contributing 27.03 percent of the total in 2024, up from 24.23 percent in 2013.

Additionally, the country has 116,978 e-commerce economic units, with Dhaka hosting the largest portion of around 47.42 percent or 55,474 units.​

 

[Saif]

‘Economy was more dire than people thought’

Finance adviser talks about govt’s 3 strategies to ease economic strain

www.thedailystar.net

‘Economy was more dire than people thought’
Finance adviser talks about govt’s 3 strategies to ease economic strain

Photo: Prabir Das/Star

The interim government has an uphill task of fixing the economy it inherited from the Awami League government of 15 years, said Finance Adviser Salehuddin Ahmed.

"When the interim government assumed power, it inherited a problem-driven economy -- the situation was more dire than people thought," he told The Daily Star in an interview on Monday.

There were external problems, but the underlying domestic issues were even more acute: the foreign exchange reserves were depleting rapidly, inflation was stubbornly high and the balance of payments was negative.

"Even though we are not in the situation where we want to be, things are improving."

The new government inherited another big problem: outstanding letters of credit dues of upwards of $4.5 billion.

"Without touching the foreign exchange reserves, the new government repaid it, and the outstanding amount dropped to $400–500 million."

The foreign reserves are stable now, said Ahmed, also a former governor of Bangladesh Bank.

The interim government has adopted a three-pronged approach to steadying the ship: raising the buffer stock of food, ensuring steady stream of liquidity for businesses and creating jobs through realignment of the annual development programme (ADP).

He said the government has been able to steady the wobbly banking sector and ward off a complete collapse of the system.

"The situation was so dire that there was widespread fear that banks could run out of money anytime. It is rare for a bank to be emptied by a few individuals -- no country in the world has experienced such a phenomenon."

Some banks are rebounding, including Islami Bank and Social Islami Bank. The two banks were controlled by the Awami League-affiliated S Alam Group.

The strong remittance inflow has provided some relief to the Shariah-based banks, helping them to revive their health.

"We have implemented targeted measures for the banking sector so that savers do not lose confidence. The central bank provided over Tk 20,000 crore to the banks and now people are no longer struggling to get their money back."

The new governor is trying but the mismanagement and poor decisions of the previous regime have created a deep-rooted problem that is hard to fix, Ahmed said.

For instance, a huge volume of defaulted loans has been stuck in the courts for a long time.

"The backlog in the courts is enormous. If this continues, the situation will only get worse."

Immediate actions such as a special judicial bench are needed to resolve the pending cases quickly.

"But this requires focused attention and significant effort. I will sit with the law adviser and the chief justice soon and urge them to launch a special bench for clearing these backlogs."

The government has stopped the provision of giving amnesty to black money though the system still contains ways to legalise undeclared wealth.

For instance, people are selling properties for prices far higher than their registered value.

This creates massive amounts of unaccounted money, which are funnelled into buying cars, appliances or other assets.

"This creates a system where black money thrives -- we will try to address this."

Regarding corruption in government projects, he acknowledged that the menace still remains.

"We are trying to tackle this, but it's not easy. The same old players remain in the system under new names, making real changes difficult."

Asked about the grievances of the White Paper Committee about the government's failure to implement the recommendations, he said: "We will review their suggestions within the next two to three months, but some of them have been addressed."

For example, the government has established task forces to bring back billions of dollars siphoned out of Bangladesh and has sought international support where necessary.

The interim government is also trying to fix the tax system, which is responsible for one of the lowest tax-to-GDP ratios in the world.

The previous government has issued several statutory regulatory orders to benefit certain firms and individuals, Ahmed said.

"After coming to power, we cancelled the SROs. We are separating the tax policy from the tax administration. In 2008, the government tried to do this but failed. I know some officials are standing in the way -- who wants to give up power? But I will implement it before I leave."

Ahmed blames the persistently high inflation on supply-side issues.

"It's not that essentials are unavailable -- they get stuck in one place without being distributed."

He pointed out that even officials like consumer rights officers or magistrates can't bring about meaningful changes alone. Extortion during transportation of goods is also raising costs, which is fuelling inflation.

Regarding the recent increase in value-added tax and supplementary duties, he said the tax rate has already been brought down for several goods and services that are widely consumed by the general public.

"The rest do not affect the general population. For instance, the VAT on biscuits priced above Tk 200 per kg is logical. Whoever buys biscuits that cost Tk 200 per kg has the ability to pay VAT."

Asked about the ADP, he said the interim government will focus on local roads and culverts to boost rural job creation.

It will not take on any sophisticated project but continue with existing mega projects such as the deep-sea port, he said, adding that the ADP budget may be pruned by about Tk 50,000 crore.

"Some people criticise us for not revising the budget introduced by the previous government. Actually, it is difficult to revise the budget in such a short period. Though the budget was not revised, we have cut government costs except for the necessary expenditures."

One such necessary expenditure was vehicle purchase for the Bangladesh Police as 300 of their vehicles were burnt down during the July uprising.

"The next budget will be pragmatic -- it won't be an unpopular budget."

Yet, the much-maligned power sector subsidy will continue. "Otherwise, people and businesses will suffer."

The main targets of the budget will be macroeconomic stability, containing inflation, ensuring energy supply and taking steps for the agricultural sector so that farmers do not suffer, Ahmed added.​

 

[Saif]

Service sector unit growth higher than manufacturing

The country’s service sector-based units grew more than manufacturing units over the past one decade that was also marked by a decrease in female employment...

www.newagebd.net

Service sector unit growth higher than manufacturing
Staff Correspondent 29 January, 2025, 23:32

The country’s service sector-based units grew more than manufacturing units over the past one decade that was also marked by a decrease in female employment.

The past decade also shows dominance of rural area in overall units.

The information was revealed by the Bangladesh Bureau of Statistics at its release of the preliminary findings of the Economic Census 2024 at its office at the city’s Agargaon.

The previous census was done in 2013.

The overall economic units—permanent, temporary and economic households—increased by 40.48 lakh nationwide to 118.77 lakh in between the two censuses.

The service sector-based units grew by a whopping 56 per cent to 108.35 lakh in 2024 from 69.15 lakh in 2013, compared with only 15 per cent growth in manufacturing units to 10.41 lakh in 2024 from 9.02 lakh in 2023.

The share of manufacturing and service units in the 2024 census stood at 8.77 per cent and 91.23 per cent respectively against 11.54 per cent 88.46 per cent respectively in 2013, according to the BBS preliminary findings.

Former World Bank Dhaka office chief economist Zahid Hussain called the trend as ‘not good’ for a country like Bangladesh where formal sector employment is low.

Referring to other countries, he said that the service sector flourished on the back of successful industrialisation.

But the preliminary findings showed that the country was at a crossroad, he said, adding that the findings also proved the emptiness of the development narrative harped by the Awami League regime ousted amid a mass uprising six months back on August 5.

Planning adviser Wahiduddin Mahmud who addressed the ceremony as chief guest said that clearer pictures of the country’s economic status would be available with the release of the final census report.

Referring to the finding that economic units in rural areas are dominating with 70.27 per cent share against 29.73 per cent in urban areas, he said that it was not clear whether the growing business activities in rural areas were linked to poverty or whether employment opportunities were diversified to areas other than agriculture.

He lamented at the findings that 75.812 lakh economic units faced challenges of capital shortage, lack of access to easy loan facilities, want of infrastructure, growing production cost, lack of skilled workers, energy shortage and lack of access to the market.

Respondents identified capital shortage, lack of access to easy loan facilities, want of infrastructure as top challenges with 48 per cent identifying lack of capital as the main problem, while 19 per cent identified lack of access to easy loan facilities and 10 per cent mentioned lack of infrastructure as their main challenges.

The planning adviser remarked that it was an irony that while many entrepreneurs suffered from severe capital shortage, the immediate past regime led the plunder of the country’s banking sector.

The statistical bureau’s preliminary findings also showed that the share of female participation in economic units decreased to 6.4 per cent in 2024 from 7.21 per cent in 2013.

Some 1.1 lakh economic units out of total 1.5 lakh respondent units in the census said that they were involved in e-commerce.

Of those, 37.11 per cent units used e-commerce facilities for customer service, 29 per cent for sales of products and 12 per cent for online transaction.​

 

[Saif]

Govt should review policies to up manufacturing sector growth

THE growth of the number of economic units in the services sector by 56 per cent, to 10.83 million units in 2024 from about 6.91 million units in 2013, as the preliminary findings of the Economic Census 2024 that the Bureau of Statistics made public on January 29 show, is encouraging. But what...

www.newagebd.net

Govt should review policies to up manufacturing sector growth
31 January, 2025, 00:00

THE growth of the number of economic units in the services sector by 56 per cent, to 10.83 million units in 2024 from about 6.91 million units in 2013, as the preliminary findings of the Economic Census 2024 that the Bureau of Statistics made public on January 29 show, is encouraging. But what remains worrisome is that the growth in the number of economic units in the manufacturing sector by 15 per cent, to about 1.04 million units in 2024 from about 900,000 units in 2013, when the census was last held, is not commensurate with the growth of the services sector. The figures stand the share of the manufacturing and services in economic units at 8.77:91.23 per cent in 2024 against the ratio of 11.54:88.46 per cent in 2013. The number of overall economic units — permanent, temporary and economic households — has increased by about 4.05 million across the country to about 11.88 million units between the two censuses. Experts believe that the growth of economic units in the manufacturing sector is ‘not good’ for a country such as Bangladesh, where employment in the formal sector is low. They believe that this is so because the services sector in other countries flourished riding on the wings of a successful industrialisation.

The proposition also points out the hollowness of the development rhetoric that the previous Awami League government, toppled in a mass uprising on August 5, 2024 after having been in office since 2009, had repeatedly harped on. The government needs to bolster the growth of economic units in the manufacturing sector. Another finding that has worryingly come up is the share of women’s participation in economic units, which declined to 6.5 per cent in 2024 from 7.21 per cent in 2013. This is antithetical to women’s empowerment. A poor participation of women in the economy could also have serious implications for society, leading to a growing economic abuse of women. This calls for early government attention. The finding of the national statistical office that economic units in rural areas dominate, with 70.27 per cent against 29.73 per cent in urban areas. The planning adviser to the interim government, who attended the Bureau of Statistics programme as chief guest, seeks to say that whether the growing business activities in rural areas are linked to poverty or employment opportunities have diversified to areas other than agriculture remains unclear. The proposition leaves the government with the task of looking deep into the situation and act accordingly. What yet remains worrying is the finding that more than 7.58 million economic units face the challenge of capital shortage, lack of access to easy loans, an absence of infrastructure, growing production cost, the dearth of skilled workers, energy shortage and an absence of access to market.

The challenges that have come up in the findings of the survey clearly tell the government what to do, where and to what extent to bolster the growth of the manufacturing sector, based on which the services sector would grow further. It is time that the government buckled down to work.​

 

[Saif]

https://thefinancialexpress.com.bd/editorial/balancing-manufacturing-and-service-sectors

Balancing manufacturing and service sectors
Published :
Jan 31, 2025 00:07
Updated :
Jan 31, 2025 00:07

The findings of the latest economic census present a disconcerting picture of the country's industrial landscape---a significant decline in manufacturing over the recent years. While non-agricultural business establishments have expanded substantially, the overall economic trajectory appears to be deviating from a sustainable growth pattern. Ideally, economic development follows a structured transition from agriculture to industry and then to the service sector. However, the current trend suggests a leap from agriculture to services, bypassing industrialisation. Data from the census highlight the stark imbalance between manufacturing and service sectors. Of the 4.06 million new businesses established over the past decade, only 3.42 per cent belong to manufacturing, while a staggering 96.58 per cent fall under the service category. This significant skew indicates a structural anomaly that could hinder long-term economic resilience. A well-balanced economy requires a strong manufacturing base to ensure job creation, enhanced productivity, and sustainable export growth.

The projected economic growth figures from the Bangladesh Bureau of Statistics (BBS) over the last decade were based on an anticipated expansion of manufacturing industries. However, the actual decline in manufacturing, coupled with the rapid rise of the service sector, reveals structural weaknesses, policy inconsistencies, inadequate investment in industrialisation and an increasing reliance on imports. Experts caution that insufficient emphasis on industrialisation could undermine economic stability, as manufacturing has traditionally played a crucial role in employment generation and GDP expansion. The census report indicates an overall rise in economic units, but employment growth has notably slowed over the past 11 years. The share of the manufacturing sector among economic units has dropped to 8.77 per cent, down from 11.54 per cent in 2013 and 12.14 per cent in 2003. In contrast, the service sector's share has surged to 91.23 per cent, up from 87.89 per cent in 2003. This shift underscores a troubling decline in industrial engagement, reflecting a structural imbalance in the economy.

A report by the Financial Express, citing the project director of the economic census, states that no large industrial factories have been established in the past decade. Instead, the growth has been confined to small industries, signalling sluggish economic progress. A major challenge for manufacturing investment is the unpredictability of tax and revenue policies, which creates uncertainty for businesses. Industry stakeholders argue that frequent policy shifts deter investors, making it difficult to forecast profitability and long-term viability in the manufacturing sector. As a result, many investors prefer the lower-risk options available in trading and services over the higher risks associated with manufacturing. Consequently, most new manufacturing ventures are small, informal units rather than large, structured industrial enterprises. Notably, 70.27 per cent of these units operate in rural areas, with only 29.73 per cent located in urban centres.

Given these circumstances, urgent policy interventions are needed to reverse the declining trend in manufacturing. The government must implement targeted measures such as stable policy frameworks, financial incentives, and robust infrastructure development to reinvigorate the sector. Strengthening this sector should be a top priority to ensure a balanced and resilient economic future.​

 

[Saif]

Govt should redouble efforts to dispel economic disparities

THE Poverty Map of Bangladesh 2022 that the national statistical office made public in Dhaka on January 30 shows a tell-tale sign of the government’s lopsided efforts that have resulted in...

www.newagebd.net

Govt should redouble efforts to dispel economic disparities
01 February, 2025, 00:00

THE Poverty Map of Bangladesh 2022 that the national statistical office made public in Dhaka on January 30 shows a tell-tale sign of the government’s lopsided efforts that have resulted in uneven development and economic disparities across the regions. The map shows that the district of Dhaka has an overall poverty rate of 19.6 per cent — part of the area’s population living below the poverty line of $2.25 per day or Tk 262 a day — whilst the national poverty rate remains 19.2 per cent, which is slightly higher than 18.7 per cent that the Bureau of Statistics earlier estimated based on the Household Income and Expenditure Survey 2022. The district of Madaripur has the highest poverty rate of 54.4 per cent, almost three times the national average, and the district of Noakhali has the lowest poverty rate of 6.1 per cent, almost a third of the national average. In small area estimation, Paltan thana in the capital city has the lowest poverty rate of 1 per cent whilst the upazila of Dasar in Madaripur has the highest poverty rate of 63.2 per cent. On a regional scale, the division of Barishal has recorded the highest poverty rate of 26.6 per cent whilst the division of Chattogram has reported the lowest poverty rate of 15.2 per cent.

The updated poverty map highlights significant gaps between the affluent and impoverished regions at all levels of the division, district and upazila, shedding light on development effort inadequacy and challenges in the government’s fight against poverty. Besides, the map further shows a poverty rate of 20.3 per cent in rural areas whilst the poverty rate in urban areas remains at 16.5 per cent. The map — which is the fourth update since it was launched in 2000 and subsequently updated in 2005, 2010 and 2016 — also shows a shift in the division level poverty as Barishal has become the division with 26.6 per cent of its population, the highest among the divisions, living in poverty, replacing the division of Rangpur, which topped the list with 47.23 per cent in the 2016 update to the poverty maps. Although the poverty rate of Barishal, which was ranked in the fifth position with 26.49 per cent in the 2016 update, has remained almost unchanged, the rate of poverty in the division of Rangpur declined significantly to 25 per cent in six years. The poverty map — covering the poverty situation in eight divisions, 64 districts and 590 upazilas and metropolitan thanas developed with the help of the World Bank and the World Food Programme — aims at giving a clear picture of the socioeconomic condition and it appears to have rightly so done.

But the initiative does not only highlight the progress and the decline not stemmed but also points to challenges that lie ahead for the government to re-orient its development policies and efforts in an impactful and inclusive manner on a journey towards prosperity that could be shared equally by all.​

 

[Saif]

Competitiveness key to avoiding future challenges: Commerce Adviser

Commerce Adviser Sheikh Bashir Uddin has urged for efforts to enhance the capacity of traders, alongside diversifying products and reducing production costs, to meet future challenges. "If we cannot create competitiveness through the participation of the private sector and reduce the production co

thefinancialexpress.com.bd

Competitiveness key to avoiding future challenges: Commerce Adviser
UNB
Published :
Jan 31, 2025 23:53
Updated :
Jan 31, 2025 23:53

Commerce Adviser Sheikh Bashir Uddin has urged for efforts to enhance the capacity of traders, alongside diversifying products and reducing production costs, to meet future challenges.

"If we cannot create competitiveness through the participation of the private sector and reduce the production costs of products, many challenges will arise in the future of LDCs. The unemployment rate will also increase in the country," he said at the closing ceremony of the Dhaka International Trade Fair 2025, held at the Bangladesh China Friendship Exhibition Centre in Purbachal, Dhaka, on Friday.

The adviser also highlighted the government's efforts to improve the investment environment under the leadership of Chief Adviser Muhammad Yunus, noting that these steps align with the aspirations of the people.

On the low participation of foreign companies in the international trade fair, he explained that it is difficult for foreign firms to commit to a month-long event, as they typically participate in shorter exhibitions lasting five to six days.

Despite this, he expressed a desire to boost international connectivity at future trade fairs.

The commerce adviser further remarked that Bangladesh will lose many of its previous advantages as it faces the challenges of LDC status.

"To meet these challenges, local imports will need to be liberalised, and it will no longer be possible for the government to provide export incentives," he said. "If businesses fail to compete, they will suffer."

He also mentioned that the government has taken important steps, such as launching the National Single Window, which provides 18 services through a single channel.

The ceremony was presided over by Commerce Secretary Abdur Rahim Khan, with speeches from Md Hafizur Rahman, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) and Md Anwar Hossain, vice chairman of the Export Promotion Bureau (EPB).

The trade fair, which began on January 1, saw participation from 343 domestic and international organisations.

A total of 361 stalls and pavilions were set up, including 11 foreign organisations from India, Pakistan, Hong Kong, Turkey, Indonesia, Malaysia, and Singapore.​

 

[Saif]

Huge crowds flock to Dhaka International Trade Fair on final day

Staff Attendees have flocked to the Bangladesh-China Friendship Exhibition Center in Purbachal on the final day of the month-long Dhaka International Trade Fair 2025, according to bdnews24.com. As the final day fell on the weekly holiday on Friday is a weekend, shoppers and visitors from all w

thefinancialexpress.com.bd

Huge crowds flock to Dhaka International Trade Fair on final day
Published :
Jan 31, 2025 17:52
Updated :
Jan 31, 2025 17:52

Staff Attendees have flocked to the Bangladesh-China Friendship Exhibition Center in Purbachal on the final day of the month-long Dhaka International Trade Fair 2025, according to bdnews24.com.

As the final day fell on the weekly holiday on Friday is a weekend, shoppers and visitors from all walks of life from the capital and its surrounding areas poured into the fair in droves from the morning. By the afternoon, the grounds were packed.

Everyone seemed to be returning home with something after taking advantage of the attractive offers on several products, especially household goods, food, electronics, and crockery. Buyers also showed great interest in 'Buy One Get One' offers.

Some stalls are offering 20 per cent to 30 per cent discounts on various products on the final day, leading to booming business.

Shoppers and visitors from many walks of life from the capital and surrounding areas started coming to the fair. They are taking advantage of the discounts on the prices of various stalls.

The Export Promotion Bureau, or EPB, and the Ministry of Commerce are jointly hosting the fair, with furniture chosen as the product of the year.

As per tradition, the trade fair began on the first day of the New Year. Chief Advisor Muhammad Yunus inaugurated the event.

This year, the largest product exhibition in the country features a total of 362 stalls and pavilions. Among these, 351 belong to domestic companies, while the remaining 11 stalls represent businesses from seven different countries.

The seven participating countries are India, Pakistan, Turkey, Singapore, Indonesia, Hong Kong, and Malaysia.

The fair showcases and offers for sale a wide range of products, including domestic textiles, machinery, carpets, cosmetics and beauty aids, electrical and electronics goods, furniture, jute and jute-based products, household items, leather, artificial leather and leather goods, sports equipment, sanitary ware, toys, stationery, crockery, plastic, melamine polymers, herbal products, toiletries, imitation jewellery, processed foods, fast food, handicrafts, and home decor items.

Vendors say that although sales have increased towards the end of the fair, they are still not seeing much profit. They pushed for an extension of the fair's hours, but the authorities did not agree.

Russell Mahmud, head of Vision Pavilion in the main building of the fair, said: "As today is the last day, we are seeing a good response from buyers and visitors. We are offering a 20 percent discount on all our products. Sales are good, but it could have been better."

Salesman Akhter Hossain is working at a stall that sells Tangail-woven sarees and three-pieces. He said, "Today is the final day, sales are good. Sarees and three-pieces are available at affordable prices."

A customer who came to the shop said, "It was different when the fair was held in Agargaon. But it isn’t bad here either. However, I think more people will come if the number of foreign stalls is increased."

Trade Advisor Sheikh Bashiruddin will officially conclude the fair’s proceedings in the afternoon but the fair will continue until 10pm.

Bangladesh has been holding the Dhaka International Trade Fair since 1995 to promote, expand, market and attract the attention of the international market for domestic products. In 2022, the venue of the fair was moved from Agargaon to Purbachal. This year marks the end of the 29th edition of the fair.

The ticket price for entry to the fair is Tk 50 per person for adults and Tk 25 for children below 12 years of age.

For the convenience of visitors, more than 200 dedicated shuttle buses from BRTC will run daily from 8am from Kuril Bishwa Road, Farmgate (Khejurbagan/Khamarbari), Narayanganj, and Narsingdi towards the trade fair.

The last bus will depart from the fair premises at 11pm.

The fare from Farmgate (Khejurbagan/Khamarbari) to the fair premises is set at Tk 70; from Kuril Bishwa Road to the fair premises, Tk 35; Narayanganj to the fair premises, Tk 120; Narsingdi to the fair premises, Tk 90; from the fair premises to Gulistan, Tk 80; and from Gulistan to Narayanganj, the fare is set at Tk 45.

Continuing from last year, alongside the dedicated BRTC bus service for commuting to and from the fair, Uber services have also been launched this year with special discounts. A special Uber pick-up spot has also been designated.

In addition, an online ticketing system has been introduced for the first time at the fair. Tickets for the fair could be purchased online and visitors could enter the fairgrounds after scanning their phones. This reduced the rush of wait times at ticket counters.​

 

[Saif]

Persistent headwinds and concerns in external sector

Amid the prevailing bleak macroeconomic scenario and the pressure on several fronts, the external sector performance during the first half of FY25 offers some much needed and welcome relief to the Bangladesh economy. The positive changes are underpinned by the robust performance of most of the atte

thefinancialexpress.com.bd

State of the Bangladesh Economy in H1 of FY2024-25
Persistent headwinds and concerns in external sector
Fahmida Khatun, Mustafizur Rahman, Khondaker Golam Moazzem, Muntaseer Kamal and Syed Yusuf Saadat
Published :
Jan 31, 2025 21:33
Updated :
Jan 31, 2025 21:33

Amid the prevailing bleak macroeconomic scenario and the pressure on several fronts, the external sector performance during the first half of FY25 offers some much needed and welcome relief to the Bangladesh economy. The positive changes are underpinned by the robust performance of most of the attendant correlates that inform the country’s external sector outcomes. Exports posted robust growth during the first half (July-Dec) of FY25 as did the earnings from remittance inflows. The slide experienced by the foreign exchange reserves was halted, and the exchange rate of Bangladeshi Taka (BDT) against major currencies stabilised, although some volatility in the reserve position continues to persist. Improved trade and current account balance, as also the overall balance of payments situation, allowed going for some de-restriction of import activities. To what extent the positive trends will continue over the second half of FY25 is, however, uncertain, particularly because some of the headwinds are becoming gradually discernible. The following sections elaborate on some of the pertinent issues in view of the above.

Robust Export Performance, But Mostly Volume-Driven: Against the backdrop of muted performance of the corresponding period of the previous year, Bangladesh’s export sector experienced an impressive growth rate of 12.8 per cent during the first half of FY25. However, the double-digit growth needs to be taken with a grain of salt since it was achieved on the relatively lower base of (-) 9.5 per cent over the first half of FY24.

One distinctive feature of the export performance in the first half of FY2025 was that both RMG (13.3 per cent) and non-RMG (11.0 per cent) sectors recorded impressive growth. Within the RMG, while knitwear continued to exhibit robust performance (13.0 per cent growth), the wovenwear was also able to catch up with similarly high growth (13.6 per cent). As noted, the non-RMG sector also performed well, overall, with some of the non-RMG traditional export sectors registering impressive growth.

What is encouraging to note is that, in spite of the significant disruptions in production in the first quarter (July-September) of the FY25, consequent to the student-citizens uprising and workers’ unrest, export sector was able to demonstrate remarkable resilience and to pick up quickly, and major brands and buyers continued to stay with, and procure from, Bangladesh.

Estimating value addition is important from the perspective of arriving at an understanding about net domestic forex retention from export activities and capturing the possible implications for the country’s forex reserves situation. Our estimates indicate that domestic value addition from export was about US$15.0 billion during the first half of FY25 as against US$13.2 billion for the corresponding period of FY24, posting a high growth of 12.6 per cent. This robust performance owed to the high growth of knitwear exports (for which the value addition is considered to be about 60 per cent of corresponding global exports, as against the wovenwear where this is taken to be about 50 per cent), and also of non-RMG exports (for which the average value addition is estimated to be about 85 per cent). The fall in the cotton price was to the advantage of exporters (this was US$ 1.79/ kg in July-December of FY25, compared to US$ 2.07/kg in FY24 and US$2.48/kg in FY23 for corresponding periods). However, as would be seen below, exporters did not benefit in the form of higher apparels prices.

With regard to the drivers of the export growth in the key markets of the European Union (EU) and the United States of America (USA), as Table 4.1 indicates, this was primarily on account of the high growth in volume (10.6 per cent in the EU and 16.2 per cent in the USA), rather than that of price which witnessed negative growth rate (-.05 per cent and -4.0 per cent respectively). This, however, depicts the overall trend as regards the imports by both the EU and the USA since the performance pattern was the same for all major sourcing countries such as Vietnam, and, to some extent, China as well. The significant fall in cotton price, by 13.3 per cent between July-December period of FY24 and FY25, noted above, could be one reason for the above. On the other hand, this also underscores the stranglehold the brands and buyers have on the buy-driven global value chain of apparels whereby they are strongly positioned to pass on the lower price of inputs and intermediates in the form of lower prices to producers and exporters of apparels in Bangladesh and other countries.

While exports of jute and jute goods, and leather continued to struggle (-8.1 per cent and -11.6 per cent growth respectively), exports of leather and sports footwear posted very high growth of 30-45 per cent.

An analysis of export composition evinces that intra-RMG diversification continues to remain limited. Structural changes favouring the growing segment of the global RMG market- man-made and synthetic fibre-based apparels items- are yet not visible. To note, three-fourths of Bangladesh’s RMG exports are cotton-based, while more than three-fourths (and growing) of the global apparel market is non-cotton-based. There is a need to restructure export incentives in place to encourage investment in, and export of, man-made fibre-based apparel items. This would also help to raise the share of domestic value retention in total exports of Bangladesh which at present hovers around 60.0 per cent.

Indeed, both export concentration and market concentration persist. For example, the country’s export share in the growing markets of South Asia, East Asia, and ASEAN came down in the first half of FY2025 compared to the matched figure for FY24 (the share came down to 11.8 per cent from 12.7 per cent). Addressing the attendant challenges is particularly important also in anticipation of Bangladesh’s upcoming graduation from the Least Developed Country (LDC) status. Taking a cue from Vietnam, Bangladesh should aggressively pursue Free Trade Agreements (FTAs) and Comprehensive Economic Partnership Agreements (CEPAs) with countries of the region. A dedicated Trade Negotiating Cell needs to be set up, and the country’s offensive and defensive interests identified. Forward-looking trade strategies will need to be formulated and proactively pursued. Domestic tariff rates and regulatory policies will have to be adjusted in view of this in anticipation of Bangladesh’s future as a non-LDC developing country. Initiatives targeting the various trade-related measures, at the border and behind the border, must be put into action, and adequate preparation must be taken in anticipation of changing market access regime beyond the border.

Recent initiatives of the Bangladesh Investment Development Authority (BIDA) to attract export-oriented Foreign Direct Investment (FDI) to targeted sectors are timely, and need to be vigorously pursued. The proposed measures by BIDA include prioritising the setting up of selected Special Economic Zones (initially five SEZs and in ten years an additional ten) and identification of sectors that will be prioritised (19 sectors) in policies. The policies will need to be implemented by making available all the investment-related services as stipulated in the One Stop Service Act of 2018.

Proactive implementation of the Smooth Transition Strategy in view of LDC graduation is critically important if the current robust export performance is to be sustained in future, and the challenges of LDC graduation are to be adequately addressed. The discourse and proposal as regards deferment of LDC graduation (beyond 2026) and the possibility of availing of the Generalised System of Preferences (GSP) plus facility should not dissuade Bangladesh from doing the needful towards sustainable graduation. This is for a number of reasons. Firstly, as the CDP report (2021) indicates that Bangladesh is comfortably situated in view of all the three graduation thresholds and, as such, it will be a hard sell to argue for any deferment. Secondly, accessing the GSP plus preferential market access will be difficult (Bangladesh’s export share of RMG to the EU at present is above the ceiling proposed in the GSP Plus Scheme). Thirdly, the rules of origin for RMG in the GSP Plus proposed are onerous: two-stage conversion instead of one stage under the existing Everything But Arms (EBA) scheme. Fourthly, compliance requirements as regards labour, environment, CO2 emission and other standards are expected to become much more stringent once the new EU-GSP Scheme comes into effect in 2027. The task before Bangladesh will be to take all necessary initiatives and measures in view of the country’s graduation timeline of November 26, 2026.

Better and more efficient trade facilitation measures will be critically important in raising the export and trade competitiveness of Bangladesh. These included implementation of the recently formulated National Logistics Policy (2024), Paperless Trade Policy, Single Window System and cross-border Digital Commerce Policy (2024), and introduction of green trade facilitation measures. Putting in place the above will raise Bangladesh’s trade competitiveness and bring down trade-related costs and improve the business environment significantly.

Imports Gain from Price Effect: The encouraging growth of exports, together with the robust inflow of remittances helped to stall the fall in the forex reserves experienced since June 2024, and stabilise it at about US$26.0 billion in more recent months. This facilitated the withdrawal of some of the restrictions on imports put in place earlier. This led to a rise of 2.0 per cent in imports during the July-October of FY25 period compared to the corresponding period of FY24 (when imports were -20.6 per cent lower when compared to the matched period of FY2023). However, the import structure indicates that the growth was mainly because of the growth of imports of raw cotton (15.4 per cent) and textiles and articles thereof (26.8 per cent), while import of key production-related intermediaries (e.g., crude petroleum; -46.7 per cent) and capital goods (e.g., capital machinery: -25.1 per cent) remained in the negative. L/C opening (-0.5 per cent) and L/C settlement (-1.0 per cent) were in negative terrain for the period between July-November, FY25. However, to note, the two indicators were deep in the negative during the previous two corresponding periods (-12.3 per cent and -26.8 per cent for the same period of FY24 against FY23). The slide downward, thus, has been arrested. In view of the fall in prices of major commodities in the global market (e.g., fuel cotton, etc.), imports in terms of volume were able to post a positive trend. Accordingly, the data on import L/C opening, and L/C settlement should be treated with some caution, and leave room for interpretation.

Encouraging Remittance Inflow but Composition Merits Closer Look: As was noted, the high growth of remittance inflow has contributed to restraining the slide in the availability of foreign exchange in Bangladesh. The year 2024 saw the highest amount of remittance flow to the country US$26.89 billion, which was 22.7 per cent higher than 2023. If the period under review (July-December of FY25) is considered, the growth in remittance flow was 27.6 per cent against the matched period of FY2024.

Over the past four years (between 2021 and 2024), about 4 million people have left Bangladesh for overseas jobs, mostly in the Middle-East countries. It was pointed out in the previous IRBDs that this was not reflected in the amount and origins of remittance inflows to Bangladesh. Remittance inflow figures for 2021, 2022, and 2023 were US$22.0 billion, US$21.3 billion, and US$21.9 billion respectively despite the fact that about three million people had left the country for overseas jobs over the corresponding period. The other disquieting development was the structure of the inflow- there was a significant shift from Saudi Arabia to the UAE, for example. This is clearly discernible from Figure 4.2.

The fall in remittances from Saudi Arabia (more than 50 per cent of migrant workers left for the country), and the parallel rise in the remittances from the UAE, allude to the suspicion about a shift towards informal channels in recent past years. This calls for more in-depth investigation. In this connection, one may recall the report of the White Paper Committee 2024 which was set up by the Interim Government. The report noted that Dubai has emerged as a major hub of the money laundered from Bangladesh in the recent past. A number of underlying factors were identified in this connection: Dubai real-estate regulations (dedicated areas earmarked for foreign buyers and not asking about the source of money); investment policies (attracting foreign investors without undertaking due diligence); easy ways for people to set up shell companies and aggregators purchasing foreign currency from remitters by paying a premium; distribution of ill-gotten money among remittance-receiving households in Bangladesh by using various mobile financial platforms; employing firms and agents specialised in handling laundered money; hiding the sources through multilayered transactions and setting up shell companies in tax havens.

It is hoped that the Task Force set up by the Bangladesh Bank for Recovery of Stolen Assets, with support from the re-energised Bangladesh Financial Intelligence Unit (BFIU) and a rejuvenated Anti-Corruption Commission (ACC), will go deeper into the attendant issues, undertake forensic investigation and identify the key players involved in the laundering of money and will lodge criminal cases to bring the perpetrators to justice. Efforts must be pursued in all earnest to bring back the stolen money to where it truly belongs (filing cases in Bangladesh; establishing paper trail to the ultimate beneficiary abroad; filing cases in overseas jurisdiction; getting court verdicts to sequester, freeze and seize assets and return the recovered money to Bangladesh). To facilitate this process, Bangladesh should become a full member of the Financial Action Task Force (FATF), and Global Forum (GF) on Transparency and Exchange of Information for Tax Purposes.

Balance of Payment Scenario: The robust performance of exports and remittances contributed to an overall improvement in the balance of payments situation towards the end of December 2024. While this is still not comfortable, the trend is, however, encouraging when compared with the corresponding period of FY24. As was noted, large inflow of export and remittance earnings have helped to stall the slide downwards in the forex reserves situation, and contributed to stabilisation of, to a certain degree, the exchange rate of BDT. The improvement is primarily on account of the significant reduction in the trade account deficit, and to a larger extent, to the declining current account deficit. The improvement in Bop is not primarily because of the debt-creating financial account balance (to note, in the July-November period of FY2022, this was US$4,599 million; underpinned by medium- and long-term loans worth US$3,013 million). This compositional shift is a positive trend. However, the dismal performance in terms of FDI and portfolio flows remains a nagging concern.

There are a number of issues which, however, will need to be kept in the perspective in view of the likely BoP scenario over the near-term future: (a) with increasing de-restriction of imports, import payments are expected to go up; consequently, the trade balance could come under further pressure. Sustaining current robust export performance will be critically important in view of this; (b) maintaining the ongoing high growth of remittances will not be easy. It could be that the rise in remittance flow is because of the evident disruption of hundi/hawala and other informal channels of illicit financial flows in the aftermath of the August uprising. This could as well be a one-time phenomenon; (c) while the fall in reserves has been halted, the demands of higher imports and growing debt servicing liabilities could accentuate the pressure on forex reserves (the grace periods- when only interests have to be made- as regards a number of megaprojects are coming to an end; when the repayment period will commence, both interest and principal amount will need to be paid). Fourthly, true, the BDT, in view of the higher availability of the foreign currency in the country, has somewhat stabilised (for example, at about BDT 120-121 vis-a-vis USD). However, if forex demand on account of import and debt servicing payments goes up, BDT could slide further under an open market regime. This would then likely have implications in the form of imported inflation.

Exchange Rate Movement and Stabilisation of BDT: After the sharp decline of almost 40 per cent over the last three years, the value of the BDT appears to be stabilising in recent months. The BDT exchange rate against USD appears to be at the equilibrium level, as of now. As is known, at present the Bangladesh Bank is pursuing a crawling peg policy (within a limited range). However, a move towards a fully market-based exchange rate regime is anticipated over the near-term future. The exchange rate movement will need to be closely monitored. At the same time, the Bangladesh Bank may consider gradually phasing out (or withdrawing) the additional money being given to remitters to incentivise remittance flow and discourage sending money through informal channels (at 2.5 per cent). In 2024, against the remittance flow of US$26.88 billion, about US$0.67 billion was paid to remitters as incentives (equivalent to more than 80 billion taka at the current exchange rate of US$1=BDT 120). Given the revenue situation, the prevailing policy in this regard ought to be carefully weighed, and if justified, changed. Maintaining the exchange rate stability and holding comfortable forex reserves are the twin challenges that the central bank will have to deal with in the near-term future.

Concluding Remarks: The performance of the external sector during the July-December 2024 period transmits some hopeful messages. However, headwinds in the form of the global trading environment (likely US trade policy changes under the Trump administration), demand-side pressure on forex against the backdrop of import and investment pick-up, the growing pressure of Public and Publicly Guaranteed (PPG) debt servicing, and the challenges of implementing the smooth and sustainable LDC graduation strategy should keep policymakers alert and on their toes. The external sector situation and BoP scenario in June 2025 will hinge on how policymakers are able to deal with these emergent challenges, and take advantage of the drivers and accelerators of external sector performance. How the key external sector correlates evolve in the coming months of FY25 will hinge critically on this. In the context of LDC graduation, the smart way to go forward would be to implement the Smooth Transition Strategy in all earnest and take the needed initiatives to transform the economy from one of preference-driven competitiveness to skills and productivity-driven competitiveness.

The discourse about deferment of graduation should not dissuade Bangladesh from taking the needed measures. It is also to be noted that, in the end, the issue of requesting a deferment of Bangladesh’s LDC graduation is a political call. Whether Bangladesh will be comfortable to remain an LDC beyond 2026, with the war-torn Afghanistan, being the only other LDC in the region, demands careful strategic and political consideration.

Efforts to bring back the laundered money from abroad must be pursued in all earnest. Measures need to be geared to undertaking energetic initiatives concerning prosecution, investigation, collaboration with relevant global initiatives and platforms, and filing of criminal/ civil cases in foreign jurisdictions to recover the stolen assets and the evaded taxes.

Dr Fahmida Khatun, Executive Director, Centre for Policy Dialogue (CPD); Professor Mustafizur Rahman, Distinguished Fellow, CPD; Dr Khondaker Golam Moazzem, Research Director, CPD; Mr Muntaseer Kamal and Mr Syed Yusuf Saadat, Research Fellows, CPD. moazzem@cpd.org.bd; avra@cpd.org.bd

[Abu Saleh Md Shamim Alam Shibly, Tamim Ahmed and Helen Mashiyat Preoty, Senior Research Associates; M Tanjim Hasan Khan, Resource Mobilisation Associate; Afrin Mahbub, Preetilata Khondaker Huq, Anika Tasnim Arpita, Jannath Sharmin Chowdhury, Anindita Islam, Abrar Ahammed Bhuiyan, Nuzaira Zareen, Ayesha Suhaima Rab, and Safrina Kamal, Programme Associates of CPD provide research assistance.]​

 

[Saif]

A struggling economy needs greater attention

Government lacks urgency and focus in crisis response

www.thedailystar.net

A struggling economy needs greater attention
The government lacks urgency and focus in crisis response

VISUAL: STAR

The bleak economic outlook for Bangladesh, as recently highlighted by the Centre for Policy Dialogue (CPD), is concerning. In a paper titled "Navigating Expectations in Turbulent Times," the think tank revealed that the interim government's economic measures have yet to bring substantive improvements in people's lives and to support businesses. Despite reform initiatives across various sectors, including the economy, any noticeable recovery or dynamism remains absent.

As many have pointed out, Bangladesh has a real opportunity to implement substantive changes in its taxation system during this transition period. Over the years, the country's development activities have become increasingly dependent on debt due to its low tax-GDP ratio. To address this, Bangladesh must increase direct taxes and curb tax evasion. However, instead of prioritising these measures, the interim government has disappointingly adhered to an outdated approach by raising VAT—a regressive policy that disproportionately affects low-income groups. This move also contradicts the pro-people spirit of the historic July uprising.

Investment, or lack thereof, is another major concern highlighted by the CPD. While the presence of an elected government can positively influence investment, the interim administration has failed to significantly improve other critical factors that drive investment. As a result, a conducive environment has yet to be established, which is alarming. To attract investment, the government must urgently implement measures, such as setting up a one-stop service for businesses and developing adequate infrastructure. Engaging with relevant stakeholders to address bottlenecks in business operations is also essential.

Inflation is another pressing issue that the government has struggled to tackle. Despite repeated calls for stronger monitoring to prevent hoarding and market distortions, little progress has been made in that regard. Given the hardships faced by ordinary people due to sustained inflationary pressures, addressing this issue should have been a top priority.

The CPD has rightly emphasised that political and economic reforms must progress hand in hand, requiring a degree of political consensus. Achieving this will undoubtedly be challenging. Additionally, it must be acknowledged that the ousted Awami League government inflicted significant damage on the economy, which may take years to repair. However, the fact remains that the interim government has underperformed in addressing economic challenges and badly lacked the urgency and focus necessary to tackle these issues. It is high time it recognised the desperate need for an economic turnaround and took decisive action to deliver it.​

 

[Saif]

Shifting poverty map a wake-up call for policymakers

Greater efforts needed to level up poorer regions like Barishal and Rangpur

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Shifting poverty map a wake-up call for policymakers
Greater efforts needed to level up poorer regions like Barishal and Rangpur

VISUAL: STAR

That economic and climate vulnerabilities are inextricably linked has once again been underscored by the latest Bangladesh Bureau of Statistics (BBS) survey, which ranked Barishal as the poorest division in the country. For long, that spot had been reserved for Rangpur, which was—and still is, to a large extent—synonymous with crippling poverty mostly due to seasonal famines or Monga. However, according to a report based on the Poverty Map 2022, things have turned around for Rangpur where the poverty rate dropped from 47.23 percent in 2016 to 25 percent in 2022. In contrast, Barishal's poverty rate slightly increased from 26.49 percent to 26.6 percent.

The shifting poverty map reflects the changing reality of our policy and geographical landscapes. Rangpur's relative improvement, according to an expert at the BBS event, has been partly driven by the efforts of the government and NGOs in addressing seasonal food insecurity. On the contrary, Barishal's relative deterioration underscores the growing impact of climate change on coastal regions. The division, once known as a food basket, is now struggling with climate vulnerability and its resultant effects, including rising salinity and declining agricultural yields. As a result, many are losing their traditional livelihoods and slipping further into poverty.

Such disparities could only have emerged due to inequitable distribution of budgets, development projects, and economic opportunities. This highlights the need for a more balanced approach to resource allocation, infrastructure development, and economic diversification. Poorer regions also need targeted investments in education, healthcare, and industry to achieve parity with more developed areas.

Another factor contributing to the shift is how wealth and opportunities are being distributed. For example, districts like Noakhali, which now has the lowest poverty rate at 6.1 percent, provide a stark contrast to districts like Madaripur, where poverty stands at 54.4 percent—nearly three times the national average of 18.7 percent. Such disparities could only have emerged due to inequitable distribution of budgets, development projects, and economic opportunities. This highlights the need for a more balanced approach to resource allocation, infrastructure development, and economic diversification. Poorer regions also need targeted investments in education, healthcare, and industry to achieve parity with more developed areas.

That said, we cannot ignore the role likely played by Bangladesh's flawed data governance in shaping or redrawing poverty maps. One can rightly question how Rangpur's poverty rate could have declined so dramatically in just seven years between 2016 and 2022. As it is now abundantly clear, the state data ecosystem was severely compromised during Sheikh Hasina's rule, which often presented flawed and overly optimistic economic indicators, including poverty rates, GDP growth figures, etc. Since data guides policy efforts, flawed statistics likely distorted decision-making, denying crucial interventions to regions that needed them most.

The newly unveiled poverty map seems more grounded in reality and, as such, should serve as a wake-up call for all involved. As one of the poorest and most climate-vulnerable countries, Bangladesh's policymakers must ensure that climate resilience is embedded in poverty alleviation strategies. Similarly, there must be greater efforts to bridge wealth and opportunity gaps among regions to insulate poorer divisions and districts from harsher economic shocks and climate-induced hardships.​

 

[Saif]

Safety net schemes fall short in the fight against poverty

Social safety net programmes, such as Open Market Sales (OMS) and Vulnerable Group Feeding (VGF), provided less help to the actual poor, despite the government boasting about the impact of those schemes on reducing moderate and extreme poverty, according to a taskforce report.

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Safety net schemes fall short in the fight against poverty
Finds government taskforce

Social safety net programmes, such as Open Market Sales (OMS) and Vulnerable Group Feeding (VGF), provided less help to the actual poor, despite the government boasting about the impact of those schemes on reducing moderate and extreme poverty, according to a taskforce report.

The impact of those programmes was low because of an unclear focus, low benefits, and persistent targeting errors, the report, submitted to the interim government last week, said.

Using the 2022 Household Income and Expenditure Survey (HIES), the report estimated that social protection programmes contributed to reducing extreme poverty by only 0.6 percentage points and moderate poverty by 0.8 percentage points between 2010 and 2022.

"Most schemes fail to align with the core objective of addressing poverty, and the absence of robust income support measures leaves a critical gap in tackling both moderate and extreme poverty," it said.

Between 2010 and 2022, the poverty rate declined from 31.5 percent in 2010 to 18.7 percent in 2022, an average annual decline of 1.07 percentage points, according to the Bangladesh Bureau of Statistics (BBS).

Over the same period, extreme poverty followed a similar trajectory, dropping from 17.6 percent to 5.6 percent, an average annual decline of 1 percentage point.

The number of people in poverty declined from 4.54 crore in 2010 to 3.09 crore in 2022, while the corresponding fall in extreme poverty is estimated to have been from 2.53 crore to only 93 lakh, BBS data showed.

These outcomes could improve significantly if inclusion errors were corrected and resources reallocated to poor households, said the taskforce, which was formed on September 10 last year.

It was established to develop strategies to boost the economy and mobilise resources for equitable and sustainable development.

Those adjustments to poverty alleviation schemes, the report said, could increase the reduction in extreme poverty to 1.3 percentage points and moderate poverty to 2.5 percentage points.

Data from the 2022 HIES show that 53.9 percent of poor and vulnerable families are excluded from social protection programmes, mainly because of exclusion errors, while 62 percent of non-poor and non-vulnerable households receive some form of benefit because of inclusion errors.

CORRECTION EFFORTS ALSO FALL FLAT

To address the shortcomings of safety net programmes, the National Social Security Strategy (NSSS) was adopted in 2015, signalling a shift towards a structured framework grounded in the lifecycle approach.

The lifecycle approach means designing poverty alleviation policies and programmes that address the different vulnerabilities and needs people face at various stages of their lives, from childhood to old age.

The NSSS, which has seemingly well-defined reform objectives and time-bound action plans, is set to expire in June next year.

However, progress towards realising the NSSS vision has fallen significantly short of expectations, the taskforce report said.

Persistent issues, including structural inefficiencies, inadequate resource allocation, weak institutional capacities, and limited inclusivity, have hindered progress and undermined the system's effectiveness, the taskforce mentioned.

These shortcomings prevent vulnerable groups from escaping the cycle of poverty, thereby diminishing the overall impact of social protection programmes.

With the NSSS set to expire in June 2026 and many key reforms still unimplemented, its transformative potential remains unrealised.

For instance, programme fragmentation is still frequent, while progress in consolidating and harmonising poverty alleviation programmes is limited. Similarly, targeting errors in beneficiary selection continue to be pervasive.

Resource constraints exclude a substantial number of potential beneficiaries in all programmes, the small benefits provided without adjustments for inflation render the impact negligible, and a comprehensive and integrated database on social protection beneficiaries remains elusive, according to the report.

It said there has been virtually no progress in introducing interventions based on social insurance principles (such as unemployment insurance), while the capacities of different ministries and departments remain grossly inadequate, with persistent dependence on development partners.

"More strikingly, despite its emphasis, the system has evolved without a clear focus on addressing poverty effectively, and—given its current state of limited resources and meagre benefits—its role in dealing with inequality is highly questionable," the report mentioned.

SOCIAL PROTECTION GROSSLY OVERSTATED

The inclusion of numerous unrelated and irrelevant schemes in social protection allocations not only inflates the budget but also obscures the limited political commitment to addressing poverty and vulnerability, redirecting attention to the broader resource constraints faced by the country, the report said.

It said that social protection is grossly overstated because of the inclusion of schemes such as pensions for government employees, subsidies, interest payments on national savings certificates, and infrastructure development programmes.

Of the six largest schemes by budget allocation, only one—the old-age allowance—can be considered a genuine social protection measure.

Quoting government sources, it said social protection spending in fiscal year (FY) 2024–25 accounts for 2.5 percent of the gross domestic product (GDP) and 17 percent of the national budget.

However, when the programmes linked with pensions and subsidies are excluded, the allocation drops to only 1.2 percent of GDP and 7 percent of the budget.

The World Social Protection Report 2024–26, published by the International Labour Organization (ILO), estimated that Bangladesh spends just 0.9 percent of its GDP on social protection. This figure is markedly below the South Asian regional average of 3.8 percent.

On the other hand, social protection benefits in Bangladesh are low and are rarely adjusted for inflation, resulting in a steady erosion of their real value over time.

Estimates suggest that monthly benefits from key programmes, such as the old-age allowance (OAA) and widow allowance (WA), amount to just 14 percent of the national poverty line income per person, while the allowance for persons with disabilities is slightly higher at 22 percent.

This issue is further compounded by the lack of annual inflation adjustments for most regular benefit payments, which exacerbates the decline in their purchasing power, leaving them increasingly inadequate to address poverty and vulnerability effectively.

COVID EXPOSED FLAWS IN POVERTY FIGHT

Regarding the vulnerabilities in the safety net programmes, the report said their impact was starkly evident during the Covid-19 pandemic in 2020, when the resulting economic shocks pushed many individuals and families into poverty, giving rise to a group widely termed the "new poor".

It is estimated that the richest 5 percent of households in 2022 held 30 percent of the national income, while the poorest 5 percent were left with less than 0.4 percent.

Regularly adjusting transfer values for social protection programmes to account for inflation is crucial to ensuring their effectiveness in alleviating poverty. Many programmes in Bangladesh have failed to provide adequate benefits as allowances are not consistently reviewed in line with economic development and inflation.

Consequently, the real value of benefits has significantly declined over time, eroding their purchasing power. The NSSS has recommended inflation adjustments for all cash transfers under lifecycle-based core schemes to address this issue.

However, even with inflation adjustments, the real value of benefits for most programmes will remain insufficient, as initial benefit levels were too low to begin with.

To address this, it is critical that revised benefit levels are aligned with the minimum expenditure basket, enabling transfers to meaningfully alleviate poverty, said the taskforce.

A systematic review of transfer values should be conducted for all cash-based programmes, taking into account inflation, the expenditure basket, and the country's socio-economic progress.

Based on these reviews, adjustments should be implemented at regular intervals of two to three years to maintain the relevance and impact of social protection interventions, the report noted.​

 

[Saif]

Remittances grow 3% in January

Migrants sent home $2.18 billion in the first month of 2025

www.thedailystar.net

Remittances grow 3% in January
Migrants sent home $2.18 billion in the first month of 2025

Remittances grew 3 percent year-on-year to $2.18 billion in January 2025 and this happened at a time when Bangladesh Bank imposed a ceiling on banks for remittance collection.

Bangladesh Receives $26.9B in Remittance in 2024

As a result, total remittances in the July-January period of the 2024-25 fiscal year rose 24 percent year-on-year to $15.96 billion, according to data released by the Bangladesh Bank today.

In January last year, remittance inflows had increased 7 percent year-on-year.​