[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Ambitious reforms urgent for Bangladesh to attract FDI

Bangladesh urgently needs ambitious reforms to attract more foreign direct investment (FDI) and stimulate domestic private investment by ensuring better coordination among government agencies - especially on policy matters. In an interview with The Financial Express, Hoe Youn Jeong, the Asia

thefinancialexpress.com.bd

Ambitious reforms urgent for Bangladesh to attract FDI
Says ADB Country Director

Doulot Akter Mala
Published :
May 22, 2025 00:33
Updated :
May 22, 2025 00:33

Bangladesh urgently needs ambitious reforms to attract more foreign direct investment (FDI) and stimulate domestic private investment by ensuring better coordination among government agencies - especially on policy matters.

In an interview with The Financial Express, Hoe Youn Jeong, the Asian Development Bank (ADB) Country Director for Bangladesh, put forward the suggestion to avert further erosion of the already-waning investor confidence as reflected in the declining inflow of FDI.

"The government must streamline and simplify licencing and permit procedures, business regulations, and processes," he said.

The areas that deserve simplification are starting and closing businesses, technology adoption, infrastructure, logistics, cross-border trade, dispute resolution, labour laws, taxation, incentives, and finance.

In FY 2024, the FDI inflows amounted to only 0.4 per cent of GDP, marking a 71-percent fall from July to November last year, according to the ADB Country Director.

Over the past decade (2013-2023), Bangladesh's average FDI inflow stood at just 0.8 per cent of GDP, significantly lower than Cambodia (9.4 per cent), Vietnam (4.6 per cent), and Indonesia (1.9 per cent).

"The government must uphold international standards on labour, human rights, and environmental practices. Genuine reforms in these areas will enhance Bangladesh's competitiveness and reliability as a global investment destination," Mr Jeong noted.

The ADB has revised down Bangladesh's GDP growth forecast for FY 2025 to 3.9 per cent from previous 5.1 per cent, citing political uncertainty, flooding in key sectors, banking vulnerabilities, industrial unrest, and persistent inflation.

Revised export figures for FY2023 and FY2024 have further lowered the growth baseline.

"To stabilise the macroeconomy and sustain growth, Bangladesh needs bold action," Jeong asserted. "This includes diversifying the economy, enacting critical reforms, and increasing public investment in essential infrastructure."

He also called for efforts to promote entrepreneurship, rationalise tariffs, improve business climate, and build resilient urban systems and infrastructure.

As Bangladesh prepares to graduate from the LDC category in November 2026, it faces critical economic challenges.

Mr Jeong underscored the need for economic diversification, reduced reliance on imported energy, shrinking the informal sector, enhancing governance, and building resilience.

According to Bangladesh's national Smooth Transition Strategy, GDP growth may decline by 1.0-2.0 per cent post-graduation due to the loss of trade preferences, concessional financing, and special WTO treatments.

Political uncertainty and financial sector fragilities could compound the risks, he added.

"To manage the transition, we've discussed strategic actions with the interim government," Mr Jeong said.

These include designing an economic stabilisation plan, creating a framework for the FY 2025-26 national budget, advancing priority reforms, enacting a strong LDC transition strategy, and accelerating progress of the sustainable development goals (SDGs).

He said the ADB is also working with the government to address implementation delays in ADB-funded projects by improving project readiness, strengthening agency capacities, enhancing interagency coordination, streamlining procedures, and engaging more with private and development partners.

"By acting decisively, Bangladesh can manage the transition effectively and secure sustainable growth beyond 2026," Jeong said.

Regarding trade, Jeong warned that the new 37 per cent US tariff on Bangladeshi exports, particularly readymade garments (RMG), threatens export earnings. The US is Bangladesh's largest RMG market, accounting for 17 per cent of the country's total exports.

However, the full impact of the tariffs remains unclear as rates may vary and trade dynamics may shift. Much will depend on Bangladesh's relative price competitiveness and trade negotiations.

"If these tariffs negatively affect the US and EU economies, demand for Bangladeshi goods could drop, further limiting export growth," he added.

To mitigate this, Bangladesh must quickly diversify its export products and markets. The Smooth Transition Strategy identifies sectors with strong potential such as manmade-fibre apparel, pharmaceuticals, ICT, agro-processing, leather, light engineering, and shipbuilding.

Effective implementation of the National Tariff Policy 2023, the National Logistics Policy 2024, and new free-trade agreements will be vital. Bangladesh should also pursue constructive dialogue with the US to secure favourable trade terms.

"Rationalising import tariffs is essential for economic diversification. With limited fiscal space, Bangladesh cannot rely on subsidies or incentives to sustain exports," Jeong noted.

He called for removing structural barriers, encouraging innovation, and creating quality jobs. The ADB remains committed to supporting Bangladesh's resilience and competitiveness as it transitions from the LDC (least developed country) status.

"We are working with the government to expedite two proposed policy-based loans that will support key reform efforts," he said.

These loans aim to strengthen the banking sector and promote inclusive, climate-resilient development. A programmatic approach will help the government tackle complex reforms holistically over the medium term.

Jeong highlighted Bangladesh's key strengths: a young workforce (with over 65 per cent working age population), strong remittance inflows, global competitiveness in RMG, strategic location between South and Southeast Asia, and the resilience of its people.

"Upgrading seaports can help Bangladesh become a regional trade hub," he added.

To harness these strengths, Jeong emphasised the need for a comprehensive and strategic reform roadmap. Guided by the 2024 White Paper and reform commission findings, the interim government is building consensus on priority reform actions.

Reforms should focus on business regulation simplification, licencing and permit streamlining, improved inter-agency coordination, and responsible business practices aligned with international standards.

Strengthening public investment, particularly in infrastructure and essential services, is critical. Integrated development of logistics, economic corridors, energy, transport, water, sanitation, urban services, and digital transformation will support sustainable growth.

"These reforms will boost productivity, attract private investment, create jobs, and strengthen supply chains," he said. "As a trusted development partner, ADB stands ready to support Bangladesh in delivering these reforms."​

 

[Saif]

Foreign exchange reserves to reach $40 billion in next fiscal year, BB governor hopes

Bangladesh Bank Governor Dr Ahsan H Mansur on Wednesday projected that the country's foreign exchange reserves will rise to $30 billion by June, with a further target of reaching $40 billion in the upcoming fiscal year. The governor made the remarks at an event organised by the Policy Research Ins

thefinancialexpress.com.bd

Foreign exchange reserves to reach $40 billion in next fiscal year, BB governor hopes
UNB
Published :
May 21, 2025 20:09
Updated :
May 22, 2025 00:37

Bangladesh Bank Governor Dr Ahsan H Mansur on Wednesday projected that the country's foreign exchange reserves will rise to $30 billion by June, with a further target of reaching $40 billion in the upcoming fiscal year.

The governor made the remarks at an event organised by the Policy Research Institute (PRI), highlighting the central bank's outlook on the economy and banking sector.

“By next month, the reserve will be between $27 billion and $30 billion. There is a target to raise the reserve to $40 billion in the next fiscal year,” Dr Mansur said.

He also addressed the challenges facing the microcredit sector, noting that high interest rates are becoming increasingly unsustainable.

“Microcredit with a 26 per cent interest rate cannot survive. Customers are now accessing loans from agent bank branches at nearly half that rate. Over time, microcredit at such high interest will be phased out as it fails to compete,” he said.

As of May 19, the central bank's latest data shows Bangladesh’s gross foreign exchange reserves stand at $25.44 billion.

Under the International Monetary Fund's (IMF) Balance of Payments and International Investment Position Manual (BPM6) methodology, usable reserves are reported at just over $20 billion.​

 

[Saif]

No possibility of dissolving NBR right now: Finance Ministry

There is no possibility of dissolving the National Board of Revenue (NBR) right at this moment since it is very much time consuming to implement the recently promulgated “Revenue Policy and Revenue Management Ordnance 2025” after necessary amendments. “Under the current circumsta

thefinancialexpress.com.bd

No possibility of dissolving NBR right now: Finance Ministry
BSS
Published :
May 22, 2025 20:34
Updated :
May 22, 2025 20:34

There is no possibility of dissolving the National Board of Revenue (NBR) right at this moment since it is very much time consuming to implement the recently promulgated “Revenue Policy and Revenue Management Ordnance 2025” after necessary amendments.

“Under the current circumstances, all the operations of the National Board of Revenue (NBR) will continue like in the past,” said a press release of the Ministry of Finance.

It said that the officials and employees of the income tax and customs would conduct their overall operations under the existing system.

The release also said that necessary amendments to the Ordinance would be brought after consultations with the NBR and all important stakeholders to frame the administrative structure of separation of the revenue board upholding the interests of the BCS (tax) and BCS (customs and VAT) cadre.

It mentioned that the government has no plan to reduce the number of posts of the tax, customs and VAT cadres rather their posts would be increased following necessary reforms side by side there would be much more scope for promotions including appointment to the post of secretary.

In this regard, all the officials and employees of the revenue board have been requested to remain present in their respective offices during office hours and thus discharge their respective duties with integrity ahead of the operations of the national budget for FY26 for the greater interest of the country and thus expediting the economic operations of the country through rendering desired services to the taxpayers.

The release said that despite holding fruitful discussions with the government, the NBR Songskar Oikya Parishad announced non-cooperation movement although it has no rational reason.

It said that following the promulgation of the Ordinance, its implementation would be time consuming since a lot of tasks have to be completed like framing the organogram of the two new divisions side by side necessary changes should have to be brought into the Allocation of Business, Income Tax Act, Customs Act, VAT Act and the concerned rules and regulations.​

 

[Saif]

Govt to amend NBR ordinance

In the face of turmoil amid continued protest by employees, the government yesterday backtracked from its position and stated it would bring “required amendments” to the new ordinance that split the National Board of Revenue.

www.thedailystar.net

Govt to amend NBR ordinance
Employees to continue protest

In the face of turmoil amid continued protest by employees, the government yesterday backtracked from its position and stated it would bring "required amendments" to the new ordinance that split the National Board of Revenue.

It will consult the NBR and other important stakeholders before bringing the changes to the ordinance on tax reform, the finance ministry said in a statement.

"Since implementation of the ordinance is time-consuming after bringing the required revision, activities of the NBR will continue, and officials of customs and income tax cadres will accomplish their duties," the ministry said, urging the protesters to withdraw their ongoing strike.

The statement came hours after the protesters submitted a memorandum to Chief Adviser Prof Muhammad Yunus, pressing a four-point demand that includes repeal of the ordinance bifurcating the NBR and the resignation of its Chairman Abdur Rahman Khan.

The protesters say they are not opposed to the separation itself, but their principal grievance lies in a clause that allows civil servants from the general administration cadre to lead the two new divisions, sidelining experienced officers from the revenue cadre.

The ministry statement said the government has no plan to reduce the number of member posts for customs and tax cadres at the NBR. On the contrary, the number of posts for them is expected to increase after the implementation of the reforms, it added.

The protesting NBR employees welcomed the government's move in a statement late at night, but vowed to resume their protests on Saturday.

They said their core demands, such as the repeal of the ordinance and the resignation of the chairman, were not touched upon in the government statement.​

 

[Saif]

Bangladesh rake in $2.25b in remittances in first 24 days of May

Expatriate Bangladeshis have consistently sent over $2 billion in remittances each month since September, and that trend has continued into May. In the first 24 days of May, remittances totalled $2.25 billion, according to data released by Bangladesh Bank on Sunday. In April, Bangladesh recorded

thefinancialexpress.com.bd

Bangladesh rake in $2.25b in remittances in first 24 days of May

bdnews24.com
Published :
May 25, 2025 21:48
Updated :
May 25, 2025 21:48

Expatriate Bangladeshis have consistently sent over $2 billion in remittances each month since September, and that trend has continued into May.

In the first 24 days of May, remittances totalled $2.25 billion, according to data released by Bangladesh Bank on Sunday.

In April, Bangladesh recorded its second-highest monthly remittance inflow in history, just under $3 billion. The previous month, March, saw a record $3.29 billion in remittances ahead of Eid-ul-Fitr, the highest ever for a single month.

According to the central bank, the previous peak before that came in December 2024, when remittances reached $2.64 billion. By that measure, April’s figure is now the second highest on record.

With May’s total crossing the $2 billion mark, Bangladesh has now seen 10 consecutive months of monthly remittances exceeding that threshold.

However, May also brought worrying news regarding remittances.

Analysts have raised concerns over a proposed US law introduced by President Donald Trump, which seeks to impose a tax on money transfers from the US to other countries. If passed, it could have a negative impact on Bangladesh’s remittance inflows.

The bill proposes a 5 percent tax on all international money transfers from the US. It would apply not only to non-citizens residing in the US for work or business but also to those on H-1B or F-1 visas, and even to green card holders.

Senior officials at Bangladesh Bank and managing directors of several commercial banks fear that if the tax is enforced, remittances through formal banking channels will decline. Many US-based expatriates may then turn to informal channels like hundi, dealing a major blow to the country’s foreign reserves.

Speaking at a roundtable earlier this month, Bangladesh Bank Governor Ahsan H Mansur said the country’s reserves would grow only if remittance and export earnings increase. He expressed optimism that reserves would continue to rise in the coming months.

He also asserted that the value of the dollar would not be determined by foreign companies or institutions, but set domestically by Bangladesh itself.

Earlier this month, Bangladesh Bank allowed the exchange rate to be determined by market forces. The governor confirmed this move followed discussions with the IMF.​

 

[Saif]

Missing revenue target

When a set revenue target looks unachievable, the reasons may be either it is too lofty to achieve or inefficiency on the part of taxmen or some unavoidable setback encountered at some point of the fiscal period. In case of Bangladesh, the general trend of mismatch between the revenue target and th

thefinancialexpress.com.bd

Missing revenue target

Published :
May 26, 2025 23:52
Updated :
May 26, 2025 23:52

When a set revenue target looks unachievable, the reasons may be either it is too lofty to achieve or inefficiency on the part of taxmen or some unavoidable setback encountered at some point of the fiscal period. In case of Bangladesh, the general trend of mismatch between the revenue target and the actual earning is a combination of the first two. The fiscal year 2024-25 had also to bear the brunt of the third in the form of July-August uprising and its ripple effects throughout the year. If all this was not enough, the latest pen-down programme observed by the officials of the National Board of Revenue (NBR) following the ordinance on its bifurcation has proved to be the last straw on the camel's back. The consequence has been what it ought to be: by April, the government's revenue income will miss the downsized target by Tk 715 billion.

There was no guarantee that the tax department would have achieved the target if it did not go for the pen-down strike. But the disruption caused due to the protest programme, particularly at this late and crucial stage, is expected not only to miss the target by a bigger margin but may also decelerate the process of garnering revenue during the current and the final months of the outgoing financial year. Move to split the NBR was not only ill-timed but also the process of doing so caused dissent among the tax people. Sure enough, there was a need for reaching a consensus through extensive consultation with NBR officials before going for its bifurcation. Some experts have questioned the merit of placing the bifurcated organs of the NBR under the finance ministry because bureaucratic supervision will largely be responsible for compromising whatever autonomy the unified organisation enjoys. Evidently, such imposition of the decision could well be avoided and so too the self-inflicting harm. At a time when the country needs as much tax revenues as it can generate, smooth and better coordination was in demand.

Mobilisation of only Tk3.58 trillion in domestic revenue during the past 10 months of this fiscal and that too at a decelerated growth rate of 3.24 per cent compared to the previous fiscal still has a large gap to cover. Even the revenue officials have expressed their doubt that they cannot close the gap. This is certainly not good news for the interim government. In whichever form the NBR operates next until it is in power, it will have to carry the legacy of the past, this current fiscal year in particular.

At a time when the NBR was supposed to be invigorated to put in a robust performance in tax collection, any change in its organogram had to be brought about rationally and the timing of it had also to be perfect without negatively affecting its revenue mobilisation process. Taking care of the overriding need for clearing the augean stables was more important than any other programme. After all, the bottom line is to expand the tax net and eliminate the collusion between a segment of dishonest tax officials and tax payers that either unlawfully exempts some from submitting tax return or helps pay a radically sliced amount in place of the actual tax return they needed to submit.​

 

[Saif]

Enhanced domestic revenue mobilisation for economic resilience

The upcoming budget for FY2025-26 is very significant for Bangladesh from several perspectives. This is the first budget after the fall of the ousted government, and the interim government aims to use the budget as a platform for structural reform to remedy the economic woes Bangladesh has been suf

thefinancialexpress.com.bd

Enhanced domestic revenue mobilisation for economic resilience

TIM Nurul Kabir
Published :
May 26, 2025 23:35
Updated :
May 26, 2025 23:35

The upcoming budget for FY2025-26 is very significant for Bangladesh from several perspectives. This is the first budget after the fall of the ousted government, and the interim government aims to use the budget as a platform for structural reform to remedy the economic woes Bangladesh has been suffering from, particularly during the past few years. As Bangladesh is scheduled to graduate from the Least Developed Country (LDC) status in November 2026, the interim government also has the responsibility to speed up preparedness to meet the post-LDC graduation economic challenges.

Fiscal policy is one of the most crucial areas of government economic policy that has the potential of affecting economic stability and boosting growth. With the economy slowed by high inflation and low revenue mobilisation, the impending exit from the LDC club poses major economic challenges for Bangladesh, which need to be addressed immediately and effectively. The interim government is set to unveil a contractionary national budget with the target of reducing spending and implementing reforms to boost domestic revenue to narrow the budget deficit.

Because of low level of revenue mobilisation, the size of Bangladesh's government sector is one of the lowest in the world, at 13-14 per cent of GDP. The tax-GDP ratio which is a key indicator of revenue mobilisation efficiency has remained stagnant at around 8 per cent, which is much lower than neighbouring Nepal-- 23.4 per cent and India-- 20 per cent. Despite this low level of public expenditure, Bangladesh has maintained a budget deficit of approximately 5 per cent of GDP, financed primarily by external and internal borrowings. Growing reliance on borrowing has led to a rising debt burden.

Bangladesh's debt-to-GDP ratio rose to 36.30 per cent in FY2024 from 32.41 per cent in FY2021, due to substantial expansion in both domestic and external borrowing. According to statistics, 14.24 per cent of the national budget for FY25 was allocated solely for interest payments on government debt.

Borrowing from banking sources increased sharply to BDT 5.97 trillion in FY2024, up from BDT 3.34 trillion in FY2021, signaling crowding-out risks. External debt stock surged to BDT 8.12 trillion in FY2024, compared to BDT 4.20 trillion in FY2021. External debt-to-GDP ratio increased to 22.60 per cent in FY2024 raising external vulnerability. A significant portion of the national budget goes to debt servicing to deal with the enormous debt burden causing significant loss of fiscal space on account of mandatory interest payments.

Amid rising repayment obligations and declining foreign exchange reserves, major nondiscretionary expenditures grew faster than the increase in revenue, which caused the fiscal space to shrink. Besides interest payments on foreign and domestic public debt, other major nondiscretionary outlays include pay and allowances for government employees; pensions and gratuities; and subsidy for energy, agriculture and some other sectors.

As per available data, total nondiscretionary spending on pays, allowances, pensions and gratuities accounted for more than 43 per cent of the revenue in FY23. Extensive subsidies allocated to support various sectors account for almost one fourth of the total tax revenue of the government becoming burdensome for the budget.

According to the debt bulletin report of the finance division of the Ministry of Finance, government expenditure on interest payments account for one-sixth of the national budget. Bangladesh's total debt-to-GDP ratio was 33.02 per cent in 2023, with domestic debt at 19.0 per cent and external debt at 14.04 per cent. Total debt-to-GDP ratio rose to 36.30 per cent in FY2024 and is further projected to rise to around 40.26 per cent in 2025, reflecting higher fiscal pressures.

Bangladesh's public debt in terms of GDP is no doubt among the lowest globally. A total debt-to-GDP ratio of more than 40 per cent is significantly lower than the IMF threshold of 55 per cent. However, it is government revenue, and not GDP, that determines the capacity to pay public debt. In terms of debt-to-revenue measure, Bangladesh's public debt is globally one of the highest.

According to estimates, more than Tk. 980 billion of domestic credit was extended by Bangladesh Bank (BB) to the budget in FY2023. This surge in the borrowing from the central bank triggered corresponding surge in inflation to almost 10 per cent in 2023. In FY2024, the BB provided Tk. 36,176.5 crore domestic credit to the budget during the period of July to February.

As significant portion of government expenses is allocated to paying interest on its debts, a major share of public expenditure is consumed for paying interest, putting constraint on fiscal flexibility. This constraint on fiscal flexibility could worsen as tighter monetary policies as a short term measure to curb high inflation would drive up interest rates on treasury bills and bonds.

Enhanced domestic revenue mobilisation is essential for reducing fiscal deficits, providing funds for public investments and ensuring economic resilience. Low tax collection constrains the ability of the government to invest in development projects. As noted, operating expenses dominated budget execution in FY2023, comprising 64 per cent of total actual spending, while development expenditure accounted for only 36 per cent.

To enhance domestic revenue mobilisation for strengthening fiscal foundations and supporting sustainable growth, two major steps have been taken recently by the interim government. The Medium and Long-Term Revenue Strategy (MLTRS) of the National Board of Revenue (NBR) was unveiled in April, setting a target of raising Bangladesh's tax-GDP ratio to 10.5 per cent by FY2034-35.

Defining medium term as the period from FY2025-26 to FY2029-30 and the long term from FY2030-31 to FY2034-35, the MLTRS aims to implement tax administration reforms to enhance efficiency, transparency and accountability in revenue collection. Upcoming reforms include expanding the tax base, simplifying the tax system, modernising tax infrastructure, enhancing voluntary compliance among taxpayers, and implementing structural changes.

In May, the interim government has issued the "Revenue Policy and Revenue Management Ordinance 2025", dissolving the NBR and replacing it with two new divisions under the finance ministry. In a move to modernise tax administration and boost revenue collection, the government will establish separate Revenue Policy Division and Revenue Management Division. The Policy Division will design tax laws, set rates, and oversee international tax treaties, while the Revenue Management Division will handle enforcement, audits, and compliance for income tax, VAT, and customs.

Bangladesh's total tax revenue consists of about two-thirds indirect tax and one-third direct tax. While indirect taxes are easier to collect and contribute significantly to government revenue, these taxes are levied on goods and services consumed by all individuals regardless of income level, which places a disproportionate financial burden on the lower-income households. Proportionately higher dependence on indirect taxes contributes to widening income inequality in the society.

In contrast, direct taxes such as personal income tax and corporate tax play a crucial role in ensuring fairer tax burden distribution. Countries in the Asia region that have successfully increased their overall tax revenue, including India, Thailand, China and South Korea have steadily moved away from dependence on indirect taxes, towards greater reliance on direct taxes.

As Bangladesh stands at a critical juncture in its development trajectory, and strives to attract and retain greater volume of the much required foreign direct investment (FDI), a stable, transparent, and ethical fiscal environment is critical for economic resilience and sustainable growth. A comprehensive approach is required to address structural weaknesses in the taxation system and ensure efficiency in domestic revenue mobilisation. Tax policy changes are an ongoing exercise, for which active and ongoing stakeholder consultations imperative to ensure resilient growth of industries, trade, investment and the national economy.

T.I.M. Nurul Kabir, business, technology and policy analyst, is Executive Director, Foreign Investors Chamber of Commerce and Industries (FICCI)​

 

[Saif]

Conducive investment climate: A key imperative

Creating a congenial environment to attract foreign direct investment (FDI) is no longer just a developmental goal, it is a necessity. In an increasingly competitive global market, where nations are vying for foreign capital, it is imperative that Bangladesh presents itself as a promising destinati

thefinancialexpress.com.bd

Conducive investment climate: A key imperative

Wasi Ahmed
Published :
May 28, 2025 00:13
Updated :
May 28, 2025 00:13

Creating a congenial environment to attract foreign direct investment (FDI) is no longer just a developmental goal, it is a necessity. In an increasingly competitive global market, where nations are vying for foreign capital, it is imperative that Bangladesh presents itself as a promising destination that fosters investor confidence and ensures ease of doing business. While some progress has been made in recent years, particularly in terms of infrastructural upgrades and policy-level commitments, significant gaps still exist that need urgent attention. Without these corrections, foreign investors are likely to remain hesitant, and the country may miss out on vital investment opportunities.

The urgency of this issue came to the fore during a recent meeting of the joint Bangladesh-China Working Group (WG) on economic cooperation and investment. The meeting highlighted the pressing need for Bangladesh to offer a more investor-friendly climate, particularly as Chinese businesses show a growing interest in establishing operations in the country. The dialogue saw participation from representatives of the Chinese Ministry of Commerce, the Chinese Embassy in Dhaka, and Bangladesh's Economic Relations Division (ERD), among others. Notably, this meeting served as a preparatory session ahead of the upcoming Bangladesh-China Joint Economic Commission (JEC) meeting scheduled to be held in Dhaka on June 1.

China has long been a major economic partner of Bangladesh, both in terms of trade and investment. In the fiscal year 2023-24, Bangladesh imported goods worth US$16.637 billion from China, accounting for 26.4 per cent of its total imports. This clearly underscores the high demand for Chinese products in the domestic market. Additionally, China, including Hong Kong, has emerged as one of the leading sources of FDI for Bangladesh. According to data from the Bangladesh Bank, Chinese FDI reached $2.789 billion as of December 2024, making China the second-largest investor in the country.

Chinese enterprises are actively involved in an array of diverse sectors, including textiles, energy, manufacturing, and infrastructure. Major development projects such as the Padma Bridge and the Karnaphuli Tunnel in Chattogram bear testimony to China's significant involvement with Bangladesh's growth journey. Moreover, as production costs rise in China and geopolitical uncertainties prompt companies to explore alternative markets, Bangladesh stands to benefit from the "China Plus One" strategy, which encourages diversification of manufacturing bases beyond China.

Recognising this opportunity, the interim government has expressed a strong desire to attract more Chinese investment, particularly in high-priority sectors such as healthcare, renewable energy (solar panel manufacturing), and high-value-added textiles. However, to fully leverage the advantages of China's industrial relocation, Bangladesh must address persistent challenges that have long plagued its investment ecosystem.

A leader of the Bangladesh-China Chamber of Commerce and Industry (BCCCI) recently pointed out that while Bangladesh is proactive in seeking foreign investment, especially from China, various structural impediments continue to discourage investors from making long-term commitments. Despite Bangladesh's favourable factors -- such as a strategic geographical location, competitive labour costs, and the development of economic zones-the investment climate is often marred by bureaucratic inefficiencies, infrastructural shortcomings, policy inconsistencies, and a lack of transparency.

Chinese businesses, along with other foreign investors, frequently cite several critical obstacles. These include prolonged and complex approval procedures, inefficient customs processes, and inconsistencies in the application of rules and regulations. The overall business environment suffers from sluggish government agency responses and a general sense of unpredictability, making it difficult for investors to navigate the system with confidence.

Infrastructure remains another major area of concern. Despite some improvements, Bangladesh continues to grapple with an infrastructure deficit. Unstable electricity and gas supplies, congested ports, and underdeveloped transport networks all contribute to increased operational costs and delay in project implementation. These inefficiencies diminish the country's competitiveness in the global investment landscape.

A glaring example is the slow pace of progress in implementing the proposed economic zone dedicated to Chinese investors in Anwara, Chattogram. Despite high expectations and early enthusiasm, the project has seen delays, which has only added to investor frustration. This not only weakens investor sentiment but also affects the credibility of Bangladesh's investment commitments.

According to analysts, the only way forward is carrying on with deep-rooted reforms. Administrative inefficiency and corruption must be addressed head-on. Streamlined approval processes, transparent and consistent policy frameworks, and the digitisation of public services could significantly improve investor confidence. Moreover, consistent dialogue between the government and the private sector -- both domestic and foreign -- will be essential to identify and resolve bottlenecks on a continual basis.

Additionally, leveraging successful regional models could be helpful. Learning from investment-friendly practices in countries such as Vietnam, Indonesia, Cambodia can offer valuable insights for Bangladesh. These countries have successfully improved their rankings in global indices such as the Ease of Doing Business and the Global Competitiveness Report, largely due to systemic reforms and robust infrastructure development.

Bangladesh at the moment stands at a critical juncture. With global supply chains shifting and investors looking beyond traditional destinations, the country has a golden opportunity to position itself as a viable alternative. However, this will only be possible if it takes meaningful and sustained steps to address the underlying issues that inhibit FDI. A conducive, transparent, and efficient business environment is not just desirable -- it is imperative if Bangladesh is to emerge as a key investment destination in the region.

​

 

[Saif]

Managing, boosting domestic demand central to curbing inflation

'We believe elections will promote decentralization, as more activities will spread beyond Dhaka,'Finance Adviser Dr. Salehuddin Ahmed says in conversation with The Financial Express on budget Following is the full text of the interviewQuestion: What is the vision of the upcoming budget, and how w

thefinancialexpress.com.bd

Managing, boosting domestic demand central to curbing inflation

Says Salehuddin as he crafts budget focusing on trade expansion, job creation, investment

Published :
May 28, 2025 00:07
Updated :
May 28, 2025 00:07

Finance Adviser Dr. Shalehuddin Ahmed talks to Doulot Akter Mala, Special Correspondent of The Financial Express, in an exclusive interview on Sunday. —FE Photo

'We believe elections will promote decentralization, as more activities will spread beyond Dhaka,'Finance Adviser Dr. Salehuddin Ahmed says in conversation with The Financial Express on budget

Question: What is the vision of the upcoming budget, and how will it differ from previous government's budget?

Answer: The vision of this budget is to build an equitable and prosperous Bangladesh where economic and business development benefits everyone. Our goal is to improve the quality of people's life and make daily living easier through practical and inclusive policy measures.

Unlike previous governments, we are not preparing a budget filled with unrealistic promises. Instead, we are focusing on achievable, clearly defined goals within the limits of our available resources. The emphasis is on realism, responsibility, and effectiveness.

Q: What are the main challenges in implementing this budget?

Ans: The main challenge lies in budget formulation due to a significant resource gap. Our needs surpass our current reserves. While we rely on domestic sources like bank savings certificates, we must also secure foreign loans and assistance.

Bangladesh's economy has been through severe disruptions, and now we're focused on stabilization through trade expansion, job creation, and investment. Inflation remains a serious concern and could continue to be a major challenge for the next 2-3 years.

Q: Is inflation control being hindered by lack of coordination between fiscal and monetary policies?

Answer: There isn't a fundamental conflict between fiscal and monetary policies, but they need to be more coordinated. The monetary policy, through high policy rates and tight liquidity, is focusing on demand management. This has raised credit costs that affect businesses.

While these measures aim to control inflation, the bigger issue is managing and boosting domestic demand. That's the central challenge in curbing inflation effectively.

Q: What would you say on January tax hike? Is it an outcome of such policy mismatches?

Ans: Yes, it reflects a mismatch. The tax increase was a fiscal-policy move, while monetary policy was in contraction. The government needed more funds for importing essential items like food and fertilisers. VAT implementation, although difficult, was not intended just to raise taxes but to ensure revenue for public needs.

Unfortunately, many development projects have failed to yield promised long-term benefits. This budget will emphasize efficient use of allocated funds rather than indiscriminate expansion.

Q: Won't a reduced ADP (Annual Development Programme) affect employment?

Ans: Yes, it could have an impact. We're avoiding large capital-intensive megaprojects that have limited job creation for locals, as they often rely on foreign expertise. Instead, we aim to prioritize labour-intensive, small- to medium-scale local projects.

We're also boosting sectors like IT, energy, especially gas exploration, and small enterprises (CSME). Refinancing through Bangladesh Bank will support these initiatives, with special emphasis on women entrepreneurship and startups. A dedicated fund will be allocated to foster innovation and increase employment through entrepreneurship.

Q: Can the upcoming election, likely in December-June, affect budget implementation?

Ans: No, elections are not the exclusive responsibility of the local administration. The Election Commission will lead the process, and other government operations will continue as usual.

We believe elections will promote decentralization, as more activities will spread beyond Dhaka. We aim to ensure that energy supplies and public services remain uninterrupted so people feel secure and businesses can continue growing during this period.

Q: Media reports air concern over cut-down allocations for health and education in the upcoming budget. What would you say?

Ans: The reports are partially misleading. We are not cutting operational or essential programme funding. What we're reducing unnecessary infrastructure spending -- for example, building schools or hospitals without teachers or doctors.

Instead, we're increasing allocations for teacher training, equipment, and technical skills development. Especially in rural areas, we are trying to skill those low-ranged people technically. Upgrading institutions like TTCs and VTCs will produce a technically skilled workforce, some of whom can also work abroad. We also recognize the need to raise teacher salaries and fill vacant posts as there are a lot of NPO teachers. However, operational budgets will still be under close scrutiny to avoid waste.

Q: What is government direction for banking-sector revival?

Ans: Though not directly addressed in this budget, Bangladesh Bank is taking the lead on banking reforms. They are assessing the assets of 12 banks, exploring restructuring, possible bond issuance, or capital injections to improve their long-term viability.

Some banks face severe liquidity issues. While we want less dependence on banks for long-term financing, the capital market must also mature as a viable alternative.

Q: Are there incentives in the budget for capital-market revival?

Ans: Yes. We recognize the capital market has suffered due to 15 years of mismanagement, insider trading, and weak governance. Many violators have been penalized. Now, we're encouraging new IPOs and better compliance.
We want ICB to play a bigger role, especially in mutual-fund management. Despite already allocating BDT 30 billion, outcomes have been suboptimal. We'll request Bangladesh Bank to allow ICB-managed mutual funds into the capital market, and the government may provide counter-guarantees.

State-owned enterprises like Unilever, Power Grid, and EGS will be encouraged to offload shares. Currently, many big firms avoid the stock market because they easily access bank loans. To change this, we are considering widening the corporate-tax gap between listed and non-listed companies (currently at 5%) to encourage public listing.

Our focus is also on improving access to finance, particularly through government banks-to deepen the capital market and benefit all investors. We came to know that some insiders of the Securities and Exchange Commission and others are involved in creating discrepancies on the share market.

Q: Why NBR stalemate happened? Development partners had long been pushing for separation of NBR's policy and implementation functions.

Ans: In no countries policy preparation and tax collection are done by same people. What people at the NBR were doing-- they had been preparing SRO, making its interpretation, providing judgement, which means everything done by them.

When a businessman goes to the tax commissionerate and makes appeal, the commissioner lessens tax. Discrepancies were there. In new law, the power to issue SRO has been given to parliament; the NBR itself won't be able to do that.

In 2008, the government also tried to make the separation, not necessarily now doing so on IMF and World Bank's advice. But that time the government could not do so, because the employees at the NBR do not want it.

We have told them that there is no compromise on separation of the NBR. In policy wing, economists, development experts, statisticians, economic forecast-makers need to be employed.

The tax-policy wing will be a small office while the implementation wing will be bigger one. There was misinterpretation--the vested interests have created confusion among them.

NBR has not been dissolved, it has been restructured.

Q: Isn't field-level experience needed for tax policy?

Ans: Yes, the experience is needed. But they fear officials from admin cadre will occupy the posts. Also people from taxes will be employed here. We want to modernise NBR. Whatever money the government gave to NBR, they spent that for skills development of people. There was no need to spend such a huge amount of money for their training.

Q: There was no project for automation

Ans: Yes, they did not automate the revenue collection. If they had automated the process-- let me give an example -- what would happen. Some 1.6 million people submitted tax returns. Those who went to the offices to pay tax--we heard in the past--the tax officials were asking for bribes.

Q: Corruption is everywhere… Please have a look on TIB reports.

Ans: Corruption in NBR is very deep. None will tell you that he paid bribe to clear his tax return. But in case of other government offices, you will make it open if you had to pay bribe to get gas or electricity connection. But businessmen fear if they tell about paying bribe, the NBR officials will make them hostage next year. If automation is done, these bad practices will go, thus the NBR officials did not automate the process.

Q: There are many officials who are against the new ordinance. Needs an amicable solution?

Ans: I will go for a solution. But if they start discussion with negative mindset, no solution will come. They are asking for withdrawing the ordinance. No, it can't happen. Yes, come and discuss, who will man the division, what will be career path. There will be no job cuts.

Personally one is honest, not the system. Because, the system allows one to do corruption, be dishonest. One commissioner in Chittagong has assessed the tax some Tk 1.0 billion, but he later lowered it down to only Tk 400 million. Why so? Definitely he did it against getting at least Tk 100 million as bribe.

In the United States, none needs to go to the tax offices. They pay taxes online. But in Bangladesh you need to go to a tax office and when you go, you need to pay.

Through the strike they have already stopped revenue collection everywhere--in seaport, land port, airport.
Especially, before the budget, collection of Tk 30 billion to Tk 40 billion is being hampered.

They claim they were doing very well. Do you think if they were really doing well, the tax-GDP ratio stays at 7.5 per cent?

Q: What measures are there to lower higher US tariffs?

Ans: We have lessened duty on cotton import to zero. We have lowered duty to zero in case of 10 products that are being imported from USA. However, importing LNG from USA is very costly for us. We will increase regional trade.

Q: The stalemate over IMF's loan tranches is over now. Are we raising foreign- dependence in preparing budget?

Ans: IMF is giving budget support by June. Not only IMF, the World Bank and ADB are also giving support. What we will do, this time higher dependence will be on domestic resource.

We want to lower tax expenditure which means there are many tax exemptions given through SROs. We will cut these exemptions. RMG sector is getting tax exemptions last 40 years claiming them infant industry.

If we don't increase FDI, remittance, export, we cannot lessen dependence on foreign sources for budget implementation.​

 

[Saif]

Bangladesh’s per capita income hits a record high $2,820 in 2024–25

Bangladesh’s per capita income increased to all time high of $2,820 in the 2024–25 fiscal, according to Bangladesh Bureau of Statistics.

en.prothomalo.com

Bangladesh’s per capita income hits a record high $2,820 in 2024–25
Special Correspondent Dhaka
Published: 27 May 2025, 19: 48

Bangladesh’s per capita income hits a record high $2,820 in 2024–25

The per capita income of Bangladesh increased to an all-time high of $2,820 in the 2024–25 fiscal – a rise by $82 from $2,738 in the previous fiscal year.

Bangladesh Bureau of Statistics (BBS) released the periodic data on per capital income and GDP (gross domestic product) of the 2024–25 fiscal on Tuesday.

Previously, the highest per capita income stood at $2,793 in the 2021–22 fiscal. After that, per capita income did not increase because of the appreciation of the US dollars

According to BBS data, the per capita income was $2,793 in the 2021–22 fiscal, and $2,749 in the 2022–23 fiscal.

BBS said that per capita income fluctuated mainly due to changes in the dollar exchange rate. The average exchange rate was fixed at Tk 120.29 per dollar to calculate per capita income for the current fiscal year. The exchange rate was at Tk 111.06 per dollar in the last fiscal.

In terms of taka currency, the per capita income for the current fiscal year stands at Tk 339,221, which was at Tk 304,102 in the previous fiscal.​

 

[Saif]

Bangladesh gets $1b investment proposals in 9 months

The Bangladesh Investment Development Authority (BIDA) on Tuesday said the country received foreign investment proposals worth US$1 billion in last nine months...

www.newagebd.net

Bangladesh gets $1b investment proposals in 9 months
Bangladesh Sangbad Sangstha . Dhaka 27 May, 2025, 22:51

The Bangladesh Investment Development Authority (BIDA) on Tuesday said the country received foreign investment proposals worth US$1 billion in last nine months.

The authority, therefore, rebutted recent claims by ‘an industry representative’ that foreign direct investment (FDI) has dried up and that the BIDA is inactive in promoting joint ventures or engaging with investors.

In a statement, BIDA said that between October 2024 and March 2025, Bangladesh received net FDI worth $756 million (around Tk 9,247 crore), directly countering the claim that no new foreign investment come in the past eight months.

Over the past nine months, BIDA registered 739 industrial projects, including 66 wholly foreign-owned and 61 joint ventures, the statement noted.

Additionally, the Bangladesh Economic Zones Authority (BEZA) signed land lease agreements with 16 companies - six of which are fully foreign-owned and three joint ventures.

The Bangladesh Export Processing Zones Authority (BEPZA) signed similar agreements with 31 companies.

‘In total, the proposed foreign investment during this period stands at nearly $1 billion (Tk 12,220 crore),’ BIDA said.

The authority expressed concern that ‘sweeping and misleading statements’ regarding FDI trends risk tarnishing the country’s image and urged all stakeholders to base public comments on accurate data.

BIDA emphasised its role in fostering a conducive investment climate through policy and institutional reforms and in building effective connections between local and foreign investors.

The agency also pointed to its efforts at the Bangladesh Investment Summit 2025, where it organised sector-specific B2B networking sessions in collaboration with business chambers, banks, and other private sector partners.

It further announced that over 100 B2B meetings have been arranged for an upcoming high-level Chinese business delegation visiting next week, focusing on textiles, food processing, and electronics.

‘Foreign investment typically takes time to mature - a widely recognised reality in investment promotion,’ the statement added.​

 

[Saif]

Political stability essential for macroeconomic stability

MACROECONOMIC performance, despite some improvements in the past nine months of the interim government, has still remained a cause for concern. A lack of political stability and the absence of necessary institutional reforms are believed to be hindering largely sustained macroeconomic progress...

www.newagebd.net

Political stability essential for macroeconomic stability
29 May, 2025, 00:00

MACROECONOMIC performance, despite some improvements in the past nine months of the interim government, has still remained a cause for concern. A lack of political stability and the absence of necessary institutional reforms are believed to be hindering largely sustained macroeconomic progress. The Centre for Policy Dialogue in its third interim review of the macroeconomic performance for the 2024–25 financial year says that the partial reforms effected by the interim government since it assumed office in August 2024 have been insufficient to foster economic stability. The review emphasises an urgent need for comprehensive reforms encompassing structural, administrative and legal aspects of economic and related institutions to ensure long-term macroeconomic stability and progress. It observes that inflation, unemployment and inclusive growth would remain unresolved without far-reaching reforms in public finance, market systems, the banking sector, the external sector, the capital market and the power and energy sector. The report also points out that the goal of reducing the current high inflation rate, hovering over 10 per cent, to 6.5 per cent in the next financial year, beginning in July, appears unrealistic. In addition, the continued lack of both local and foreign investment, coupled with inadequate job creation, remains a significant concern.

The review and the economists who attended its release on May 27 also stress that while comprehensive reforms are essential for improved macroeconomic performance, the delay in transition to a democratic political order through fair elections poses a serious risk. The sluggish investment during the nine months of interim governance indicates that the reforms undertaken thus far have fallen short. Persistent uncertainties, stemming from political instability, weaknesses in infrastructure, inefficient one-stop service provision and the lack of uninterrupted power and energy supply, continue to hinder investor confidence. The report rightly emphasises the importance of political stability, noting that it has been critical in attracting private and foreign investment and in boosting revenue mobilisation. Economists, therefore, recommend that the interim government should announce a specific date for the next general elections in consultation with political parties. They further suggest that elections should not be kept in the time frame from December 2025 to June 2026 and that necessary reforms in the economic sector should continue. While it is acknowledged that restoring macroeconomic stability and advancing from the condition left by the previous Awami League government is no easy task, comprehensive reforms and political stability are indispensable for achieving an early economic recovery.

The government should, therefore, prioritise strengthening institutions, enhancing governance frameworks and ensuring transparency and accountability in the implementation of economic policies. Simultaneously, it must take decisive steps on holding elections early to restore political stability, a major factor in economic stability and progress.​