[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

GED projects gradual economic recovery for Bangladesh

The General Economics Division (GED) of the Planning Commission has projected a gradual economic recovery for Bangladesh, buoyed by favorable trends in exports, remittances, a stable exchange rate, and easing inflationary pressures. In its April 2025 Economic Update and Outlook, GED noted that imp

thefinancialexpress.com.bd

GED projects gradual economic recovery for Bangladesh
Published :
May 07, 2025 18:46
Updated :
May 07, 2025 18:46

The General Economics Division (GED) of the Planning Commission has projected a gradual economic recovery for Bangladesh, buoyed by favorable trends in exports, remittances, a stable exchange rate, and easing inflationary pressures.

In its April 2025 Economic Update and Outlook, GED noted that improved investors’ confidence-particularly following the successful Bangladesh Investment Summit 2025-along with a moderately tight but accommodative monetary policy, is expected to further support industrial growth, reports BSS.

“Economic recovery is expected to be bolstered by a favorable external sector with positive exports and remittances growth, a stable exchange rate and declining inflationary pressures,” said the GED outlook.

The report highlighted the need to reduce commercial lending interest rates to stimulate investment. GED emphasised the importance of tackling non-performing loans and boosting banking sector efficiency to improve access to credit.

It also stressed the government’s ongoing efforts toward fiscal consolidation, which are expected to strengthen fiscal accounts. “Enhancing efficiency in the selection of development projects-prioritizing sustainability-will increase the prospects for quality growth,” the report added.

While inflation is expected to remain stable between 8.0% and 9.0% during April and May 2025, it remains a concern. Food inflation, which surged to 10.65% in FY2023-24, eased to 8.93% in March 2025 after the availability of winter vegetables improved supply.

Key contributors to overall inflation in March included rice (14.62%), fish (11.58%), and vegetables (6.08%). Notably, the prices of brinjal (17.12%), medium rice (16.73%), and hilsa (11.37%) drove up food costs-partly due to seasonal demand during Ramadan and the Bengali New Year.

However, rural areas continue to face higher inflation, highlighting the need for more efficient food supply chain management.

Bangladesh’s external sector showed signs of strength in March 2025, with remittances reaching a record $3.29 billion-up 65% year-on-year-boosted by Eid-related transfers and a shift to formal remittance channels following regulatory tightening.

From July 2024 to March 2025, total remittances climbed to $21.77 billion, compared to $16.69 billion during the same period of the previous year. Foreign exchange reserves rose accordingly, now standing at approximately $25.62 billion.

Exports also saw an 11.44% year-on-year increase, reaching $4.25 billion, largely driven by the readymade garment sector.

Bangladesh’s immediate positive response to Trump’s reciprocal tariff has worked well and brought a sigh of relief for exporters.

Bangladesh’s diplomatic engagement with the U.S. over reciprocal tariffs has resulted in a temporary reprieve, with the country agreeing to increase imports of American agricultural products.

Despite external gains, investment activity remains subdued. In February 2025, deposit growth slowed to 7.88%, while private sector credit growth was just 7.15%-among the lowest in recent years.

Contributing factors included high lending rates, political and economic uncertainty, and weakened bank health, with around 10 banks seeing diminished lending capacity due to irregularities. Increased government borrowing from commercial banks-up 60% year-on-year-has further strained private sector credit availability.

In March, the Taka traded within a narrow band of Tk 121.5755-121.9542 per U.S. dollar, reflecting relative exchange rate stability despite growing demand for LCs and foreign currency.

Remittances helped stabilize the currency, with the improved foreign reserve position enhancing the outlook for the external sector.

After a weak first quarter, with GDP growing just 1.96% due to industrial slowdown and floods affecting agriculture, the second quarter of FY2025 saw a rebound to 4.48%.

Growth was driven largely by the industrial sector, which grew 7.1% in Q2, led by manufacturing (8.49%), mining, and quarrying (8.01%), and wholesale and retail trade (6.63%).

While the economic recovery is underway, GED underscores the need for accelerated reforms, investment stimulation, and structural improvements to sustain the momentum.​

 

[Saif]

Inflation drops from 14.5pc to 8.5pc in 9 months: BB Governor Mansur

Bangladesh Bank Governor Ahsan H Mansur on Thursday said that the country's inflation rate has dropped significantly – from 14.5 per cent to 8.5 per cent-over the past nine months. The governor made the remarks while speaking as the chief guest at the opening ceremony of the Banker SME Women

thefinancialexpress.com.bd

Inflation drops from 14.5pc to 8.5pc in 9 months: BB Governor Mansur
UNB
Published :
May 08, 2025 19:17
Updated :
May 08, 2025 19:17

Bangladesh Bank Governor Ahsan H Mansur on Thursday said that the country's inflation rate has dropped significantly – from 14.5 per cent to 8.5 per cent-over the past nine months.

The governor made the remarks while speaking as the chief guest at the opening ceremony of the Banker SME Women Entrepreneurs' Gathering, Product Exhibition and Fair, held at the Bangla Academy premises in the capital.

He expressed optimism that inflation could fall further by 4.0 to 5.0 percentage points if the government maintains consistent efforts and stable policies.

The SME and Special Programmes Department of Bangladesh Bank organised the event.

According to the latest estimates from the Bangladesh Bureau of Statistics (BBS), overall inflation stood at 9.17 per cent in April, down from 9.35 per cent in March. Both food and non-food inflation declined last month. However, the average annual inflation remains above 10 per cent.

Bangladesh Bank Deputy Governor Nurun Nahar, Executive Director Md Khasru Parvez, City Bank MD and CEO Masrur Arefin, and Naushad Mostafa, Director of the SME and Special Programs Department, also spoke at the event.

"If we keep printing money and expect inflation to drop, that won't work. We need to adopt a strict stance. Inflation will take time to ease, but it is on the right track and will continue to decline gradually." Governor Mansur said.

Referring to the current figures, he said, "Food inflation was at 14.5 per cent, which has now come down to 8.5 per cent. Non-food inflation, which was over 12.5 per cent, is now slightly above 9.0 per cent."

"I am hopeful that it will fall further. If we maintain policy stability and put in the effort, reducing inflation to 4.0 to 5.0 per cent is achievable – and that would be a satisfactory outcome for all," he added.

Addressing gender disparities in financial access, Dr Mansur said women are still not receiving their rightful share of banking services.

"Women are getting only 6.0 per cent of total disbursed loans in the banking sector. This is far from realistic. There are many obstacles for women in accessing loans. We must find ways to overcome these and move women forward. Financial awareness among women also needs to improve," he said.

The governor went on to say, "We are committed to supporting women entrepreneurs, but not merely by expanding central bank funds, as that would require creating new money. Instead, commercial banks must lend from their own resources, recognising women's rights in financial inclusion."

The ongoing four-day fair, organised by Bangladesh Bank to boost the participation of women entrepreneurs, will run until May 11. A total of 68 women entrepreneurs from various districts are showcasing their products at the event.

On the final day, six women entrepreneurs will be honoured for their achievements.​

 

[Saif]

Allow foreign investors to turbocharge economic growth

Foreign currency reserve was never something a common man had to take notice of in Bangladesh. But as the economic doom and gloom prolonged last year, we suddenly found ourselves looking at this figure like we follow the scoreboard in a tight cricket match. We were frantically cutting down on impo

thefinancialexpress.com.bd

Allow foreign investors to turbocharge economic growth
Niaz Mohammad Siddiqui
Published :
May 10, 2025 14:39
Updated :
May 10, 2025 14:39

The main objective of the Bangladesh Investment Summit 2025 was to attract foreign investment.

Foreign currency reserve was never something a common man had to take notice of in Bangladesh. But as the economic doom and gloom prolonged last year, we suddenly found ourselves looking at this figure like we follow the scoreboard in a tight cricket match.

We were frantically cutting down on import items to reduce our need for foreign currency. The country’s credit worthiness was also getting hammered by the international credit rating agencies. We were very much in the middle of an economic maelstrom midway into last year.

While we were on war footing to prop up our foreign currency reserve, Vietnam in the south-east Asian region, had finished 2024 with around US $80 billion reserves.

Vietnam had managed to draw US $39 billion in foreign direct investment (FDI) in 2023, while Bangladesh could manage only US $3 billion. The question is how come a country with around half our population and the same GDP size can attract 13 times more FDI, even after growing at around 6 per cent per year over two decades!

Samsung alone has invested USD $23.2 billion in Vietnam, and in 2024, the company’s export earnings from its Vietnam operation reached US $54.4 billion, which is bigger than Bangladesh’s entire export earnings for the same year.

The irony is that Samsung had been keen to make this investment in Bangladesh 10 years ago but since we could not give them land mutation papers of the Korean EPZ, Samsung decided to divert the investment to Vietnam. If we look back, we will find many such own goals we have scored against Bangladesh’s interest in the past. Growing up in Bangladesh, we always like to tell ourselves that our country is full of opportunities for foreign investors. Yet, we have evidently done a shoddy job in converting these opportunities into solid investment from the foreign investors. Even when it comes to the existing foreign investors, we cannot confidently say that we have made them feel at home here.

There are many instances where we find that the foreign investors are labelled as culprits for siphoning off foreign currency out of Bangladesh. Every time there is a tax dispute that involves a foreign investor, the foreign investor is painted as the villain even before the due process has been exhausted to solve the disputes.

In the name of propping up local investors, we have seen the country putting up barriers in the telecom industry for the mobile operators who are mostly foreign investors. We have adopted telecom ecosystem model that has induced systemic inefficiency. Such protectionist attitude has held back Bangladesh from realising its full digital potential.

The good thing is that the current administration has clearly shown its intent to address these bottlenecks. Once the tax burden on customers and the mobile operators are brought down to global standards and all the ecosystem related inefficiencies are dealt with, this sector can once again enjoy the glory days and expedite the country’s digitalisation process.

I believe Bangladesh Investment Summit has created a very positive backdrop for accentuating the reform agenda across all the sectors, including the telecom sector. Bangladesh’s future growth trajectory hinges on how the government engages with the foreign investors’ community. Digitalisation of the economy and the society can in true sense work as the catalyst to stimulate the future growth trajectory of the entire economy.

But for that to happen, it is crucial that we reform our regulatory framework for the telecom and the wider digital sector in a way that can deliver the nation’s vision in the quickest possible time. If the foreign investors’ community is convinced that our regulatory framework works as enablers for their business case, they would be happy to pour in the money into the country. There has to be a win-win situation for the country, the foreign investor and the customers.

We have to remember that Bangladesh, despite having many unique features, need to convince the foreign investors that they have a country who is eager to work with them and are pledge-bound to look after their commercial interests. Having a great product with no promotion will always get defeated by an average or even a substandard product with proper attention to promotion.

Aside from promoting the country, there are some thorny issues that continues to jinx our prospect, such as, doubts over smooth repatriation of profit, lack of legal mechanism to exit the market, shortcoming in digitalisation that fails to curb corruption, inadequate infrastructure and energy shortcomings, tax regime that appears less friendly to investment, most importantly the lack of comprehensive backing of the political leadership to embrace an export-led growth strategy. These must be fixed without further delay.

Ashik Chowdhury, the Executive Chairman of the Bangladesh Investment Development Authority (BIDA) has the whole country abuzz with his smart presentation. The good part is that even our dynamic BIDA chair knows that one or two sensational presentation will not win big deals for the country.

Mr Ashik knows all too well that he needs to show tangible results to win the trust of the foreign investors. By solving the 10 years long pending land mutation dispute over the Korean EPZ within only just two months, he has shown that he intends to deliver. What we need now is for the entire government machinery to emulate his pro-foreign investment stance. We need Mr Ashik’s dynamism to spread across the entire bureaucracy.

Unfortunately, the investment climate-strengthening agenda requires time to come to fruition. Vietnam, again, offers a great example for us. First and foremost, Vietnam adopted an export-led growth strategy since the early days of adopting the "Doi Moi" (renovation) reform programme in 1986. Since then, Vietnam has shown unwavering commitment to implementing this export-led growth strategy.

But if we are to successfully follow Vietnam’s example, we need to give the foreign investors far larger space in our economy than we do. As long as the government is clear eyed about its policy visions, it has no reason to worry about letting foreign investors have a much larger space to contribute to our economic development. The process ceding more space to foreign investors often clashes with nationalistic sentiments of people.

Hence, it is crucial that the government constantly engages with the people to convince them that collaborating with the foreign investors serves the long-term interest of the country. Singapore’s per capita GDP in 1970 was only US $620, but at the end of 2024, it reached US $90,000+. If Singapore had not opened up to foreign investment, they would certainly not have been enjoying the level of prosperity they enjoy today.

- Niaz Mohammad Siddiqui is a strategic communications professional​

 

[Saif]

NBR moves to bring land, flat, building owners under tax net

The National Board of Revenue (NBR) has initiated a move to track down owners of land, flats and buildings across the country in an effort to widen the country’s narrow tax net. The move comes as more than two-thirds of income tax return submissions fall below the taxable threshold of Tk 3.5

thefinancialexpress.com.bd

NBR moves to bring land, flat, building owners under tax net
UNB
Published :
May 11, 2025 18:43
Updated :
May 11, 2025 18:43

The National Board of Revenue (NBR) has initiated a move to track down owners of land, flats and buildings across the country in an effort to widen the country’s narrow tax net.

The move comes as more than two-thirds of income tax return submissions fall below the taxable threshold of Tk 3.5 lakh, according to NBR data.

As per the law, people with annual income below this threshold are exempt from paying income tax.

Currently, the number of Taxpayer Identification Number (TIN) holders in the country stands at over 1.15 crore. However, only slightly more than 40 lakh of them submitted their income tax returns.

Among these, a significant portion reported income below the taxable limit.

Under existing law, having a TIN is mandatory for purchasing land, buildings or flats in Bangladesh.

Both buyers and sellers of property valued above Tk 1 lakh within city corporations, cantonment boards and municipalities at district headquarters must have TINs, as stipulated in the Finance Bill.

The twelve-digit electronic TINs (E-TINs) of both parties must be included in the deed documents during the registration process of such properties.

“So, for the sake of the revenue collection, we have taken the move to chase these owners of land, building and flat,” a senior official of the NBR told UNB.

He acknowledged that the revenue authority had previously fallen short in pursuing these property owners for tax purposes.“We are ready to strike this sector from now on,” he added.

NBR has instructed tax commissioners to bring all eligible individuals and organisations under the tax net and work to eliminate fears surrounding the tax process.

The Board also directed its offices to intensify tax surveys and reactivate dormant TINs as submission of income tax returns has been made mandatory for every TIN holder.

The Income Tax Wing has issued guidelines to field offices instructing them to collect taxpayer information from city corporations, Rajuk, sub-registrar offices and other relevant authorities.

This effort, known as “internal survey,” involves collecting secondary data – information already held by various institutions.

The NBR has extended this survey to the upazila level targeting potential taxpayers through secondary data gathering. For example, an official may identify potential taxpayers from an employer’s staff list.

“This is called internal survey,” the senior NBR official explained to UNB.

Initially, the focus is on gathering data from trade licences issued by city corporations and municipalities. TINs will then be issued to these businesses to bring them under the tax net.

Besides, the NBR is obtaining data from Bangladesh Investment Development Authority (BIDA) for foreign nationals, BRTA for vehicle owners, sub-registry offices for land transactions, power distribution companies, and service providers.

Information on flat and house ownership is also being collected from the National Housing Authority.

"We hope that this’ll help us raise revenue collection,” the NBR official added.

NBR sources said board officials are also conducting door-to-door surveys to identify new taxpayers.

To further this initiative, NBR has signed data-sharing agreements with various agencies including BRTA, power distribution companies, the Department of National Savings and BIDA.

According to NBR data, income tax collection till May 2025 stood at Tk 1,14,924 crore, while actual collection was Tk 85,428 crore.​

 

[Saif]

Urgency of economic and institutional reform

The warning is dire for Bangladesh. Renowned economists of the country have sounded the alarm bell ringing not for nothing. At a book launching ceremony in the city, they have emphasised the urgency of undertaking economic and institutional reforms because failure to meet the numerous fresh challen

thefinancialexpress.com.bd

Urgency of economic and institutional reform
Published :
May 13, 2025 00:32
Updated :
May 13, 2025 00:32

The warning is dire for Bangladesh. Renowned economists of the country have sounded the alarm bell ringing not for nothing. At a book launching ceremony in the city, they have emphasised the urgency of undertaking economic and institutional reforms because failure to meet the numerous fresh challenges---internal and external---can prove to be an 'existential threat'. With the dwindling or disappearing privileges of LDC status such as concessional finance, preferential trade access and aid, the country will have to navigate a rough terrain of international trade and investment regime, if not a hostile one. In fact, some of the symptoms of what is to come have already been there with the bargain over the fourth and fifth tranches of IMF loan and the fallouts of an armed conflict between India and Pakistan.

If the Covid-19 and the Ukraine war that started at a crucial time of global economic recovery first exposed the vulnerability of countries like Bangladesh to external economic and trade-related shocks, their management of internal affairs is no less responsible for the economic downturn they now suffer. Bangladesh, in particular, has faced a double whammy with the oligarchic clique of the time looting huge amounts from the country's banking channel for laundering those abroad. So what has really gone awry could happen because of policy failure and a lack of institutional development. Lutfey Siddiqi, special envoy on international affairs to the chief adviser, finds a paradoxical arrangement between the capitalist or private sector-led economy the country is pursuing and the structure based on socialistic or communist planning model. This assertion certainly demands further explanation. True, the bureaucratic red tapes at several points hinder the freedom free market economy usually allows for business but this cannot be termed a communist system of centralised planning of economic system. The bureaucratic stumbling blocks had to be maintained in the interest of commissions on big-budget development expenditure and bribe for approval of trade-related activities.

It is good to know that the interim government has processed 150,000 permits under the new National Single Window system and soon all the 19 required departments are set to be integrated together. Well, this will spare the businesspeople and entrepreneurs the hassle and delay they had to suffer and ease doing business to some extent. But there are other conditions integral to the system like the law and order, particularly the rent-seeking environment still prevailing. If the parasites cannot be eliminated, businesses will never be transparent and orderly. The example of a garment manufacturer Siddiqi cited to show the vicious practice of rent-seeking speaks volumes for the business environment here. Operating in both Bangladesh and Vietnam, the garment manufacturer pays 40 per cent more to Vietnamese workers and still the operation there is more profitable.

So, law and order has to be drastically improved to make comparable payments for Bangladeshi workers conditional to their Vietnamese counterparts. In an environment of lawlessness, mere simplifying business procedures will not convince investors to lay their money. Better it would be to start the process at home. The state-owned enterprises proving white elephants can be disbanded or privatised within a given time frame. The bottom line here is to streamline manufacturing and business along with raising efficiency and productivity to stay in competition.​

 

[Saif]

Remittance crosses $25b this fiscal year

Remittance inflow in the first ten months and eleven days of this fiscal year surpassed $25 billion, breaking all previous records.

www.thedailystar.net

Remittance crosses $25b this fiscal year

File photo: Reuters

Remittance inflow in the first ten months and eleven days of this fiscal year surpassed $25 billion, breaking all previous records.

Between July last year and May 11 this year, Bangladesh received $25.45 billion in remittances, up 28 percent year-on-year, according to data from the Bangladesh Bank.

The previous record was $24.77 billion, which came in fiscal 2020-21.

The surge in money sent home by Bangladeshi expatriates is being credited to a cocktail of factors, such as a narrowing gap between official and informal exchange rates, a clampdown on money laundering and a renewed sense of patriotism among people living abroad.

Since August 5 last year, remittance inflows have risen every month. In March, the country hit a single-month record of inflows: $3.29 billion.

The spike in remittance inflow is helping the government stop the depletion of foreign currency reserves.

As of May 7, foreign currency reserves stood at $20.3 billion.

The narrowing of the gap between official and unofficial exchange rates has driven this uptick, said a senior BB official.

Currently, the official exchange rate for the dollar ranges from Tk 121 to Tk 122.50, while rates in the informal market hover between Tk 123 and Tk 124.50, according to industry insiders.

The central bank official also said that they have informed banks that the BB will no longer provide direct dollar support, pushing them to source foreign currency on their own.

This has also contributed to the remittance collection through formal channels, the official said.

Last fiscal year, Bangladesh received $23.91 billion in remittance.​

 

[Saif]

17 political parties attend BIDA meeting on investment, BNP did not attend

The Bangladesh Investment Development Authority (BIDA) recently held a consultation meeting with political parties to discuss improvements to the country's investment climate. The meeting took place on Tuesday at BIDA's office in Agargaon, Dhaka, and was chaired by BIDA's Executive Chairman, Chowd

thefinancialexpress.com.bd

17 political parties attend BIDA meeting on investment, BNP did not attend
FE ONLINE DESK
Published :
May 13, 2025 23:18
Updated :
May 13, 2025 23:18

The Bangladesh Investment Development Authority (BIDA) recently held a consultation meeting with political parties to discuss improvements to the country's investment climate.

The meeting took place on Tuesday at BIDA's office in Agargaon, Dhaka, and was chaired by BIDA's Executive Chairman, Chowdhury Ashiq Mahmud bin Harun (Ashiq Chowdhury).

Out of 19 political parties invited, 17 attended the meeting. Notably absent were the Bangladesh Nationalist Party (BNP) and the Bangladesh Jatiya Party (BJP).

According to BIDA sources, BNP's Standing Committee member Amir Khasru Mahmud Chowdhury was invited but did not attend.

In response, he stated that the current investment climate is not the responsibility of the interim government and emphasised the need for a clear election date to allow investors to prepare accordingly, as per local media.

Representatives from various political parties shared their perspectives during the meeting.

MM Akash, a central committee member of the Communist Party of Bangladesh (CPB), highlighted the importance of political continuity for investment growth, noting that investors seek stability.

AHM Hamidur Rahman Azad, Assistant Secretary General of Jamaat-e-Islami, welcomed recent reforms by the interim government but acknowledged ongoing challenges. Nasiruddin Patwari of the National Citizens' Party (NCP) stressed the need to prioritise youth employment and environmental considerations in investment initiatives.

Zonayed Saki, Chief Coordinator of the Ganosamhati Andolon, pointed out persistent issues such as bureaucratic harassment and difficulties in obtaining bank loans, which hinder investment. Syed Ishaq Muhammad Abul Khair of the Islami Andolon Bangladesh criticised the complex registration process for starting a business, which often involves multiple agencies and unofficial payments.

Several parties, including the CPB, advised that foreign investments should not compromise national interests. Nasrin Sultana, Joint General Secretary of the Amar Bangladesh Party (AB Party), proposed the creation of an economic charter based on consensus among all political parties.

In his opening remarks, BIDA's Executive Chairman Ashiq Chowdhury emphasised that investment and employment are matters of national interest, transcending party politics. He acknowledged existing challenges in the investment sector and outlined ongoing and planned reforms aimed at creating a more conducive environment for investors. Chowdhury also mentioned that discussions with foreign companies are being conducted with national security considerations in mind.

The meeting underscored the importance of political stability and clear governance for fostering a favourable investment climate in Bangladesh.​

 

[Saif]

Sukuk: a game-changer in socio-economic development

To tap the liquidity of Sharia-compliant banking area for financing the government’s deficit budget and for supporting the country’s overall development, a decision was made to introduce Islamic bond, or ‘Sukuk’, in the fiscal year 2019-20. On the one hand, a significant nu

thefinancialexpress.com.bd

Sukuk: a game-changer in socio-economic development
Istequemal Hussain
Published :
May 13, 2025 23:59
Updated :
May 13, 2025 23:59

To tap the liquidity of Sharia-compliant banking area for financing the government’s deficit budget and for supporting the country’s overall development, a decision was made to introduce Islamic bond, or ‘Sukuk’, in the fiscal year 2019-20.

On the one hand, a significant number of investors were disinclined to invest in interest-bearing Treasury bills and bonds, and other government securities, and on the other hand, the liquidity of Sharia-based banks and financial institutions remained largely unutilised due to the lack of opportunities to invest in conventional securities. In this context, the government issued the ‘Bangladesh Government Investment Sukuk Guideline, 2020’ on October 8, 2020, and appointed the Bangladesh Bank to act as the Special Purpose Vehicle (SPV) and Trustee. Additionally, the Finance Division of the Ministry of Finance serves as the originator for issuing Sukuk, and there is also a robust Sharia Advisory Committee in place to look after the Sharia compliance.

In the past few years, the Bangladesh government has raised Tk 220 billion by issuing five separate investments Sukuk. In furtherance, a decision has been made to issue the 6th Bangladesh Government Investment Sukuk, worth Tk 20 billion with seven-year tenure, using the Ijara methods for the project titled ‘Rajshahi Division Important Upazila & Union Road Widening & Strengthening Project (RDIRWSP)’.

SIXTH SUKUK: The prospectus for issuing the Bangladesh Government Investment Sukuk (RDIRWSP Socio-Economic Development Sukuk) has been finalised with the approval of the Sharia Advisory Committee of the Bangladesh Bank. The auction for the mentioned Sukuk will be held on May 19, 2025 at the head office of the Bangladesh Bank and will be issued on the next working day, which is on May 20, 2025. According to the prospectus, the Sukuk will be issued under the Ijara methods, with seven year tenure, that means maturity date would be May 20, 2032. Investors will be paid Tk 2.10 billion annually (at a rate of 10.50 per cent) as rent on a semi-annual basis. Banks and financial institutions with a current account/Al-Wadiah current account with the Bangladesh Bank can participate directly in the auction. Additionally, domestic and foreign individual investors, insurance companies, provident funds, and the Deposit Insurance Fund can participate through banks/financial institutions having a current account/Al-Wadiah current account with the Bangladesh Bank.

Various infrastructural projects require investment to carry out the country’s economic development activities, which are planned in the budget of each fiscal year. In general, to support the budget deficit, the government raises fund by issuing treasury bills and bonds through conventional banks. About one-fourth of the total assets held by Sharia-based banks in the banking sector had led the government to introduce Islamic bonds or Sukuk to utilise the liquidity of Sharia-based banks for government developmental activities. Currently, due to the high demand for Sukuk among the clients of conventional banks, the fourth Sukuk has been made more universal.

The term ‘Sukuk’ is actually the plural of ‘Sakka’—a type of legal document or contract. The first issuance of Sukuk took place in the seventh century in Damascus, present-day Syria. Sukuk represents Islamic certificates that signify undivided ownership rights in services, projects, investments, or real estate or their usufruct. In other words, Sukuk is a document indicating partial ownership of a tangible or intangible asset or a service.

The crucial difference between conventional bond and Sukuk is that Sukuk are issued based on ownership or rights over an asset. This means that Sukuk is not a debt rather a form of partial ownership or rights. The prime feature of Sukuk is that it is entirely managed according to Sharia principles, which means it is free from riba or interest.

Various structures or methods can be followed in issuing Sukuk, such as Mudarabah, Musharakah, Murabaha, Istisna, Salam, Ijara, and Qard Hasan. The implementation work of the project titled ‘Rajshahi Division Important Upazila & Union Road Widening & Strengthening Project (RDIRWSP)’ is in its initial stages. The sixth Sukuk based on the above project will be issued using the Ijara methods and main underlying contracts are Istisna and Ijara, where the asset will be prepared under the Istisna contract and then leased out under the Ijara contract, with the rental payments serving as the profit for the Sukuk holders amounting Tk 14.70 billion. In general, Ijara Sukuk is issued by the property owner to lease or rent the property in exchange of rental payments. Sukuk holders become owners of the underlying asset in exchange of their subscription.

According to the type of investors, the allocation percentages for the sixth Sukuk are as follows: (1) Shariah-based banks, financial institutions, and insurance companies—70 per cent of the issued Sukuk, (2) Islamic branches and windows of conventional mainstream banks—10 per cent of the issued Sukuk, and (3) individual investors, provident funds, deposit insurance etc—20 per cent of the issued Sukuk.

Additionally, besides the aforementioned three categories, all conventional banks/finance companies/insurance companies can participate in the Sukuk auction. The allocation of Sukuk to investors will follow three steps:

If the bids submitted by any of the three categories exceed the designated proportion, the Sukuk will be allocated to the bidders within that category on a pro-rata basis.

If fewer bids than the designated proportion are submitted in any category, and more bids than the designated proportion are submitted in another category, the remaining Sukuk will be allocated to the bidders who submitted higher bids on a pro-rata basis.

If the required subscription is not met across the three categories, the remaining Sukuk will be allocated proportionately among the participating conventional banks, financial institutions, and insurance companies.

Sukuk-1: The first Bangladesh Government Investment Sukuk was issued in two phases on December 29, 2020, and June 10, 2021, aiming to raise Tk 80 billion for the ‘Safe Water Supply Project Nationwide’ with bids reaching 3.79 times and 8.18 times of the issued amount respectively. Bids amounting Tk 478.79 billion were submitted. This five-year Ijara Sukuk has a rental rate of 4.69 per cent and will mature on December 29, 2025. The Department of Public Health Engineering is the implementing agency for the project, which is nearly 65 per cent complete.

Sukuk-2: The second five-year Sukuk of Tk 50 billion, was successfully issued on December 30, 2021, to finance the ‘Demand-Based Government Primary School Development Project (Phase 1)’. Structured under the Ijara method, the Sukuk offered a competitive rental rate of 4.65 per cent to investors. The issuance received a robust response, with bids reaching 4.66 times of the offered amount, reflecting strong investor confidence. The project was implemented by the Directorate of Primary Education under the Ministry of Primary and Mass Education and has now been fully completed, marking a significant milestone in the enhancement of primary education infrastructure.

Sukuk-3: The third five-year Sukuk, named IRDP-3 Social Impact Sukuk, worth TK 50 billion was issued on April 20, 2022, for the ‘Priority Rural Infrastructure Development Project-3’. This Sukuk was issued under the Istisna and Ijara methods, with a rental rate of 4.75 per cent for Sukuk holders. The Local Government Engineering Department is the implementing agency, and the project is currently 80 per cent complete.

Sukuk-4: The CDWSP Social Impact Sukuk, amounting to Tk 10 billion, was issued on June 6, 2024, under the ‘Chattogram Division Upazila & Union Road Widening & Strengthening Project (CDWSP)’. Aimed at improving connectivity and transportation across both rural and urban areas, the project focuses on widening and strengthening local roads in Upazilas and unions to support economic growth in the Chattogram Division. Structured under Istisna and Ijara contracts, the Sukuk offers a 10.40 per cent rental rate and attracted strong investor interest, with bids reaching 4.41 times of the issued amount.

Sukuk-5: The first Seven-year Social Impact Sukuk named ‘Construction of Important Bridges on Rural Roads (Phase-II) project (CIBRR-2)’ worth Tk 30 billion, aimed at improving rural connectivity in Bangladesh that focuses on building vital bridges on rural roads to facilitate better transportation, promote economic activity, and improve the quality of life for people living in rural areas. This Sukuk was issued under the Istisna and Ijara methods, with a rental rate of 9.25 per cent for Sukuk holders, and it was issued on March 13, 2024, with bids reaching 3.64 times of the issued amount.

End note: Sukuk play a pivotal role in driving socio-economic development and enhancing the stability of the Islamic financial sector in Bangladesh. By funding key infrastructure projects such as roads, schools, bridges, and water systems, Sukuk contribute to employment generation, to increase productivity, and broader economic growth. These instruments also support poverty alleviation and empowerment of rural people by improving connectivity and public welfare in underdeveloped regions. Moreover, Sukuk promote financial inclusion by offering Sharia-compliant investment opportunities to individuals and institutions that are hesitant to invest in interest bearing instruments due to religious restrictions.

Sukuk have emerged as a transformative financial tool in Bangladesh, advancing socio-economic development while fostering a stable and inclusive Islamic financial ecosystem. By aligning public financing with ethical and faith-based investment principles, Sukuk not only meet developmental needs but also solidify the foundation of Islamic finance in the country.

Istequemal Hussain is Director, Debt Management Department, Bangladesh Bank, and Member Secretary, Shariah Advisory Committee, Bangladesh Bank.​

 

[Saif]

10 reasons why NBR split

Government decision dissolving the National Board of Revenue into tax- policymaking and tax-administration divisions is to improve efficiency, reduce conflicts of interest, and widen tax base, the CA Office says. The explanation came Tuesday from the office of the head of interim government as a s

thefinancialexpress.com.bd

CA’s office explains
10 reasons why NBR split

FE REPORT
Published :
May 14, 2025 00:47
Updated :
May 14, 2025 00:47

Government decision dissolving the National Board of Revenue into tax- policymaking and tax-administration divisions is to improve efficiency, reduce conflicts of interest, and widen tax base, the CA Office says.

The explanation came Tuesday from the office of the head of interim government as a section of NBR staff took it amiss and went on a pen-down protest against the much-discussed measure.

The post-uprising government has announced the major structural reform that effected dissolution of the National Board of Revenue (NBR) to be replaced by two distinct entities under the Ministry of Finance-Revenue Policy Division and Revenue Management Division.

A group of NBR officials swung into protest against the move as soon as the announcement came to light.

"Established over fifty years ago, the NBR has consistently failed to meet its revenue targets. Bangladesh's tax-to-GDP ratio is approximately 7.4 per cent, one of the lowest in Asia. For context, the global average is 16.6 per cent, while Malaysia's stands at 11.6 per cent. To achieve the development aspirations of its people, Bangladesh must raise its tax-to-GDP ratio to at least 10," says the CA office in the statement to substantiate the recast.

Restructuring the NBR is critical to this goal, said a spokesman, adding that there is growing consensus that a single institution should not be responsible for both creating tax policy and enforcing it-such an arrangement breeds "conflicts of interest and promotes inefficiencies".

For years, businesses in Bangladesh have complained that policies have often prioritized revenue collection over fairness, growth, and long-term planning.

Saying that several longstanding issues have plagued the revenue board, the CA Office cites 10 reasons why it is done.

Conflicts of interest: Housing both policy-making and enforcement under one roof has led to compromised tax policies and widespread irregularities. Under the current system, officials responsible for tax collection are not subject to any accountability framework and are often able to negotiate payments from tax defaulters compromising public interest. In many cases, tax collectors are reluctant to take action against tax-evaders and assist them in doing so for personal interest.

There is no system and process in place for objectively measure the performance of tax collectors and their career progression has not been linked with measurable performance indicators.

Inefficient revenue collection: The dual mandate diluted focus on both policy formulation and institutional capacity-building. As a result, the tax net remains narrow, and revenue collection has lagged far behind potential.

Weak governance: The NBR has suffered from inconsistent enforcement, poor investment facilitation, and systemic governance issues, all of which have eroded investor confidence and weakened the rule of law.

Bureaucratic Overlap: The existing structure-where the head of Internal Resources Division also leads the NBR-has created confusion and inefficiency, hampering effective tax-policy design and delivery.

Demoralisation and internal tensions: The reform process has triggered anxiety among seasoned tax and customs officers, some of whom feel they may be sidelined or overlooked.

How the restructuring to help: The new structure is designed to address these chronic problems through a clearer, more accountable framework.

Clear division of responsibilities: The Revenue Policy Division will be responsible for drafting tax laws, setting rates, and managing international tax treaties. The Revenue Management Division will oversee enforcement, audits, and compliance. This separation ensures that the officials setting tax obligations are not the same as those collecting them, eliminating opportunities for any sort of connivance.

Improved efficiency and governance: By allowing each division to focus on its core mandate, the reform will enhance specialisation, reduce conflicts of interest, and improve institutional integrity.

Expanded tax base and stronger direct taxation: The reform is expected to broaden the tax net, reduce dependence on indirect taxation, and strengthen direct tax collection by placing skilled professionals in appropriate roles.

Better, more development-oriented policies: A dedicated policy unit can craft evidence-based, forward-looking tax strategies instead of reactive policies driven solely by short-term revenue goals.

Greater investor confidence: Transparent, predictable policies and a professional tax administration are expected to attract investment and reduce complaints from the private sector.

Ultimately, the government clarification concludes, this restructuring is not just a bureaucratic reshuffle-it's a necessary step toward building a fairer, more capable tax system. Strengthened policymaking and cleaner tax administration will be vital for Bangladesh to meet the needs-and realise the hopes-of all its citizens.​

 

[Saif]

Protectionism, apparel export overreliance key barriers

Protectionist policies and overdependence on apparel exports are among the major internal challenges preventing Bangladesh from joining multilateral trade blocs, said Albert Park, chief economist of the Asian Development Bank (ADB). Speaking at an event on the sidelines of the 58th ADB Annual Mee

thefinancialexpress.com.bd

Protectionism, apparel export overreliance key barriers
Says ADB chief economist about entry of Bangladesh to multilateral trade blocs

Doulot Akter Mala
Published :
May 14, 2025 00:53
Updated :
May 14, 2025 00:53

inset-p1-1Protectionist policies and overdependence on apparel exports are among the major internal challenges preventing Bangladesh from joining multilateral trade blocs, said Albert Park, chief economist of the Asian Development Bank (ADB).

Speaking at an event on the sidelines of the 58th ADB Annual Meeting held recently in the Italian city of Milan, he said it is not that other countries are unwilling to sign trade agreements with Bangladesh.

Rather, the country's internal challenges are the main barriers to forming bilateral and multilateral trade agreements, he also said.

Responding to The Financial Express correspondent's queries, Park said regional and bilateral trade agreements must be emphasised for sustainable business growth in Bangladesh.

The four-day annual meeting, which brought together policymakers and development partners from across Asia and beyond, concluded on May 7.

Asia and the Pacific has significantly benefitted from participating in global value chains by adopting open trade and investment practices, said Park.

However, the region now faces mounting challenges, including Trump's tariff policy, geopolitical tensions, rising protectionism, and growing threats from climate change, pandemics, and other global shocks, he added.

"In this context, strengthening cross-border economic cooperation within Asia and between Asia and the Pacific is essential to building resilience and mitigating external risks," he said during a media group discussion.

Bangladesh's average import tariff exceeds 27 per cent - almost triple the global average. Even among the least developed countries (LDCs), its rates are exceptionally high.

A recent analysis based on the World Bank data showed average tariffs are 11 per cent in low-income, 7.0 per cent in lower-middle-income, 5.0 per cent in upper-middle-income, and 3.0 per cent in high-income economies.

The government has moved to rationalise the high tariff to weather the negative impacts on the economy after it graduates from the LDC status in 2026. The country may lose preferential trade access to many markets then.

Meanwhile, the government has moved to join the Association of Southeast Asian Nations (ASEAN), BRICS, and Regional Comprehensive Economic Partnership (RCEP), among other blocs, to mitigate the adverse impacts.​