[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Forex reserve crosses $25 billion

The forex reserve in the country has crossed US $25 billion before the Eid-ul-Fitr as it was boosted by the record $2.95 billion remittance income in the first 26 days of this March. Bangladesh Bank deputy director Mohammad Ibrahim Munshi confirmed this.

en.prothomalo.com

Forex reserve crosses $25 billion
Staff Correspondent
Dhaka
Published: 28 Mar 2025, 20: 27

Dollar File photo

The forex reserve in the country has crossed US $25 billion before the Eid-ul-Fitr as it was boosted by the record $2.95 billion remittance income in the first 26 days of this March.

Bangladesh Bank deputy director Mohammad Ibrahim Munshi confirmed this.

According to the central bank, the reserve was $25.44 billion on Thursday. On the other hand, as per the calculation done using BPM-6, following the requirement of the International Monetary Fund, the amount of reserve was $20.29 billion.

The Bangladesh Bank paid $1.75 billion import bills of January and February on 9 March through Asian Clearing Union (ACU).

As a result, the actual reserve had fallen to $19.75 billion. But within just 20 days, the reserve amount increased, thanks to the remittance and export incomes.​

 

[Saif]

Bangladesh, Pakistan, and Sri Lanka sign deal to strengthen capital markets

The agreement, signed on Thursday in Colombo, aims to facilitate technology development and sharing

www.thedailystar.net

Bangladesh, Pakistan, and Sri Lanka sign deal to strengthen capital markets

Photo: DSE

The Dhaka Stock Exchange (DSE), Pakistan Stock Exchange (PSX), and Colombo Stock Exchange (CSE) have signed a tripartite memorandum of understanding (MoU) to enhance cooperation among the three bourses.

The agreement, signed on Thursday in Colombo, aims to facilitate technology development and sharing, human resource collaboration, product development, regulatory coordination, investor protection, and knowledge exchange across the markets, according to a press release issued by the DSE yesterday.

The signing ceremony was attended by DSE Chairman Mominul Islam, CSE Chairman Dilshan Wirasekara, and Securities and Exchange Commission of Pakistan Chairman Akif Saeed, along with directors and senior officials from the respective institutions.

DSE Chairman Mominul Islam said, "South Asian stock exchanges—except for India—face technological and operational constraints due to their relatively small size. These limitations prevent markets with immense potential from reaching their full capacity."

"Through mutual experience-sharing and joint investments in technology, our stock exchanges can play an effective role in developing strong and efficient capital markets in their respective countries," he added.

As part of the event, the DSE chairman participated in a panel discussion titled "Navigating Frontier Capital Markets: How Evolving Market Regulation and Exchanges Foster Efficient Capital Market Development."

DSE representatives also held separate meetings with the chairman and commissioners of the Securities and Exchange Commission of Pakistan, senior executives of PSX, and officials from CSE.​

 

[Bilal9]

Very important update on US-imposed tariff on Bangladesh exports to US. Bangladesh is the first country who took the implications seriously and has started a close dialog (public and private deliberations) with the US office of Trade Representative starting in early February. So this is not a surprise to any of the Bangladeshi advisers and they are prepared.

 

[Saif]

IMF team to begin discussions Sunday on $4.7b loan tranches

The delegation from the International Monetary Fund (IMF) will start discussions on Sunday to review updated financial data before releasing the next tranches of the $4.7 billion loan. According to the Finance Division of the Ministry of Finance, the IMF team will visit Dhaka to assess the conditi

thefinancialexpress.com.bd

IMF team to begin discussions Sunday on $4.7b loan tranches
UNB
Published :
Apr 05, 2025 17:45
Updated :
Apr 05, 2025 17:45

The delegation from the International Monetary Fund (IMF) will start discussions on Sunday to review updated financial data before releasing the next tranches of the $4.7 billion loan.

According to the Finance Division of the Ministry of Finance, the IMF team will visit Dhaka to assess the conditions for releasing the fourth and fifth tranches.

The delegation will meet various government departments over the course of two weeks, starting on Sunday.

The team is expected to arrive in Dhaka this (Saturday) evening.

During their visit, IMF team members will engage with the Finance Division, National Board of Revenue (NBR), Power Division, Power Development Board, Bangladesh Energy Regulatory Commission (BERC), and the Energy and Mineral Resources Division.

The IMF team will hold a press briefing on April 17.

On both the first and last days of their visit -- April 6 and April 17 -- the IMF delegation will meet Finance Advisor Dr Salehuddin Ahmed.

Bangladesh has already received three tranches since the loan program began on January 30, 2023.

The country received $476.3 million in the first tranche on February 2, 2023, $681 million in the second tranche in December 2023, and $1.15 billion in the third tranche in June 2024.

In total, Bangladesh has received about $2.31 billion from these three tranches, leaving the fourth and fifth tranches, totalling $2.39 billion, still pending.

Meanwhile, in a pre-budget discussion with the Economic Reporters’ Forum (ERF), Finance Advisor Dr Salehuddin Ahmed emphasised the importance of the IMF loan for budgetary support.

He said the government and the IMF have agreed to release the two installments for the fiscal year 2024-25 together.

But sources indicate that there are three key obstacles preventing Bangladesh from receiving both installments of the IMF loan simultaneously: making the currency exchange rate a market-based one, raising additional revenue equal to 0.5% of GDP, and separating the revenue administration from the NBR’s revenue policy.​

 

[Saif]

NBR looking to expand the base of VAT payers

The National Board of Revenue (NBR) has taken a move to expand its Value Added Tax (VAT) base, with a view to increase revenue collection for the national exchequer. In a meeting chaired by NBR chairman Md Abdur Rahman Khan on Thursday, the field level officials of Dhaka have been asked to be more

thefinancialexpress.com.bd

NBR looking to expand the base of VAT payers
UNB
Published :
Apr 05, 2025 11:00
Updated :
Apr 05, 2025 11:00

The National Board of Revenue (NBR) has taken a move to expand its Value Added Tax (VAT) base, with a view to increase revenue collection for the national exchequer.

In a meeting chaired by NBR chairman Md Abdur Rahman Khan on Thursday, the field level officials of Dhaka have been asked to be more active and sincere for improving VAT collection keeping aside the stories of growth.

An official who was present in the meeting told UNB that the NBR chairman has instructed them to expand the base of VAT.

“I do not want to hear the word growth anymore, I want to see the expansion of VAT net,” the NBR official quoted the NBR chairman as saying.

The NBR boss also asked the officials to change their mind set regarding revenue collection.

“You have to change your attitude, otherwise there is no need to be here anymore,” he warned the officials who were present in the meeting, according to the official who spoke to UNB on condition of anonymity.

The NBR chairman also assured that the good performers will be awarded, although he expressed his depression regarding the poor performance of the VAT wing.

“We are unable to show any good performance till now in VAT collection, you have to conduct combing drives to find new VAT payers, you have to work as the whole nation is depending on the NBR,” he told the meeting.

Abdur Rahman Khan, giving example of people’s eagerness to pay taxes during the 1/11 period, said that at that time people were very much enthusiastic to pay taxes.

“We have to handle the situation like that,” he said.

He also asked the officials not to harass the compliant VAT payers.

Earlier on Monday, while holding a pre-budget meeting with the Economic Reporters’ Forum (ERF), the NBR chairman had said that he had already instructed his VAT officials to conduct combing drives in a small area first to make all business people pay their VAT.

“No one will be left out from this drive, each and every shop owners will pay their applicable VAT, there will be no discrimination in this regard,” he said.

He said that the NBR is moving towards that direction.

The government on January 9 had issued the "Value Added Tax and Supplementary Duty (Amendment) Ordinance, 2025" and "The Excises and Salt Act (Amendment) Ordinance, 2025" imposing increased VAT rate on more than hundreds of different kinds of items aiming to strengthen the country's economic base.

But later, facing strong protest and criticism the NBR has issued several notifications by re-fixing the rates of VAT, Supplementary Duty and Excise Duty on a number goods and services, which were increased on January 9.

Now the NBR wants to impose a single, flat rate of VAT for all goods and services in the country, if the business people agree to that.

The NBR chairman has already said that the VAT is currently mired in total indiscipline.

He said that if input VAT credit and standard VAT rate can be imposed properly, then for many business entities the rate would be less than one percent.

He mentioned that for a long time the VAT Law has been distorted. In this connection he said that the new VAT Law was introduced in 2012 which was amended in 2019 after some major distortion.

He said that the power of VAT was accounting based and invoice based, it has been destroyed. As a result it is not growing right now, the main strength of VAT has been uprooted.

“We want to bring discipline in VAT,” he said in the pre-budget meeting with the ERF on Monday.​

 

[Saif]

https://www.thedailystar.net/business/news/global-investors-set-attend-investment-summit-amid-fdi-concerns-3864206

Global investors set to attend investment summit amid FDI concerns
The event is scheduled to begin in Bangladesh on April 7

The Bangladesh Investment Summit 2025 is set to begin at the InterContinental Dhaka on April 7, taking place at a critical juncture when foreign direct investment (FDI) inflows have plunged to a six-year low, raising concerns about the country's investment climate.

Chief Adviser Prof Muhammad Yunus, in a message to global partners, extended a warm invitation to the summit, calling it an opportune moment to explore Bangladesh's investment potential.

"My friends, partners, and distinguished global leaders from around the world, it is my honour and pleasure to warmly invite you to the Bangladesh Investment Summit 2025," Yunus said.

He highlighted the country's recent economic transformations, driven by progressive investment policies, and reaffirmed the government's commitment to ensuring a level playing field for all investors.

"Bangladesh today stands out with its defining strengths -- solid economic fundamentals, globally competitive resources, and one of the highest returns on investment in the region.

"This summit serves as your gateway to data-driven insights into Bangladesh's most promising sectors. Join us and witness firsthand the immense opportunities our nation holds. Partner with us in shaping the future of one of the world's most dynamic economies."

Scheduled to run from April 7 to April 10, the summit aims to draw attention from global investors and underscore Bangladesh's evolving economic landscape.

More than 550 foreign investors from 50 countries have registered to attend, alongside 2,500 local participants.

Against this backdrop of political uncertainty, isolated incidents of labour unrest, and broader economic challenges, the summit is seen as a crucial platform to rebuild investor confidence, highlight economic reforms, and position Bangladesh as a competitive investment destination.

According to the Bangladesh Bank, FDI inflows declined by 71 percent year-on-year in the July–September quarter of FY25, dropping to $104.33 million -- the lowest in six years.

The country's total FDI stock stood at $17.68 billion as of September 2024, with the United Kingdom, Singapore, and South Korea emerging as the top three investors.

The UK leads the way with $3.05 billion -- primarily invested in banking, power, and pharmaceuticals. Singapore follows with $1.78 billion, and South Korea ranks third with $1.6 billion, driven by investments in manufacturing and telecommunications.

Many high-ranking officials and dignitaries are expected to take part in the summit, according to the Bangladesh Investment Development Authority (Bida), including Óscar García Maceiras, CEO of Inditex, Sultan Ahmed bin Sulayem, group chairman and CEO of DP World, Kyeongsu Lee, vice-president of Samsung Construction and Trading Corporation, Jon Omund Revhaug, executive vice-president and head of Telenor Asia, and Han Jun-seokt, CEO of Giordano Korea.

Baroness Rosie Winterton of Doncaster, DBE, the UK's Trade Envoy to Bangladesh, Jarno Syrjälä, under-secretary of state for international trade at the Ministry for Foreign Affairs of Finland, and Mike Orgill, senior director, public policy and government relations, APAC, Uber are also expected to feature.

At a press briefing held at the Foreign Service Academy in Dhaka on March 23, Ashik Chowdhury, executive chairman of the Bida, reaffirmed the government's commitment to fostering an investment environment anchored in economic stability and policy transparency.

He admitted that concerns persist, ranging from policy unpredictability to infrastructure bottlenecks. However, he underscored that Bangladesh's resilient economic growth, diverse industrial base, and ongoing reform measures signal a promising future for long-term investors.

Chowdhury also stressed that policy consistency, infrastructure development, and regulatory simplification will be critical in ensuring sustained investor confidence.

The summit will officially be inaugurated on April 9 by the chief adviser, alongside senior executives from multinational corporations.

The Bida hopes that the event will act as a turning point for investor sentiment, offering a platform to showcase the country's progress while allowing policymakers to engage directly with international stakeholders.​

 

[Saif]

https://www.thedailystar.net/business/economy/news/rising-costs-erode-business-competitiveness-3864336

Rising costs erode business competitiveness

Bangladesh, long regarded as a cost-competitive destination and once hailed as the next Asian tiger, is now grappling with mounting pressure as the cost of doing business is rising sharply across key sectors.

What was once considered the country's strongest advantage – a cheap labour pool -- is now being undermined by persistent infrastructural weaknesses, policy unpredictability, and rising input costs.

The World Bank's latest assessment and regional business surveys reveal that while labour costs in Bangladesh remain comparatively lower than in Vietnam and India, the total cost structure -- encompassing logistics, energy, financing, and regulatory compliance -- has become increasingly unfavourable.

The issue has once again come to the spotlight, becoming highly relevant as the US government has raised the tariff on Bangladeshi products to 37 percent from around 15 percent.

Experts believe that shipments of Bangladeshi goods will experience a significant setback, with the possibility of a decline in exports to the US market due to the reduction in competitiveness.

The new US tariff on Bangladeshi products has created uncertainty, which is not helpful for a developing country like Bangladesh.

According to the Comprehensive Report on the Logistics Sector of Bangladesh, prepared by the Economic Relations Division of the Bangladesh government, logistics alone account for 15-20 percent of production expenses, significantly higher than Vietnam's 9-11 percent.

This sharp gap is mainly attributed to poor road infrastructure, congestion at major ports such as Chattogram, and outdated logistical facilities.

In contrast, Vietnam's investment in deep-sea ports and modern transport networks has helped reduce delivery times and lower logistics costs, boosting its competitiveness.

Energy is another major hurdle.

Bangladesh's reliance on expensive imported liquefied natural gas (LNG) and furnace oil has exposed businesses to volatile and elevated electricity prices.

Vietnam and India, by comparison, have successfully expanded renewable energy capacity and secured stable, long-term energy supplies, reducing production uncertainty.

Cambodia, despite its economy being smaller, benefits from affordable hydropower imports from its neighbours.

The situation is further aggravated by the rising cost of finance.

The recent adoption of the SMART interest rate regime has driven business lending rates above 13 percent.

In comparison, Vietnamese firms enjoy borrowing rates between 7 to 9 percent, while India's recent monetary easing has brought small and medium enterprise lending rates to around 8 to 10 percent.

Policy inconsistency is also becoming a serious impediment.

Frequent changes to tariff structures, regulatory delays, and a lack of predictability in key business policies have diminished confidence among both foreign and domestic investors.

By contrast, Vietnam and Cambodia have pursued stable, investment-friendly regulatory environments.

A comparative study by the Policy Research Institute (PRI), titled "Vietnam's Superb Export Performance: Lessons for Bangladesh" and conducted in 2021, shows that Vietnam now attracts nearly $27 billion in annual foreign direct investment (FDI).

Meanwhile, Bangladesh struggles to reach even $3 billion.

Even Cambodia, with a far smaller economy, performs better than Bangladesh in FDI inflows per capita.

Selim Raihan, executive director of the South Asian Network on Economic Modeling, observed that Bangladesh was caught in a web of deep-rooted structural problems.

"We are stuck in several fundamental areas," he said. "Logistics, business finance, and the high cost of capital have become significant constraints. Our only sustained advantage has been low labour costs -- and even that is now under threat."

Raihan warned that unless Bangladesh addresses its critical weaknesses in infrastructure, port management, business finance, and skills development, the country's ambitions to diversify beyond ready-made garments would remain elusive.

Raihan said Bangladesh urgently needs policy reforms, robust infrastructure development, and skilled workforce training to enhance its export competitiveness.

It is essential to formulate supportive policies to attract foreign investment and expedite the implementation of free trade agreements (FTAs), he said.

"Efforts should also be undertaken to reduce tariffs and diversify exports. Active participation in bilateral, multilateral, and regional cooperation is crucial for global trade," he said.

He emphasised that immediate initiatives were vital to addressing upcoming challenges following Bangladesh's graduation from least developed country (LDC) status.

M Masrur Reaz, chairman of Policy Exchange Bangladesh, echoed similar concerns.

"The issue is no longer confined to the garment sector. The entire business environment is under pressure due to high costs and structural inefficiencies," he said.

"Geopolitical shifts, rising protectionism, and automation are reshaping global value chains. Countries with stronger fundamentals are taking advantage of this transition, while Bangladesh is falling behind," he said.

Reaz underlined the urgent need for reforms to enhance trade facilitation, modernise logistics, strengthen infrastructure, and build human capital.

"Without timely and coordinated actions, Bangladesh's position as a competitive manufacturing and export hub will continue to weaken," he said.

Adding to these concerns, Asif Ibrahim, a leading exporter of the readymade garments sector, said Bangladesh's exports to the US would face challenges following the hiking of the tariff on imports from Bangladesh.

"This tariff will be a significant burden for Bangladesh's overall exports to the United States, especially when some of the countries that Bangladesh compete with for US market share have been imposed with lesser tariffs," Ibrahim said, referring to India.

He urged policymakers to address this challenge on an urgent basis by reducing import tariff of the main export items of the US to Bangladesh.

"This is crucial for protecting Bangladesh's long-term trade interests and for ensuring sustained economic growth," he added.

With the upcoming LDC graduation in 2026, Bangladesh's competitiveness will be tested further as preferential trade treatments begin to phase out.

Without significant reforms, the rising cost of doing business could become the biggest obstacle to Bangladesh's future growth.​

 

[Saif]

Trade deficit dropped by $632m in eight months as exports grow more than imports

Bangladesh’s trade deficit continues to decline in the 2024-25 financial year (FY25) as export growth surpasses import expansion. The deficit fell by 4.41 per cent in the first eight months of FY25. The July-February period of the fiscal saw a year-on-year decrease of $632 million, accordin

thefinancialexpress.com.bd

Trade deficit dropped by $632m in eight months as exports grow more than imports
Published :
Apr 06, 2025 23:51
Updated :
Apr 06, 2025 23:51

Bangladesh’s trade deficit continues to decline in the 2024-25 financial year (FY25) as export growth surpasses import expansion.

The deficit fell by 4.41 per cent in the first eight months of FY25.

The July-February period of the fiscal saw a year-on-year decrease of $632 million, according to the latest Bangladesh Bank data released on Sunday.

The central bank said the trade deficit in the FY25 from July to February stood at $13.70 billion from $14.32 billion in the same period of the previous fiscal year.

Exports grew by 9.10 per cent in the first eight months of the current fiscal year and amounted to $30 billion, up from $27.54 billion in the same period last year.

On the other hand, imports rose by 4.5 per cent and in the current fiscal stood at $43.73 billion from $41.87 billion in the previous fiscal.

An analysis shows that the trade deficit has narrowed due to the increase in imports along with exports.

According to the balance of payments data, the current account deficit has declined by 68.90 percent in the first eight months.

The current account deficit during the period stood at $1.27 billion, down from $4.7 billion in the same period of the previous fiscal year.

Again, in the July-February period of the current fiscal year, the financial account stood at $1.42 billion, up from $654 million in the same period last year.

That means an increase in the surplus of over 116 per cent.

Former World Bank chief economist for Bangladesh Zahid Hussain told bdnews24.com, “The fiscal balance has improved a bit from before. Remittances topped $3 billion in March. It is expected that the balance of payments in March will be better than this month."​