[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Private sector struggling under mounting pressure

The private sector is facing increasing uncertainty as stubbornly high inflation, stagnant investments and inconsistent energy supplies continue to weigh on businesses, according to industry leaders.

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Private sector struggling under mounting pressure
Businesses say at seminar

The private sector is facing increasing uncertainty as stubbornly high inflation, stagnant investments and inconsistent energy supplies continue to weigh on businesses, according to industry leaders.

"In recent months, business sentiment has been significantly affected by inflationary pressures, high borrowing costs and exchange rate volatility," said Taskeen Ahmed, president of the Dhaka Chamber of Commerce & Industry (DCCI), at an event in Dhaka yesterday.

He called for policy stability and structural reforms to restore business confidence.

Red-hot prices remain a key concern for both individuals and businesses, with inflation hovering at over 9 percent since March 2023. Making things worse, Bangladesh's foreign exchange reserves have been under strain for nearly three years, leading to a depreciation of the local currency against the US dollar.

For manufacturers, rising commodity prices usually result in reduced demand, while a weaker taka increases operational costs. Besides, authorities have raised interest rates to battle inflation, further pushing up borrowing costs for businesses.

In his keynote address at the event, titled "Bi-Annual Economic State and Future Outlook of Bangladesh Economy – Private Sector Perspective," the DCCI president said that industries are already under pressure due to inconsistent energy supplies, which they fear will worsen during the upcoming summer.

"Industries are struggling with frequent power shortages and an unpredictable energy supply. The cost of gas has increased, yet supply is inconsistent," Ahmed said.

"If this continues, businesses will find it difficult to remain competitive."

The DCCI president mentioned that private investment has stagnated at 24 percent of GDP almost since the pandemic, while foreign direct investment (FDI) has dropped to a six-year low.

"Without urgent interventions, sustaining economic momentum will be challenging."

Regarding the financial sector, Ahmed pointed to the growing liquidity crisis, especially its impact on businesses.

"The central bank hiking the policy rate to 10 percent has made credit inaccessible for small and medium enterprises. Private sector credit growth fell to 7.28 percent in December 2024, well below the target of 9.8 percent for the fiscal year 2024-25. The high cost of borrowing is discouraging investment."

Ahmed called for policy consistency, tax reforms and investment in infrastructure to support private sector growth.

"The private sector is ready to drive economic expansion, but we need clear and stable policies. If inflation, energy crises and financial instability drag on, businesses will struggle to sustain operations," he mentioned.

M Masrur Reaz, chief executive officer of the Policy Exchange Bangladesh, said the country's macroeconomic situation has been in a fragile state since 2022 due to high inflationary pressures.

He believes macroeconomic stability will remain elusive if the foreign exchange reserves do not increase by $7 to $8 billion by the end of this year. As such, the economist requested the government to secure $5 to $6 billion from multilateral lenders by June to stabilise forex reserves.

Reaz also advocated a stable and sufficient energy supply.

Sayera Younus, executive director (research) of Bangladesh Bank, said inflation would decline to around 6 percent by the end of the current fiscal year.

She hoped that the foreign exchange reserves would increase by at least $5 billion by the end of June, driven by growing exports and remittance inflows.

Mohammad Abu Eusuf, a professor of development studies at the University of Dhaka, said financing a deficit by borrowing from the banking sector would hurt private sector credit flow.

Mohammad Yunus, research director at the Bangladesh Institute of Development Studies, highlighted the potential for FDI and joint ventures, especially in the leather and pharmaceutical sectors.

Md Abdur Rahim Khan, additional secretary (export) of the commerce ministry, said export diversification remains a significant challenge, with garments accounting for more than 85 percent of export earnings.

Khan, who is currently the secretary of the commerce ministry, said the local light engineering sector holds immense potential, though exports in this sector declined in the last fiscal year.

Regarding Bangladesh's graduation from least developed country (LDC) status, which is scheduled in 2026, he said that despite the phasing out of subsidies and incentives, reducing business costs by 10–15 percent could enhance global competitiveness.

However, he pointed out that access to financing poses a challenge for entrepreneurs. Besides, it is important to attract foreign investment to build a diversified economy.

Referring to the current tax-to-GDP ratio of 8 percent, Khan said, "$40 billion in revenue collection for a $450 billion economy is completely unacceptable."

He also expressed concerns over the lack of full automation of government services and the inadequate implementation of the National Single Window system.​

 

[Saif]

Bangladesh on the path to recovery, says Finance Adviser

Finance Adviser Dr Salehuddin Ahmed on Saturday stressed collective efforts to move Bangladesh forward, aiming to provide a better and more dignified life for all citizens. "We want to ensure a quality life for all," he said at an event unveiling the second edition cover of his book, "Go

thefinancialexpress.com.bd

Bangladesh on the path to recovery, says Finance Adviser
UNB
Published :
Feb 22, 2025 22:02
Updated :
Feb 22, 2025 22:02

Finance Adviser Dr Salehuddin Ahmed

Finance Adviser Dr Salehuddin Ahmed on Saturday stressed collective efforts to move Bangladesh forward, aiming to provide a better and more dignified life for all citizens.

"We want to ensure a quality life for all," he said at an event unveiling the second edition cover of his book, "Govornorer Smritikotha", followed by a discussion meeting at the Institute of Chartered Accountants of Bangladesh (ICAB) Auditorium in Dhaka. The book's first edition was published in 2019.

Dr Salehuddin recalled that the country had nearly plunged into a severe crisis during the previous regime. "Bangladesh was almost on the brink of falling into a ditch," he noted, "but now it's turning around, thanks to the sincere efforts of the government and support from all stakeholders."

Emphasising responsibility over mere power acquisition, Dr. Salehuddin remarked, "We did not just assume power; we took responsibility. You cannot imagine the state Bangladesh was in previously; only those involved closely knew the depth of our troubles."

Reflecting on his experiences, the Finance Adviser described the background behind writing his memoir, which sheds light on critical periods in Bangladesh's banking sector and economy. He emphasized that he never compromised his principles during his tenure as Governor of Bangladesh Bank and earlier as a public servant.

Dr Salehuddin called for enhanced honesty, integrity, and skill development among human resources to drive the nation forward. "Now more than ever, we need honesty, integrity, and competent human resources," he urged.

He added that Bangladesh enjoys a positive impression internationally. "We should all strive to uphold our country's dignity and self-respect."

Encouraging constructive criticism, Dr Salehuddin cautioned citizens to remain vigilant against forces that may exploit criticism to harm national interests.

Highlighting the importance of balanced growth, the Finance Adviser emphasized, "We hope to rapidly move the country forward by ensuring quality life. High growth and income alone won't suffice; quality education and health care are equally crucial. We are relentlessly trying in this direction."

Dr Salehuddin further called upon everyone, irrespective of class or creed, to support the interim government in swiftly addressing the nation's pressing challenges.

Speaking at the event, distinguished guests, including Editor and Publisher of the daily Bonik Barta Dewan Hanif Mahmud, CPD Distinguished Fellow Dr Mustafizur Rahman, Dhaka University Professors Dr Kazi Marufur Rahman and Dr Rashed Al Mahmud Titumir, former NBR Chairman Abdul Majid, Professor Dr Mahbubullah, and writer Faruk Saifuddin, emphasized the need for the interim government to guide the economy towards recovery from near collapse.

They expressed cautious optimism, saying it would be unrealistic to expect full recovery within six months but emphasised the current leaders' potential to pave the way forward. They also underscored the pressing need to establish a society rooted in non-discrimination, equality, and justice.

Dr Salehuddin hinted that his forthcoming third edition would expand beyond his memoirs as the former Governor. "I want to write about diverse contemporary experiences. Since I have taken an oath, I cannot divulge much now," he said.​

 

[Saif]

Growth to remain sluggish for a while

Bangladesh's economy is likely to witness another year of low growth and high inflation, thanks to the revolutionary change in the political arena half a year ago. The student-led mass uprising, which forced the autocratic regime of Sheikh Hasina to fall on August 5 last year, led to a critical tra

thefinancialexpress.com.bd

Growth to remain sluggish for a while
Asjadul Kibria
Published :
Feb 22, 2025 22:43
Updated :
Feb 22, 2025 22:43

Bangladesh's economy is likely to witness another year of low growth and high inflation, thanks to the revolutionary change in the political arena half a year ago. The student-led mass uprising, which forced the autocratic regime of Sheikh Hasina to fall on August 5 last year, led to a critical transition in the country's power structure. This mass movement also significantly disrupted economic activities, leading to a bearish quarterly growth of 1.81 per cent against 3.91 per cent in the last quarter of FY24. However, economic activities rebounded modestly in the second quarter of the current fiscal year, as reflected in several proxy indicators.

Nevertheless, there is little scope to be optimistic that the economic growth in the second half of the current fiscal year would see a mighty comeback. The latest half-yearly Monetary Policy Statement (MPS), released by Bangladesh Bank in the third week of last month, made it clear. "The growth outlook for the second half of FY25 for Bangladesh does not appear optimistic due to the existing challenges," said the central bank in the MPS announced for the January-June period of 2025. "It will be hard to regain growth momentum in the near term since the government is focusing on improving fiscal discipline, and the central bank is working to control inflation," it added.

The central bank projected that economic growth might remain sluggish at around the 4.0-5.0 per cent range in the current fiscal year. In other words, the growth in FY25 will be similar to FY24, when output expanded by 4.22 per cent in the final count. The growth rate was 5.78 per cent in FY23.

Looking back, the country's annual economic growth came down to the lowest level in FY20 due to the Covid-19 pandemic-driven contraction of economic activities. GDP registered a modest 3.45 per cent in FY20, which was lowest in the last decade. In the later years, GDP bounced back, registering 6.94 per cent and 7.10 per cent in FY21 and FY22, respectively. The robust pace of growth could not be sustained in the later years. The previous regime blamed external factors, such as the negative fallout of the Russia-Ukraine war, to be precise.

Though the external factors played a role, economic mismanagement and extensive corruption of the Hasina regime, coupled with the manipulation of growth statistics, made things worse. During the last decade, several economists and experts raised some questions about the growth figures, but the autocratic regime did not pay any heed. Instead, it became gradually difficult to question the authenticity of growth, and anyone who expressed apprehension was at risk of backlash. Constructive debate on growth, as well as different economic indicators, was not welcomed. The fallen regime and its loyalists rather used to tag any such debate or discussion as a move to undermine the country's persistent development. The regime became unaccountable and set a trend of not responding to questions raised by experts and media. So, getting access to information from national statistical agency or the central bank was complex. It also continued its manipulative effort to manufacture economic growth to show that the country is moving ahead at a rapid rate. Nevertheless, growth started to fall, and the downward trend continued for three consecutive years, showing the systematic weakness of the economy.

Against the backdrop, it is clear that the size of Bangladesh's economy has not grown as high as recorded in the last decade. The expansion or the growth rate of the economy, as estimated by the Bangladesh Bureau of Statistics (BBS), requires careful examination and should not be taken at face value. For instance, in FY21, GDP at the current market price was recorded at US$416 billion, which increased to $450 billion in FY24. Economists and experts who have tried to estimate the GDP alternatively observed that the official figure is around $50 billion more than the real GDP. The previous regime used the inflated GDP figure to create an artificially colourful picture of development and push the country's graduation from the Least Developed Country (LDC) status without adequate preparation.

It is crucial to re-estimate or re-calculate the GDP figures to determine the actual size of Bangladesh's formal economy. This task, though daunting, is necessary for the national statistical agency. Nevertheless, BBS needs to do so for at least two or three years and provide a more authentic picture of GDP, as some corrective steps have already been taken. The modest growth in FY24 reflects that.

In the current year, the central bank's projection of GDP growth rate between 4 to 5 per cent range seems realistic. After a significant disruption in economic activities, followed by a slow pace of recovery, there is no scope of registering a high growth of 6 per cent or more. That's why the MPS said: "Despite the modest slowdown in economic activity, the projected growth should be viewed as remarkable, given the numerous challenges facing the economy."

The major challenges include curbing inflation, stabilising the exchange rate, rebuilding the foreign exchange reserves, and most importantly, restoring public confidence in the banking system. Due to a series of irregularities patronised by the ousted regime, the country's banking sector became vulnerable, which is reflected in the high amount of default loans. Depletion of foreign exchange reserves was driven by higher payments of imports and debt servicing against lower earnings in exports and a modest inflow of foreign investment. Again, despite some manipulation to keep the inflation rate low, it was impossible to suppress the real situation at one stage. Double-digit inflation continues to erode real income, and the central bank has been struggling to bring it down for the last six months.

In the latest MPS, the central bank rightly stressed containment of inflation without worrying much about growth. Keeping the higher policy rates unchanged is a step in that direction.

Sacrificing growth may not be desirable, though it is necessary for the time being to tame the excessive pressure of inflation.​

 

[Saif]

Beza developing 3-phase plan for economic zones

The Bangladesh Economic Zones Authority (Beza) is developing a comprehensive three-phase implementation plan to develop economic zones across the country, ensuring balanced industrialisation, employment generation, and sustainable infrastructure development.

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Beza developing 3-phase plan for economic zones

The Bangladesh Economic Zones Authority (Beza) is developing a comprehensive three-phase implementation plan to develop economic zones across the country, ensuring balanced industrialisation, employment generation, and sustainable infrastructure development.

As part of a draft "National Master Plan of Economic Zones", Beza is prioritising establishing 20 economic zones by 2046, strategically phasing the implementation for resource optimisation and to attract local and foreign investment.

Beza disclosed this during a workshop on "Economic zone prioritisation and phasing, offsite infrastructure planning and development mechanism" at its office in Biniyog Bhaban at the capital's Agargaon yesterday.

According to the master plan, which is currently being formulated through financing from World Bank, the phased approach helps mitigate challenges related to land acquisition, infrastructure readiness, and investor confidence.

The first phase, spanning from FY25 to FY30, will prioritise economic zones that are already under development or at an advanced planning stage

This in turn ensures that economic zones develop in a structured and sustainable manner, states the master plan.

Only 10 economic zones have become operational since Beza rolled out a massive industrialisation plan in 2015.

Of the 10 economic zones, two – the National Economic Zone in Chattogram and Sreehatta Economic Zone in Sylhet -- are government-run while eight are under private management.

The private ones are City Economic Zone, Meghna Industrial Economic Zone, Meghna Economic Zone, Hoshendi Economic Zone, Abdul Monem Economic Zone, Bay Economic Zone, Aman Economic Zone, and East West Economic Zone.

According to a Beza report, the 10 economic zones employ around 60,000 people. Some 7,000 people are working in government-run zones and 53,000 in the private zones.

Products worth $14.47 billion were produced in the 10 economic zones in the last fiscal year of 2022-23, it said.

Addressing the workshop, Ashik Chowdhury, executive chairman of Beza, reaffirmed his commitment to turning the master plan into a blueprint for success, driving growth, innovation, and sustainable industrialisation.

"Whenever I am given a big project, I know it is a huge responsibility. There are many challenges, but I see them as chances to learn and grow," he said.

"Beza has grown because of hard work, good planning, and always aiming for the best."

Speaking about Bangladesh's economic growth, Chowdhury said, "A long time ago, we chose Narayanganj as an important place for development. We made that decision after careful study, and now we see the results.

"We are creating a space where businesses can succeed, new ideas can grow, and young people can dream big," he added.

Beza is not just building economic zones, it is shaping the future of Bangladesh, he said.

"We must create more jobs, grow our economy, and make Bangladesh even stronger. Let us work together for a better future," Chowdhury said.

Gayle Martin, country director of World Bank, emphasised the importance of rationalising economic policies to foster sustainable growth.

From the international financial institution's perspective, a well-functioning private sector is crucial for innovation, entrepreneurship, job creation, and sustainable management of natural resources, she said.

World Bank has been supporting Bangladesh in its economic progress, analysing growth trends, and enhancing policy frameworks, she said.

In collaboration with the International Finance Corporation, World Bank is preparing a private sector diagnostic, set to launch in the coming weeks, Martin informed.

According to her, another critical area is tax policy and administration. Bangladesh has one of the lowest tax-to-GDP ratios in the world and tax exemptions account for 6 percent to 7 percent of the GDP.

Rationalising these policies is essential for fiscal sustainability, she emphasised.

While the strong growth trend of the past has lost steam, strategic private sector investment can revitalise the momentum, said Martin, adding, "The World Bank remains committed to supporting structural reforms that maximise economic zones' impact."

According to a presentation on the master plan, the first phase, spanning from FY25 to FY30, will prioritise economic zones that are already under development or at an advanced planning stage.

Beza is focusing on the construction of roads, power supply, water management, and telecommunications to attract investors.

It is also offering incentives and ensuring a "favourable" business environment by focusing on select industrial sectors such as agro-processing, textiles, and light engineering due to their low capital requirement and high employment potential.

These zones being prioritised have already been provided land, face minimal legal disputes, and have high investor interest, making them ideal for early implementation.

By 2030, these zones are projected to generate over 300,000 jobs and contribute significantly to export earnings, thereby strengthening Bangladesh's position in global trade.

The second phase, running from FY31 to FY35, will focus on introducing large-scale industries such as automobile manufacturing, pharmaceuticals, and heavy engineering.

In this phase, railway and expressway connectivity will be strengthened, and more public-private partnerships (PPP) and government-to-government (G2G) collaborations will be promoted.

Work is currently underway for the issuance of legal and environmental clearances for the land of these economic zones, and by 2035, these are expected to house large-scale industrial parks that will contribute to Bangladesh's growing manufacturing and export sectors.

The final phase, extending from FY36 to FY46, aims to transform Bangladesh into a global industrial hub by introducing AI-driven logistics, automated factories, and IoT-based infrastructure.

It will set up green economic zones with eco-friendly policies, renewable energy, and circular economies.

In this stage, specialised clusters will be created to compete with global industrial zones in Vietnam, India, and China.

The master plan states that despite efforts toward structured rollouts, land acquisition issues, environmental regulations, and policy inconsistencies remain key challenges.

Through successful implementation, the master plan seeks to transform Bangladesh into a regional industrial powerhouse, creating millions of jobs and boosting economic diversification beyond Dhaka and Chattogram.​

 

[Saif]

Country’s economy in positive trend: BIDA chief

Bangladesh Investment Development Authority executive chairman Chowdhury Ashik Mahmud Bin Harun said that there was a positive trend in the country’s economy in the past six months...

www.newagebd.net

Country’s economy in positive trend: BIDA chief
Staff Correspondent 23 February, 2025, 22:21

Bangladesh Investment Development Authority and Bangladesh Economic Zones Authority executive chairman Chowdhury Ashik Mahmud Bin Harun and National Board of Revenue chairman Abdur Rahman Khan, among others, are present at the launch event of Authorised Economic Operator at the NBR premises in the capital Dhaka on Sunday. | Press release

Bangladesh Investment Development Authority executive chairman Chowdhury Ashik Mahmud Bin Harun said that there was a positive trend in the country’s economy in the past six months.

‘Exports have increased by 13 per cent in the last 6 months, where the container handling also increased by 7 per cent in January. We need to address all the negative factors and move forward,’ he added.

He was speaking as the chief guest at the launching event of the Authorized Economic Operator at the National Board of Revenue on Sunday.

The NBR launched the AEO in aiming to make export-import business easier and risk-free along with providing customs and tariff-related information from a single platform.

BIDA executive chairman also said that if the AEO is fully operational, the pressure will be reduced on both the NBR and the business community. He also said that it should have launched earlier but it took 12 years.

He also said that a new chapter in trade facilitation has begun in Bangladesh with the issuance and implementation of the AEO certificate.

‘Compliant importers and exporters will benefit greatly by reducing lead time and costs through the proper implementation of AEO,’ he added saying that in placing import orders, the buyers first consider its Vietnam operations before allocating the remaining orders to its Bangladesh unit as Vietnam is far ahead in terms of lead time. He also said that the country needs to address these.

The NBR launched the Authorised Economic Operator to facilitate and eliminate risk in export-import business and provide customs and tariff-related information from a single platform.

Businesses and individuals can access essential trade-related details, including general information, compliance requirements, product-specific documentation, tariff rates, duty and tax benefits, an approximate tax calculator and preferential tax benefits, through dedicated websites, according to a NBR presentation.

The NBR also introduced ‘Customs Strategic Plan 2024-28’ and ‘Export-Import Hub’ at the event.

The AEO module is within the Automated System for Customs Data (ASYCUDA) World, which is designed to facilitate faster consignment clearance at ports, the revenue authority said.

NBR chairman Abdur Rahman Khan acknowledged that the revenue authority had lagged behind in automation efforts, as it had failed to implement the AEO system on time.

He said that some businesses tried to comply with the system in all areas, but some evaded it everywhere.

‘This cannot continue and through the AEO, compliant businesses will get special benefits. We want to see them compete to achieve this facility,’ he added.

He also said that the Mongla and Pangaon ports were still less busy and since cargo pressure was low at these two ports, all goods were tested there properly.

However, he said, due to high pressure, several goods are released without proper testing at the Chattogram port.

‘Introduction of the AEO facility will gradually reduce pressure on the Chattogram port as testing will be easier. If the importers get the same facilities at Mongla and Pangaon ports, they will also use those,’ he added.

NBR first secretary (customs) Amimul Ehsan Khan showcased the presentation on AEO and said that the exporters and importers registering companies under the AEO system would receive unique benefits in the expedited clearance of imported goods and customs clearance of exported goods.

AEO-licenced companies will be able to automatically self-assess 20-50 per cent of their product shipments through green lane facilities. They will also be able to use the AEO logo, pre-arrival declaration, less documentary requirements, priority in scanning and physical examination, regular audit, etc.

Moreover, the companies will be able to temporarily clear customs without chemical testing of the products they require. In cases where a bank guarantee is required, they will get the benefit of clearing goods by providing a 75 per cent bank guarantee and 25 per cent commitment.

Nine companies have received AEO certificates till date.

Zaved Akhter, chairman of Unilever Bangladesh Limited, among other businesses, also spoke at the event.​

 

[Saif]

BANGLADESH ECONOMY: Turning demographic challenges into opportunities

SPEAKING at the recent annual conference of the Bangladesh Administrative Service Association, Chief Adviser Dr Muhammad Yunus has emphasised the need to create opportunities for young people, asserting that Bangladesh’s large population is not a burden but a valuable resource...

www.newagebd.net

BANGLADESH ECONOMY: Turning demographic challenges into opportunities
Anis Chowdhury and Khalid Saifullah 24 February, 2025, 00:00

SPEAKING at the recent annual conference of the Bangladesh Administrative Service Association, Chief Adviser Dr Muhammad Yunus has emphasised the need to create opportunities for young people, asserting that Bangladesh’s large population is not a burden but a valuable resource.

A day later, deputy commissioners proposed the introduction of universal military training for youths, aiming to involve them in the country’s defence efforts.

Of course, this is a political decision, and it requires serious examinations of the proposed programme’s budgetary implications.

We have done some preliminary budget estimates. The good news is that we can introduce the programme progressively over 5-8 years, say beginning with 10 per cent of those turning 18 years as a pilot and then gradually covering the entire cohort of 18-20-year-olds who are able to serve.

The context: seismic demographic shift

IN 50 years since independence, Bangladesh’s population more than doubled from around 70 million (7 crore) to around 174 million (17 crore), turning Bangladesh into one of the most densely populated countries in the world. Despite a rapid fall in fertility, Bangladesh’s population will continue to grow largely due to the momentum effect. The UN Population Division projects that Bangladesh’s total population will reach its peak in 2071 with a population of 226 million.

Bangladesh is well into the third phase of demographic transition, having shifted from a high mortality-high fertility regime to a low mortality-low fertility one. As shown in the population pyramid (Figure 1), there is a youth bulge comprising about 28 per cent of the population in the age bracket 15-29.

The UN projects that by 2030, the proportion of youth in the age bracket 15-29 years will decline to around 25 per cent and by 2050 to around 20 per cent. So, this is our demographic moment that comes only once (see Figure 2).

As professor Yunus stressed, the young population is a blessing — a source of strength, energy, and vigour. A country with a large number of young people not only has a large pool of workforce but also a large pool of potential future leaders — often referred to as a ‘demographic dividend’.

However, demographic dividend is not prearranged. It is an opportunity provided by the age structural transition. This window of opportunity opens for a population only once. If missed, it may become a ‘demographic curse’.

A country can “become old before becoming developed,” as we see in the case of Sri Lanka, characterised by a large proportion of elderly population (non-working age) while the nation still struggles with poverty and infrastructure issues. Thus, the country not only has fewer working-age people (i.e., a smaller workforce), but also has to support a large number of people in their older age. Such a demographic situation potentially hinders a country’s economic progress and creates challenges for its social welfare systems.

Thus, an increase in the proportion of young people in a country’s population structure can bring a huge dividend provided this raw power is converted into highly skilled human resources, absorbed in productive employment, and turned into entrepreneurs.

This can be shown by decomposing the neo-classical production function as follows: Y/P = Y/SE x SE/E x E/LF x LF/WP x WP/P, where Y = GDP, P = population, E = employment, SE = skilled employment, LF = labour force, WP = working-age population.

Thus, GDP per capita (Y/P) is the product of: a) productivity gains due to skilled employment (Y/SE), b) proportion of skilled employment (SE/E), c) employment rate (E/LF), d) labour force participation rate (LF/WP) and e) demography, i.e., proportion of working age population (WP/P).

Bangladesh’s demographic dividend may become a mirage. The recent student/youth unrest, which began with a demand for quota reform and ultimately toppled the Hasina regime, is a clear indication of the economy’s inability to absorb these youthful people in productive employment or turn them into entrepreneurs. The official unemployment figure of about 3-4 per cent based on outdated labour force survey methodology does not reflect the reality.

National service: a feasible urgent solution

OUR most critical challenge is preventing the demographic curse and reaping the demographic dividend. Mandatory national service, comprising some basic defence training, IT and general literacy-numeracy, and vocational skills, will not only bring enormous economic benefits but also prepare the country for disaster management, especially due to the climate crisis. It will also act as an effective deterrent against possible threats to our national sovereignty.

Currently, we have around 1.6 crore (15.9 million) youths in the age bracket 20-24, roughly 87 lakh females and 73 lakh males. Of the youth turning 18 years, about 29 lakh are able to serve, excluding child-bearing females (around 25 per cent) and those with various disabilities.

If 10 per cent of the youth turning 18 years are included in the programme in the first year, and Tk 12,000 per month (equivalent to the current minimum wage) is used for each participant, then 5.8 per cent of the total 2024-25 budget proposed by the fallen regime would be required for defence. This is marginally higher than the 5.3 per cent allocated in the proposed 2024-25 budget. This figure rises to 5.9 per cent and 6.2 per cent if training each participant requires Tk15,000 and Tk20,000, respectively.

The above rough and ready estimates assume no change in the existing allocation for other defence expenses. Nor does the exercise consider efficiency gains.

Obviously, budgeting cannot be done in isolation. The first place to find money is reallocation as required by reprioritisation. It should be mentioned here that the fallen regime in its last budget proposed for 2024-25 in June 2024, increased defence budget by 11 per cent over the revised defence budget for 2023–24. Therefore, this has to be examined seriously; the priorities of the ‘new Bangladesh’ cannot be the same as the fallen regimes.

Money can also come from the savings that might result in other sectors, e.g., education, as there will be reduced pressure to expand post-secondary education. If necessary, the costs of such programmes have to be shared through higher taxes for the sake of securing a prosperous future for this country.

Empowering the youth

TRAINING and skill development through mandatory national service is just one element in the supply side of the equation. The pool of available talent needs to be empowered and deployed to yield a demographic dividend. Otherwise, it will be wasted and may even turn into a disruptive force.

Our most critical challenge is preventing the demographic curse. Not only do we have to reap the demographic dividend, but we also have to ensure what is referred to in the literature as the ‘second demographic dividend’. While the ‘first demographic dividend’ due to the rise in the proportion of working-age population is transitory, the ‘second demographic dividend’ can be perpetual.

For this to happen, countries need to invest in skill upgrading, support entrepreneurial initiatives, and create innovative/flexible work environments to allow working even in older age and asset accumulation by workers.

Especially given the advancement in technology, and particularly artificial intelligence, we urgently need to rethink skill development for our youth. Many university degrees may soon become obsolete because the skills they offer are prone to automation.

Ironically, many blue-collar, hands-on jobs are likely to survive because they require mental and motor skills humans have developed over millennia and are really difficult to automate. We consider them low-skill because we take those skills for granted. On the other hand, jobs that require high-level critical thinking will also survive. We need urgent actions to prevent our youth from falling into the ‘middle’.

Act now

PROFESSOR Yunus has rightly understood the key message of youth revolt: the youth should be placed at the heart of strategies, as they are committed to creating a new world that is inclusive, fair, and just. Therefore, it is logical that his government initiates the measures when the aspirations of the revolution are still fresh in the minds.

Anis Chowdhury is an emeritus professor at Western Sydney University in Australia and held senior UN positions in Bangkok and New York in economic & social affairs, and Khalid Saifullah is a statistician with years of experience working in international organisations.​

 

[Saif]

Expatriates send $1.93 billion in remittances in 22 days of February

Bangladeshi expatriates sent $1.93 billion in remittances in the first 22 days of February, according to Bangladesh Bank data. In the past seven months, since July, remittance inflows have exceeded $2 billion per month for six consecutive months. February is also expected to surpass this mark. Du

thefinancialexpress.com.bd

Expatriates send $1.93 billion in remittances in 22 days of February
UNB
Published :
Feb 23, 2025 21:13
Updated :
Feb 23, 2025 21:13

Bangladeshi expatriates sent $1.93 billion in remittances in the first 22 days of February, according to Bangladesh Bank data.

In the past seven months, since July, remittance inflows have exceeded $2 billion per month for six consecutive months. February is also expected to surpass this mark.

During January, expatriates sent $2.19 billion in total remittances.

Of the $1.93 billion received so far in February, $686.98 million came through state-owned banks, $144.38 million through one of the two specialised banks (Krishi Bank), $1,094.29 million through private banks, and approximately $4.29 million through foreign banks.

However, nine banks did not receive any remittances during this period.

These include the state-owned Bangladesh Development Bank (BDBL) and the specialised Rajshahi Krishi Unnayan Bank. Among private banks, Community Bank, ICB Islami Bank, and Padma Bank failed to receive remittances, while in the foreign sector, Habib Bank, National Bank of Pakistan and State Bank of India recorded no inflows.

In December 2024, expatriates sent a record-breaking $2.64 billion in remittances, the highest-ever in Bangladesh's history.​

 

[Saif]

We won’t hesitate to take decisions for benefit of nation: NBR chief

National Board of Revenue (NBR) chairman Md Abdur Rahman Khan on Sunday categorically said his organisation will not hesitate to take any decision for the benefit of the country. “We are moving towards that direction,” he said while holding a pre-budget discussion with the Newspapers O

thefinancialexpress.com.bd

We won’t hesitate to take decisions for benefit of nation: NBR chief
UNB
Published :
Feb 23, 2025 19:32
Updated :
Feb 23, 2025 19:32

National Board of Revenue (NBR) chairman Md Abdur Rahman Khan on Sunday categorically said his organisation will not hesitate to take any decision for the benefit of the country.

“We are moving towards that direction,” he said while holding a pre-budget discussion with the Newspapers Owners’ Association of Bangladesh (NOAB) at the NBR office in Dhaka.

He mentioned that there are three reasons behind the lower tax-GDP ratio in the country. These are: huge number of tax exemptions and their misuse, short tax net for income tax and value-added tax (VAT) and operational inefficiency.

The NBR chief said that due to the tax exemption culture, the NBR gives away the same amount of money that it collects by taxation.

"We do not want to incur tax expenditure freshly,” he said.

Abdur Rahman Khan said that if anyone makes a small profit, then that person will pay a lower tax, which is the main ethos of the tax administration. He also said that due to the lack of automation, the NBR is still doing many of its duties manually.

While placing a budget proposal for the NOAB, its president AK Azad demanded reducing import duty on newsprint to two per cent, imposing VAT at 5 per cent instead of 15 per cent and writing off corporate tax or making it nominal in the newspaper industry, considering it a service industry.

Prothom Alo Editor Matiur Rahman and The Financial Express Editor Shamsul Huq Zahid also spoke.​