[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Exports edge up in further relief to economy

Bangladesh’s exports have shown resilience, displaying steady growth in key sectors such as garments, plastics and seafood in the first eight months of fiscal year (FY) 2024-25, somewhat defying global economic headwinds and domestic concerns like high inflation and political uncertainty.

www.thedailystar.net

Exports edge up in further relief to economy

Bangladesh's exports have shown resilience, displaying steady growth in key sectors such as garments, plastics and seafood in the first eight months of fiscal year (FY) 2024-25, somewhat defying global economic headwinds and domestic concerns like high inflation and political uncertainty.

In February, export earnings stood at $3.97 billion, a 2.77 percent year-on-year increase from $3.86 billion, according to data published by the Export Promotion Bureau (EPB) yesterday.

This development comes days after the Bangladesh Bank reported a jump in remittance inflows, which surged 25 percent year-on-year to $2.52 billion last month, offering much-needed relief to a strained economy.

Total exports in the first eight months of FY25 reached $32.94 billion, up 10.5 percent year-on-year.

Exports of the readymade garment (RMG) sector, Bangladesh's largest export earner, grew 1.66 percent last month.

Overall, apparel exports rose 10.64 percent to $26.79 billion in the July-February period compared to the preceding year.

In the same period, knitwear exports climbed 11.01 percent to $14.34 billion, while exports of woven garments increased 10.22 percent to $12.45 billion.

The RMG sector accounted for over 81 percent of total export earnings, yet again underlining its dominance in the country's export basket.

"The outlook of our garment exports is promising as work orders are rebounding," said Faruque Hassan, a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

However, he said law and order must be improved as international clothing retailers frequently raise concerns over security.

According to Hassan, the country is also benefiting from US President Donald Trump's tariff policies. Higher tariffs on Chinese and Mexican apparel exports to the US are redirecting orders to Bangladeshi manufacturers, he opined.

However, low pricing remains a key challenge, he mentioned.

Manufactured goods, which make up the bulk of exports, saw a 10.49 percent increase to $31.87 billion in the first eight months of the fiscal year. Key segments such as plastic products, rubber and headgear posted strong growth of 22.25 percent, 34.71 percent and 11.40 percent, respectively.

Leather and leather products showed mixed results. While total exports in this category rose 8.48 percent to $757.50 million, raw leather exports fell 8.68 percent.

In contrast, leather footwear exports surged 24.02 percent to $450.88 million, showing a shift towards higher-value products.

The engineering sector recorded a 7.48 percent rise, led by electric products and bicycle exports, which grew by 13.51 percent and 64.7 percent, respectively.

Specialised textiles, including knitted and woven fabrics, also saw strong growth, increasing 21.62 percent.

Terry towel exports grew by just 3.11 percent in the first seven months but plunged 41 percent in February to $1.5 million from $2.54 million a year earlier.

M Shahadat Hossain Sohel, chairman of the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association, linked the sector's declining competitiveness to rising production costs driven by increased gas and power prices and higher wages.

He said that corruption at customs, including bribes during raw material imports and product shipments, has further complicated the situation.

"Without immediate reforms and a reduction in production costs, the sector may struggle to remain competitive in international markets," Sohel commented.

RN Paul, managing director of RFL Group, said strong performance in the plastics sector was driven by export orders from new destinations.

Previously reliant on European markets, the industry has recently expanded to North America, Australia and parts of Africa.

Paul said RFL registered export growth of 35 percent in the past eight months and anticipates further expansion, particularly with the addition of new products such as toys.

Commenting on the export figures, Selim Raihan, executive director of the South Asian Network on Economic Modeling, expressed mixed sentiments.

The economist said that the sustainability of export growth remains uncertain due to challenges such as stagnant private investment, high inflation and security concerns. The upcoming general election adds to the macroeconomic uncertainty, he noted.

Still, Raihan said the export growth figures are encouraging although the earnings largely came from previous orders.​

 

[Saif]

Bangladesh may take advantage of global trade tension

The trade tension across the world is shifting the wind, and Bangladesh may rather take advantage of it, says an industry leader...

www.newagebd.net

Bangladesh may take advantage of global trade tension
United News of Bangladesh . Dhaka 04 March, 2025, 22:44

The trade tension across the world is shifting the wind, and Bangladesh may rather take advantage of it, says an industry leader.

‘At the same time focus and attention should be given on investments in the backward linkages,’ said Faruque Hassan, said Director of International Apparel Federation (IAF) in an analysis shared with the media on Tuesday.

He shared a detailed analysis of the European Union’s apparel import for the period from January to December 2024.

This data provides insights into the performance of various countries in the global apparel market and Bangladesh’s position within it.

This data reflects the EU’s imports from Bangladesh between January and December 2024, indicating goods that entered through EU ports during this timeframe.

The global apparel market has experienced a modest growth, with the total import value increasing by 1.53% from US$91.17 billion in 2023 to US$92.57 billion in 2024.

Bangladesh has also managed to achieve a growth of 4.86%, with export values rising from US$18.86 billion to US$19.77 billion, Hassan said.

China, the largest supplier to the EU, has shown a growth of 2.61 per cent (year on year), with exports increasing from US$25.41 billion to US$26.07 billion.

Notably, Cambodia and Pakistan have exhibited impressive performances, with growth rates of 20.73 per cent and 12.41 per cent respectively, which is significantly higher than Bangladesh. Vietnam and India grew by 4.21 per cent and 1.97 per cent respectively. Turkey experienced a 6.64 per cent decline during the mentioned period of time.

In terms of quantity, EU’s global import increased by 8.98 per cent, with Bangladesh showing a commendable growth of 10.18 per cent in the same period, while China surged higher than Bangladesh by 12.05 per cent.

However, the analysis said, on a unit price basis, Bangladesh has seen a decrease of 4.84 per cent, which is a point of concern.

In fact the unit price of EU’s global apparel import has gone down by 6.83 per cent, significantly influenced by the -8.43 per cent price slash by China.

The price cuts by Vietnam and Cambodia are also noticeable.

This may be noted that the EU-Vietnam Free Trade Agreement (FTA) has been in effect since 2021, granting Vietnam the preferential benefit of a gradual removal of tariffs by the EU. However, taking a closer look at the European Union market, we can observe the comparative shares of various suppliers.

The share of Bangladesh in EU’s apparel was 21.37 per cent of the EU’s total apparel imports in dollar value, which was 20.69 per cent in 2023.

China, being the leading supplier, accounted for about 28.12 per cent in 2024, which was 27.87 per cent in 2023.

Other notable suppliers include Vietnam with 4.66 per cent, and India with 4.89 per cent.

The analysis underscores the need for Bangladesh to focus on strategic initiatives to enhance competitiveness, said Hassan who served as the President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA).

While the growth in export volume is encouraging, the decline in unit prices is a challenge. ‘It is crucial that we explore opportunities to add value, improve operational efficiency, and tap into diversified markets to sustain growth,’ Hassan said.​

 

[Saif]

BB steps help boost remittance inflow

Against the fast depleting foreign exchange reserves of the country, some heart-warming reports are coming from the inward foreign remittance front. Notably, the precious inward hard currency that reportedly flowed into the economy last month amounted to US$2.528 billion. This is reportedly the fou

thefinancialexpress.com.bd

BB steps help boost remittance inflow
FE
Published :
Mar 04, 2025 23:06
Updated :
Mar 04, 2025 23:06

Against the fast depleting foreign exchange reserves of the country, some heart-warming reports are coming from the inward foreign remittance front. Notably, the precious inward hard currency that reportedly flowed into the economy last month amounted to US$2.528 billion. This is reportedly the fourth highest remittance receipt in a month recorded so far, while the highest receipt ever recorded was in December last year (2024) at US$2.638 billion, according the central bank. February's remittance receipt, too, marked a 23.8 per cent growth year-on-year. In the last eight months of the current fiscal year 2024-25, the total remittance inflow stood at US$18.49 billion, up from US$14.93 billion during the same period in the previous fiscal year.

Admittedly, the positive development in the country's second biggest forex earning source is welcome. It would hopefully cushion the economy against the multiple challenges arising from every conceivable sector. Now, the first thing this steady growth in remittance inflow can do is to provide some respite to the ever-declining forex reserve, which last month increased by 1.8 per cent to US$20.90 billion, calculated using IMF's so-called BPM6 method, says BB. No doubt, the enhanced remittance dollars have come in handy for the government to clear its overdue import bills, servicing foreign debt obligations, stabilising Taka against US dollar through intervening in the forex market and managing the economic shocks from the massive flight of capital, looting of banks and the overall destruction done to the economy by the previous dictatorial regime.

Increase in remittance, thanks to the BB's various regulatory measures, has arrested the decline in forex reserves as well as successfully kept the hundi operators at bay from diverting the flow of remittance dollars from the government-run formal banking channel to the so-called grey market. But the central bank has evidently witnessed a revolutionary transformation with the changing of the guard in the administration in the wake of the student-led upsurge. Hence is the rise in the remittance flow. It has also to be admitted at this point that migrant workers usually send higher amounts of remittance during the Ramadan and on other Muslim religious occasions so their families at home might meet extra expenses required during these special events. So far so good. But the central bank or the government for that matter should not be resting on its laurels, but must go the distance to arrest further raises in the exchange rate under the prevailing reference rate regime to avoid returning to a volatile forex market inviting speculators. That would again create the abhorred grey market to attract foreign remitters.

In addition to taking measures to assure optimal inflow of remittances from existing sources, the government needs also to work for expanding the foreign labour market as well as increasing skills training facilities for those workers who are already in the pipeline seeking overseas jobs. This should be complemented by preparing professionals, particularly in the IT sector, for grabbing jobs on offer in countries with fast aging population.​

 

[Saif]

We need a more self-reliant development model

Amid USAID funding cuts, government and NGOs should collaborate to keep key projects alive

www.thedailystar.net

We need a more self-reliant development model
Amid USAID funding cuts, government and NGOs should collaborate to keep key projects alive

VISUAL: STAR

Like many countries, Bangladesh was caught off guard by the speed and extent of USAID funding cuts under the Trump administration. Although there is no official data on how many people have lost, or may lose, their jobs due to the freezing of funds, estimates from the development sector suggest that between 30,000 and 40,000 people may be affected. This is deeply concerning, particularly because it will put significant strain on the economy.

According to diplomatic sources, USAID provides Bangladesh with $300-400 million annually for health, nutrition, agriculture, livelihoods, labour rights, human trafficking prevention, and democratic development. These funds have been instrumental in Bangladesh's progress in areas such as maternal health, climate resilience, and rural development. However, following Donald Trump's inauguration as US president on January 20, his administration swiftly suspended most USAID funding and activities, except for emergency food aid, including assistance for Rohingya refugees in Bangladesh. This move has not only left thousands of development workers unemployed but also cast severe doubt over the future of various development projects.

Many development projects currently facing an existential crisis are similarly essential not only for their beneficiaries but also for society at large. As such, the government must not allow them to collapse. It should instead conduct a thorough evaluation to identify the most critical initiatives and explore ways to sustain them. This could include direct government funding for the high-priority projects, partnerships with international organisations, or securing alternative donor support. NGOs, too, must adapt by assessing their efficiency, optimising operational costs, and exploring sustainable funding sources.

Many of these now-unfunded projects serve the most vulnerable segments of our society. Whether providing crucial immunisations, essential medicines, affordable birth control, or income-generating opportunities for the poor, their loss will have a far-reaching impact. Some projects also focus on promoting workers' rights or supporting labour-related cases. With funding now frozen, many of these labour rights initiatives could be sidelined, leaving workers even more vulnerable to exploitation. In a country like Bangladesh, where a significant portion of the workforce is employed in the informal sector with weak labour protections, this could be devastating.

Many development projects currently facing an existential crisis are similarly essential not only for their beneficiaries but also for society at large. As such, the government must not allow them to collapse. It should instead conduct a thorough evaluation to identify the most critical initiatives and explore ways to sustain them. This could include direct government funding for the high-priority projects, partnerships with international organisations, or securing alternative donor support. NGOs, too, must adapt by assessing their efficiency, optimising operational costs, and exploring sustainable funding sources. Without compromising beneficiary support, they should implement cost-saving measures and seek collaborations with the private sector, philanthropic institutions, and public-private partnerships to reduce dependency on foreign aid.

The USAID funding cuts have posed a serious challenge, but they also underscored the need for a more self-reliant development model. A coordinated approach by the government, NGOs, and the private sector is therefore essential to ensure that crucial programmes continue to serve those who need them most.​

 

[Saif]

US, UAE overtake Saudi Arabia as top remittance sources

The United States, the United Kingdom, and Saudi Arabia were the top sources of remittance inflows to Bangladesh in the first seven months of the 2024-25 fiscal year.

www.thedailystar.net

US, UAE overtake Saudi Arabia as top remittance sources

The United States, the United Kingdom, and Saudi Arabia were the top sources of remittance inflows to Bangladesh in the first seven months of the 2024-25 fiscal year.

According to Bangladesh Bank, total remittance inflows from the top 30 countries stood at $15.96 billion during the period.

Remittance inflows peaked in December before declining in January, likely due to post-festival slowdowns and economic adjustments.

The United States led with $2.9 billion in remittances from July 2024 to January 2025. Monthly inflows from the US peaked at $565.04 million in December before falling to $407.52 million in January.

The United Kingdom ranked second, with inflows totaling $1.47 billion. Migrant Bangladeshis in the UK sent home $248.48 million in December, which rose to $273.4 million in January.

Saudi Arabia followed closely, contributing $1.99 billion during this period. Inflows from the kingdom increased until December, reaching $290 million, but fell by 30 percent in January.

The United Arab Emirates ranked fourth, with total remittances at $2.27 billion. December inflows stood at $370.85 million before dropping to $249.56 million in January.

Among the top 10 contributors, Malaysia sent $876.14 million, while Kuwait followed with $867.14 million. Italy, Oman, Qatar, and Singapore also played significant roles.

Remittance from Italy surged in January to $131 million, the highest in seven months.

South Africa, Canada, and Australia contributed smaller amounts, with inflows totaling $175.16 million, $99.82 million, and $93.82 million, respectively.

Saudi Arabia has historically been the largest remittance-sending country for Bangladesh. However, in recent years, the UAE and the USA have emerged as the top sources, possibly due to the role of aggregators, said Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue.

When commercial banks offered to buy foreign currencies at premium exchange rates due to a shortage of supply, these aggregators saw an opportunity to purchase foreign currency from remitters and sell the bulk currency to banks at a premium rate, he said.

Dubai, in particular, has emerged as a key hub for aggregator activities, Rahman added.

"Suddenly, remittance flows from Saudi Arabia dropped sharply, while those from the UAE surged. This shift in remittance sources needs to be closely examined by the relevant authorities."

Mohammad Ali, managing director and CEO of Pubali Bank, told The Daily Star that the US, the UK, and Saudi Arabia remain the top remittance sources as they host the highest number of Bangladeshi migrants.

Remittance inflows typically rise before festivals and winter as migrants send money home for Eid, Durga Puja, and winter weddings, he said.

Remittance Trends

Bangladesh's economy remains heavily reliant on remittances, with traditional markets playing a key role in inflows.

Remittance inflows have undergone dynamic shifts from FY2016-17 to FY2024-25, influenced by global economic trends, migration policies, and labor market conditions.

The UAE, Saudi Arabia, and the US have consistently remained top contributors, with inflows rising over the years.

In FY2016-17, remittances from the UAE stood at $2.09 billion, increasing to $3.01 billion by FY2022-23. Saudi Arabia's inflows rose from $2.26 billion in FY2016-17 to $3.75 billion in FY2022-23. The US saw a steady increase, reaching $2.96 billion in FY2022-23.

While some corridors have shown consistent growth, others have fluctuated.

Kuwait's remittances grew modestly from $1.03 billion in FY2016-17 to $1.55 billion in FY2022-23. Malaysia recorded little variation, maintaining inflows around $1.25 billion during the same period.

European countries such as the UK and Italy have remained strong sources. The UK's inflows increased from $808.2 million in FY2016-17 to $2.08 billion in FY2022-23.

Italy's contribution more than doubled, rising from $510.8 million to $1.18 billion during the same period.

Emerging and Declining Sources

South Korea, Japan, and Australia have emerged as growing remittance sources. South Korea, which recorded $80.7 million in FY2016-17, surged to $116.4 million in FY2023-24.

Japan also saw a rise in inflows, while Australia followed an upward trend.

Conversely, some Middle Eastern nations have experienced fluctuations. Qatar saw a decline after an initial rise. Oman, which recorded $897.2 million in FY2016-17, fluctuated, standing at $766.3 million in FY2024-25.

The number of aggregators has increased since the onset of the Covid-19 pandemic, as global foreign currency markets became more volatile, the Pubali Bank managing director said.

Money changers in Qatar or Oman may have used channels of US-based aggregators to send foreign currencies to Bangladesh, leading to a drop in remittance inflows from Qatar and Oman while increasing inflows from the USA, he said.​

 

[Saif]

Factories shut after July uprising struggle to reopen

Mills and factories that were vandalised, ransacked or set ablaze during and after the July uprising have been struggling to reopen due to financial crises, unavailability of bank loans and their politically exposed owners facing legal consequences.

www.thedailystar.net

Factories shut after July uprising struggle to reopen

Mills and factories that were vandalised, ransacked or set ablaze during and after the July uprising have been struggling to reopen due to financial crises, unavailability of bank loans and their politically exposed owners facing legal consequences.

Nearly 1 lakh workers were employed in these production lines, many of which now remain closed, leaving employees to bear the brunt of the disruptions.

These attacks took place following the political changeover in August last year and during labour unrest from July to October last year.

As the industries have not been in operation for the past seven months, banks are not allowing these production units to open letters of credit (LCs) or seek loan rescheduling facilities, forcing them to endure a severe shortage of working capital.

Moreover, the owners of these industrial units are either in jail or have fled abroad due to their political ties to the previous Awami League government.

Major affected factories include 14 textile and garment factories of Beximco Group, five tyre factories of Gazi Group, three plastic factories of Bengal Group and several garment factories in Ashulia, Savar, Zirabo and Zirani.

The Daily Star spoke to members of the senior management of some affected factories, including Gazi Group.

Muhammad Fakhrul Islam, executive director (finance) of Gazi Group, said they have begun reconstructing the factories with plans to reopen within the next three to four months.

The group has been trying to reschedule a Tk 1,800 crore bank loan to resume operations. "Once we restart the business, repayment of the loan will be easy," Islam said.

Losses from the burning and looting of five Gazi Group factories in Rupganj of Narayanganj in August last year amounted to over Tk 2,000 crore.

The factories of Gazi Tyre, Gazi Tank, Gazi Pipe, Gazi Door and several warehouses were destroyed, allegedly owing to the political influence of Golam Dastagir Gazi, former minister of textiles and jute, who is now in jail.

In the case of Beximco Group, the government is set to make the final wage and service benefit payments totalling Tk 525.46 crore to 31,669 workers and 1,565 officials from March 9.

Following the ouster of the Awami League government in early August last year, Beximco Group found itself in hot water.

Its Vice-Chairman Salman F Rahman, who is now behind bars, was an influential adviser to deposed prime minister Sheikh Hasina. He faces charges of murder, graft, and using political influence for personal business gain.

After the fall of the Awami League, financial irregularities linked to Rahman and his business empire came to light, with Beximco Group's bad loans amounting to at least Tk 40,000 crore.

Top officials of the now cash-strapped group said they have repeatedly requested the government to allow them to open back-to-back LCs to resume business on a limited scale.

Khalid Shahrior, head of human resources (HR) and compliance for Beximco Group's textile and garment division, said, "It is important to run the factories, regardless of who owns them, to save the employees and their families.

"Despite multiple requests, the government has not permitted the business to resume," he said.

Meanwhile, Md Jashim Uddin, vice-chairman of Bengal Group, said three factories producing plastic goods, cement bags, packaging materials, and the group's central warehouse were burned down in August last year.

More than 2,000 workers were employed in these Zirani-based units, generating Tk 80 crore in monthly revenue.

Jashim Uddin, also a former president of the Federation of Bangladesh Chambers of Commerce and Industry, said he needs to reschedule Tk 400 crore in bank loans as he plans to rebuild factories and buy new machinery.

Syed Rezaul Hossain Kazi, managing director of Big Boss, an export-oriented garment factory, said his factory incurred a Tk 60 crore loss in post-August damages.

The factory managed to resume production within days as the losses were covered by insurance.

Currently, 12,000 workers are employed at Big Boss, and Kazi said he did not face major issues with loan repayment as his factory restarted operations.

However, many affected garment factories were unable to do the same.

For example, at least four garment factories that were severely damaged have not resumed production, said Mohiuddin Rubel, former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He declined to name these factories, saying they "were not allowed to reopen due to political reasons".

AHM Shafiquzzaman, secretary to the Ministry of Labour and Employment, said the government has provided Tk 127 crore in primary financial support to five companies, including Birds, Dird, Yellow of Beximco and TNZ.

However, he said the government is now pressuring these companies to repay the loans as the six-month tenure is coming to an end.

"If they fail to repay the loans on time, the government will attempt to sell the properties these companies used as collateral when borrowing," he said, adding that some units are operational and capable of repaying their debts.

Almost all affected garment factories have resumed operations, except for a few whose owners are either abroad or burdened with high outstanding loans, said Md Anwar Hossain, administrator at BGMEA.

Besides, some factories have remained shut since July last year, due mainly to financial losses from production halts caused by labour unrest and vandalism, he said.

Brigadier General (Rtd) M Sakhawat Hussain, adviser to the Ministry of Labour and Employment, said his ministry has worked on labour issues with many factories and provided financial aid to some to pay wages.

However, providing financial support to all affected factories is not possible due to their outstanding bank loans, he said. "Still, if any factory approaches the ministry, we will try to assist."

Regarding the government's financial support for workers' wages and benefits, he said it was done on humanitarian grounds, as selling shares of these companies is complex and time-consuming.

He also said that Beximco Group's default loans are too high for the government to risk major financial intervention to restart its operations.​

 

[Saif]

Augmenting export earnings

Before apportioning blame to others, the businesspeople in the sector should pay a greater attention to bring its own house in order A 10.53 per cent rise in the country's export earnings to $32.94 billion in the first eight months of the current fiscal year on the back of an augmented rem

thefinancialexpress.com.bd

Augmenting export earnings
FE
Published :
Mar 05, 2025 23:17
Updated :
Mar 05, 2025 23:17

Before apportioning blame to others, the businesspeople in the sector should pay a greater attention to bring its own house in order

A 10.53 per cent rise in the country's export earnings to $32.94 billion in the first eight months of the current fiscal year on the back of an augmented remittance received during the same period provides a sense of relief at the time the economy is wobbling. Even the export earnings for this February recorded a 2.27 per cent year-on-year increase to US$3.97 billion compared with US$3.86 billion in the same month the previous year. Not surprisingly, the number one export commodity of the country, readymade garment (RMG) led the way by recording a 10.64 per cent growth. Taking into account the single month's export growth for February, the knitwear sub-sector registered a growth of 1.66 per cent to $3.24 billion compared to the same month the previous year. However, the woven garment articles experienced a slightly negative growth at 0.44 per cent.

The overall export growth during the first eight months of the fiscal year 2024-25, according to the sector's businesspeople, is a proof of the country's 'resilience and competitiveness on the global export market'. It is so because, the sector has defied the labour unrest, scarcity of gas and a lack of cooperation from banks. So far as labour unrest is concerned, it is the dark horses in the sector which have actually perpetuated the problem. With the highest number of leadership in energy and environmental design (LEED)-certified RMG green factories at 235 in the world by January 25, 2025, the country should have been in the forefront of receiving orders and other supports from the international buying platforms like the Alliance and Accord. Both of them played a pivotal role in transforming the safety standard of garment factories here and also transitioning into the green status. But unfortunately, the same impetus is lacking in matters of placing orders, offering higher prices commensurate with the improved status in workplace safety and helping market commodities produced in these factories.

Garment units must take the blame for not streamlining recruitment policies and procedures and solving the endemic labour unrest. Had these fundamental issues been addressed on a priority basis, even the last year's political unrest would not have left an adverse impact so telling. Vietnam has made tremendous gains from the Western world's China-bashing policy and even India has grabbed a good slice of the global garment business. So, before apportioning blame to others, the businesspeople in the sector should pay a greater attention to bring its own house in order. Together with upscaling products, the systemic improvement can help fetch far higher amounts of forex.

Finally, the reliance on RMG for foreign exchange earnings is overwhelming. Export diversity focusing on leather, pharmaceuticals, frozen fish, processed foods, plastic products---all of which have high potential---is the name of the game for raising income from export in a competitive world. Apart from the unskilled, semi-skilled and skilled workers the country is used to sending abroad, it is time to push for placement of professionals in the high-end job market. In this context, the graduates and masters in technology-based subjects such as computer science, IT, physics, applied physics should be targeted for their employment abroad. Countries like Germany and Japan with aging populations need such professionals on an emergency basis. Bangladesh must seize the opportunity to boost its hard currency earning.​

 

[Saif]

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers’ purchasing power.

www.thedailystar.net

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers' purchasing power.

Last month, the Consumer Price Index (CPI), which measures changes over time in the prices paid by consumers, dropped to 9.32 percent from January's 9.94 percent, according to data released yesterday by the Bangladesh Bureau of Statistics (BBS).

Inflation has persisted above 9 percent since March 2023.

Last July, consumer prices witnessed the sharpest jump in 14 years, hitting 11.66 percent, data from the statistical agency showed.

The latest drop was mainly driven by a reduction in food inflation, which stood at 9.24 percent in February, down from 10.72 percent the previous month.

However, non-food inflation showed an upward trend, increasing to 9.38 percent in February from 9.32 percent in January, indicating that services continue to put pressure on household budgets.

"The easing of inflation reflects the increased supply of commodities in the kitchen market," said Prof Selim Raihan, executive director at the South Asian Network on Economic Modeling, a think tank.

The availability of winter vegetables and certain spices has played a positive role in the commodity market, contributing to reductions in food inflation, he said.

"This situation clearly shows what we have been saying for a long time—that supply-side issues are a major driver of our inflation," Raihan said, adding that such problems could not be addressed solely through monetary policy.

However, he remained unsure about the trend, saying inflation above 9 percent is still very high.

"I am still not confident that inflation has declined due to policy measures. The seasonal effect will fade, and prices may rise again," he said.

"Once the seasonal supply diminishes, market prices will increase unless we address the fundamental causes of inflation and ensure proper coordination between monetary policy, fiscal policy, and market supply," he warned.

According to Raihan, the decline in inflation has been marginal.

"If you look at major commodities such as rice, lentils, oil, chicken, beef, and fish, prices have not decreased. In some cases, they have even increased," he said.

"From this perspective, I am not confident that we are taking enough steps to combat inflation."

However, Ashikur Rahman, principal economist of the Policy Research Institute of Bangladesh, believes that the government's contractionary monetary policy has played a role in this reduction.

"The contractionary monetary policy, along with a significant jump in imports, has played a role in easing inflation," he said.

There was a significant increase in imports during December and January, he said, adding that the relaxation of import policies over the past three months has shown good results, reducing supply chain disruptions.

"Now, Bangladesh Bank may not have strong justification to further raise policy rates. If this trend continues, we might see a slight reduction in the policy rate by June," he said.

Currently, the policy rate stands at 10 percent. In the last monetary policy statement, the central bank refrained from any further hikes after witnessing a declining trend in inflation since December.

However, Rahman warned that electricity supply remains a major challenge ahead.

"If the electricity supply remains stable and agricultural output performs well, keeping inflation below double digits would be a positive outcome."

So, the government needs to effectively manage supply chain disruptions and ensure stability in the power sector to improve the overall situation, he said.​

 

[Saif]

US top remittance source in February

Bangladeshi expatriates in the United States (US) sent home the highest remittance amounting to US$491.26 million in February, according to Bangladesh Bank (BB) data. Following the political changeover in August, remittance inflows from the US have seen a significant rise, enabling the US to surpa

thefinancialexpress.com.bd

US top remittance source in February
BSS
Published :
Mar 06, 2025 19:42
Updated :
Mar 06, 2025 19:42

Bangladeshi expatriates in the United States (US) sent home the highest remittance amounting to US$491.26 million in February, according to Bangladesh Bank (BB) data.

Following the political changeover in August, remittance inflows from the US have seen a significant rise, enabling the US to surpass the United Arab Emirates (UAE), which had long been the leading source of expatriate income.

The UAE was in the second position with a total of $334.94 million in remittances sent to Bangladesh in the previous month.

The expatriates in the Kingdom of Saudi Arabia (KSA), the country which hosts most of the Bangladeshi migrant workers, sent around $328.84 million in remittances, putting the country in third place.

Bangladesh received $305.52 million in remittances from the expatriates in United Kingdom, making it the fourth-highest remittance sender in the month, while Malaysia was in the fifth position as expatriate from Malaysia sent $183.87 million remittances in February.

The other top 10 countries for sending remittances to Bangladesh are Kuwait, Oman, Italy, Qatar, and Singapore in that order.

According to the latest BB data, Expatriate Bangladeshis sent US$2,528 million remittances in February, which was around 25 per cent higher than the corresponding month of the previous year.

The wage earners sent $2,022 million remittance to the country in February of 2024.

With the latest addition, the year-on-year growth in receiving remittances increased at 23.8 per cent for the first eight months, July to February, of the ongoing fiscal year (FY25) as the country received $18,490 million in total during the period. Last year, it was $14,935 million.

BB said in its monthly report on remittance inflows that in the current political and economic landscape, marked by inflationary pressures, exchange rate fluctuations, and rising import costs, remittances have provided much-needed relief.

The foreign currencies bolstered foreign currency reserves and supported millions of households across the country, it said.

“The steady flow of remittances has been a stabilising factor, contributing to poverty reduction, improved living standards, and regional development,” said the report.

“In the context of the ongoing economic recovery post-pandemic, coupled with political transitions, remittances are even more critical in sustaining economic growth, ensuring liquidity in the banking sector, and reducing reliance on external borrowing,” it added.

The United Arab Emirates (UAE) was the largest source of remittance during this period, followed by the US.

The report said inward remittances from Bangladeshi expatriates are very significant for the nation... Expatriates’ remittances are one of the largest sources of foreign currency.

The BB suggested targeted strategies to support the migrant workforce, enhance the economic benefits of remittances, improve the financial inclusion of recipients, and address the needs of migrant workers abroad.

Talking to BSS, Deputy Managing Director (DMD) of the Premier Bank PLC Abdul Quaium Chowdhury said the flow of remittances into the country shows upward trend as the government has taken measures to streamline the legal channel for encouraging non-resident Bangladeshis (NRBs) to send money to the country.​

 

[Saif]

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers’ purchasing power.

www.thedailystar.net

Inflation eases but remains above 9% for 24th month

Inflation eased in February but remained above the 9 percent mark for the 24th straight month as the rising prices of goods and services continue to erode consumers' purchasing power.

Last month, the Consumer Price Index (CPI), which measures changes over time in the prices paid by consumers, dropped to 9.32 percent from January's 9.94 percent, according to data released yesterday by the Bangladesh Bureau of Statistics (BBS).

Inflation has persisted above 9 percent since March 2023.

Last July, consumer prices witnessed the sharpest jump in 14 years, hitting 11.66 percent, data from the statistical agency showed.

The latest drop was mainly driven by a reduction in food inflation, which stood at 9.24 percent in February, down from 10.72 percent the previous month.

However, non-food inflation showed an upward trend, increasing to 9.38 percent in February from 9.32 percent in January, indicating that services continue to put pressure on household budgets.

"The easing of inflation reflects the increased supply of commodities in the kitchen market," said Prof Selim Raihan, executive director at the South Asian Network on Economic Modeling, a think tank.

The availability of winter vegetables and certain spices has played a positive role in the commodity market, contributing to reductions in food inflation, he said.

"This situation clearly shows what we have been saying for a long time—that supply-side issues are a major driver of our inflation," Raihan said, adding that such problems could not be addressed solely through monetary policy.

However, he remained unsure about the trend, saying inflation above 9 percent is still very high.

"I am still not confident that inflation has declined due to policy measures. The seasonal effect will fade, and prices may rise again," he said.

"Once the seasonal supply diminishes, market prices will increase unless we address the fundamental causes of inflation and ensure proper coordination between monetary policy, fiscal policy, and market supply," he warned.

According to Raihan, the decline in inflation has been marginal.

"If you look at major commodities such as rice, lentils, oil, chicken, beef, and fish, prices have not decreased. In some cases, they have even increased," he said.

"From this perspective, I am not confident that we are taking enough steps to combat inflation."

However, Ashikur Rahman, principal economist of the Policy Research Institute of Bangladesh, believes that the government's contractionary monetary policy has played a role in this reduction.

"The contractionary monetary policy, along with a significant jump in imports, has played a role in easing inflation," he said.

There was a significant increase in imports during December and January, he said, adding that the relaxation of import policies over the past three months has shown good results, reducing supply chain disruptions.

"Now, Bangladesh Bank may not have strong justification to further raise policy rates. If this trend continues, we might see a slight reduction in the policy rate by June," he said.

Currently, the policy rate stands at 10 percent. In the last monetary policy statement, the central bank refrained from any further hikes after witnessing a declining trend in inflation since December.

However, Rahman warned that electricity supply remains a major challenge ahead.

"If the electricity supply remains stable and agricultural output performs well, keeping inflation below double digits would be a positive outcome."

So, the government needs to effectively manage supply chain disruptions and ensure stability in the power sector to improve the overall situation, he said.​

 

[Saif]

How Bangladesh can meet its revenue targets

The income tax law in Bangladesh is strict, some might even say, excessively so. It makes provisions for aggressive measures such as disconnecting gas, electricity and water services for taxpayers who fail to pay their dues. If taxpayers miss the deadline for filing returns, even their non-taxable

thefinancialexpress.com.bd

How Bangladesh can meet its revenue targets
SYED MUHAMMED SHOWAIB
Published :
Mar 07, 2025 21:36
Updated :
Mar 07, 2025 21:36

The income tax law in Bangladesh is strict, some might even say, excessively so. It makes provisions for aggressive measures such as disconnecting gas, electricity and water services for taxpayers who fail to pay their dues. If taxpayers miss the deadline for filing returns, even their non-taxable income shall be treated as taxable. The law is rigid but despite its rigidity, revenue collection remains stubbornly below target.

The numbers speak for themselves. According to a report carried in the FE, in the first six months of the current fiscal year, the target for income tax collection was Tk 766.7 billion (Tk 76,670 crore). However, only Tk 521.62 billion (Tk 52,162 crore) was collected which is just 68 per cent of the target. This shortfall underscores the widening gap between ambition and reality. In a nation with an expansionary budget and mounting debt obligations, the government's reliance on income tax revenue is vital. Failing to meet targets creates a significant fiscal strain.

The problem, however, is not a lack of intent. The National Board of Revenue (NBR) has tried to widen the tax net by linking return submissions to essential services. Proof of Submission of Return (PSR) is now mandatory for accessing 43 essential services, including bank loans exceeding Tk 20 lakh and trade licence renewals in city corporations and municipal areas. But the results of this requirement have been underwhelming. This year, only 3,973,757 returns were filed. The fact that the country's 12 million Tax Identification Number (TIN) holders are mandatorily required to submit returns, but two-thirds of them do not do so points to a systemic problem.

A significant portion of the non-filingTIN holders earn well above the tax-free threshold. However, the NBR's efforts to identify such taxpayers have historically been fragmented. Several years ago, in an attempt to address this, NBR initiated a data-sharing programme with other government organisations. This initiative aimed to cross-reference existing databases to obtain relevant financial and asset-related information. Consequently, they secured access to the Bangladesh Road Transport Authority (BRTA) database and the Dhaka Power Distribution Company (DPDC) database. Through BRTA's database, the NBR is able to retrieve records of individuals who own or had previously owned motor vehicles, thereby gaining insights into their financial capacity. Similarly, access to the DPDC's database allows them to collect data on a portion of electricity consumers residing within the jurisdiction of the Dhaka City Corporation. This yielded partial information on approximately 1.02 million individuals with electricity connections and 1.5 million individuals who own or have owned motor vehicles. However, this is merely scratching the surface. Despite the success of this initiative, the NBR has yet to extend its access to other crucial government databases that could significantly enhance its ability to expand the tax base.

Apart from DPDC, five other power distribution companies in the country --DESCO, NESCO, WZPDCL, REB, and PDB -- along with six major gas distribution companies -- TITAS, KGDCL, Jalalabad Gas, Bakhrabad Gas, PGCL, and SGCL --hold valuable records of millions of consumers. These databases could provide crucial insights into consumer spending patterns, revealing not only who is utilising electricity and gas connections, but also the annual expenditure on these essential services. Such information could serve as a strong indicator for potential taxable income and would allow for targeted enforcement.

This is particularly relevant in city corporation areas, where tens or even hundreds of thousands of property owners collect rental income. Many of them are TIN holders who fail to submit returns, while others operate without a TIN altogether. It follows that analysing these datasets would enable the tax authorities to identify those underreporting income or evading taxes.

As it stands, salaried individuals are less likely to evade taxes on their salary income compared to those whose income does not come in the form of a paycheque. This is because employers maintain databases containing salary information and are legally obligated to withhold a portion of their employees' earnings as income tax. Accessing utility service databases could create a similar level of transparency for many other taxpayers. For example, using these databases tax officials can gather crucial usage information during investigation or assessment stages. Multiple gas and electricity connections for a single taxpayer may indicate property ownership, suggesting one or more buildings or multiple units, potentially generating rental income. Conversely, a single connection may imply apartment ownership. Furthermore, for businesses where gas or electricity is essential to operations, inconsistencies between utility usage and reported earnings would provide strong evidence of potential income concealment.

At some point the NBR can utilise advanced analytics to process data from these databases. While manual audits offer certain advantages in discrepancy detection, automation would complement these efforts, minimising resource strain and the risk of oversights.

With accurate data in hand, the NBR can then enforce the law's stringent measures more effectively. The threat of utility disconnection becomes a credible deterrent when backed by solid evidence of non-compliance. This closes loopholes that allow tax dodgers to slip through the cracks. For the system to gain public credibility, however, penalties must be applied consistently -- prioritising habitual offenders who defy tax responsibilities despite clear capacity to pay.

Bangladesh's income tax law is relatively new. It replaced the decades-old 1984 ordinance in 2023 with the promise of higher revenue and a more effective system. Strengthening data-driven enforcement would be a positive step towards making that promise a reality. But demanding compliance alone is not enough, ensuring the availability of appropriate data to identify non-compliance is just as vital. Without this, even the strictest laws will remain ineffective, and revenue targets will continue to elude attainment.​

 

[Saif]

Macroeconomic policies amid interim incumbency

Navigating the labyrinth of macroeconomic management is particularly challenging during periods of interim leadership. The fine equilibrium between fiscal, monetary, and structural policies takes on heightened significance.

www.thedailystar.net

Macroeconomic policies amid interim incumbency

Navigating the labyrinth of macroeconomic management is particularly challenging during periods of interim leadership. The fine equilibrium between fiscal, monetary, and structural policies takes on heightened significance.

This delicate balance of tightening and loosening measures, coupled with the alleviation of binding structural constraints, is pivotal in shaping the economic path. It impacts everything from inflation trends to public sentiment and confidence.

Encouraging but not reassuring

The February inflation data, while somewhat promising, does not convincingly indicate a shift towards a disinflationary trend.

The overall inflation rate fell due to a decline in food prices for the second consecutive month since December 2024. However, non-food inflation rose, with increases in categories such as clothing, footwear, health, recreation, and miscellaneous items.

As a result, the overall state of inflation remains concerning, with no clear evidence from the data suggesting a need for a monetary policy shift.

The deflation in food prices, particularly during peak supply seasons, is likely temporary, along with the diminishing effects of recent floods.

Lower tax rates on some essential food items, import liberalization, and exchange rate stability also contribute to the reduction in inflation.

The rise in non-food inflation likely reflects the recent VAT rate increases and heightened demand driven by booming remittances.

Given the evolving nature of these factors, it is evident that the current inflationary pressures require maintaining a tight monetary policy.

The persistence of non-food inflation underscores the complexity of the inflation landscape, where selective price reductions are insufficient to mitigate overall inflationary trends.

The jury is out on policies

Recently, the Bangladesh Bank reduced the cash reserve ratio to 3 percent on a daily basis while maintaining a bi-weekly average of 4 percent.

The policy rate has remained unchanged at 10 percent, with a 300-basis-point corridor since October 2024. Positive real terms for the nominal policy rate were observed only in January and February, at 0.06 percent and 0.68 percent, respectively.

The yield curve for government bonds experienced a downward shift, exhibiting fluctuations as government borrowing from banks decreased and there was a heightened aversion to private credit risk exposure.

Students of macroeconomic principles should retain their faith in the power of tight monetary policies to mitigate inflation.

The inescapable inference is that the real policy rate has not been sufficiently high nor maintained positive long enough to evaluate its success.

Its outcomes could either lead to a high societal cost or achieve the desired effect with minimal collateral damage.

Policymakers must rely on prevailing economic wisdom, remaining flexible and open-minded in their approach.

There is significant room for improvement in monetary-fiscal coordination to combat inflation. The upcoming FY26 budget must tackle this challenge directly.

If our primary aim is stabilisation, there is little room for risky policy moves such as broad subsidy expansion or major tax cuts, especially when the key factors that influence incentivisation, redistribution, or inflation reduction remain unchanged.

The agenda for action

Without structural policy reforms that eventually lead to productivity enhancements in the foreseeable future, or ideally right away, there is minimal scope for increasing overall spending beyond Tk 7-7.25 lakh crore in FY26.

This presumes that the budget deficit cannot exceed Tk 2-2.25 lakh crore and that revenues surpassing Tk 5 lakh crore are unattainable. Financing even this level of deficit will exert pressure on the flow of credit to the private sector unless deposit growth significantly exceeds the Tk 1.23 lakh crore observed over the twelve months ending December 2024 and/or net foreign financing accelerates beyond its usual pace.

The FY26 budget will serve not only as a litmus test for the interim government's fiscal prudence but also reflect its dedication to enacting the economic reforms proposed in the White Paper and the Task Force Report.

The core issue is not the novelty of the recommendations but their relevance and feasibility. Relevance encompasses understanding the appropriate timing for each high-level recommendation, while feasibility involves translating the recommendations into practical steps.

Disregarding the recommendations on the grounds of their perceived lack of novelty amounts to disengagement from reform. This is not the case in areas such as banking, energy, taxation, and public expenditure, where progress, though slow, is indeed occurring.

However, they remain inconspicuous because their results are not immediately apparent.

What is their incentive?

Structural reforms necessarily involve short-term hardships for long-term gains. Given that the interim government will bear the brunt of these hardships, what incentive does it have to expedite the completion of these reforms, knowing it will not be in power post-election?

An interim government not elected by the populace, freed from the pressures of seeking re-election, is unencumbered by the populist motivations that often pivot reigning incumbents against reforms.

This temporary administration is uniquely positioned to take decisive action, as its most significant risk is the cessation of its governance, which is inevitable anyway.

However, it may still find it difficult to avoid populist measures, either due to a genuine, albeit potentially misguided, belief in their ability to enhance social welfare through such measures or because such decisions serve certain interests best. The path of least resistance could be tempting if it exists. These are the so-called "low-hanging fruits." The risks and rewards associated with all these options are, if anything, uncertain.

One legacy the interim government would fervently wish to avoid is bequeathing a macroeconomic landscape as dismal as the one it inherited.

Should this eventuality transpire, the populace's inevitable inquiry will resonate: "What did you accomplish, Sirs?" Thus, there exists no refuge from risk. We harbour the hope that the interim government's economic management team will align themselves with the right side of history regarding economic policy and institutional reforms.​

 

[Saif]

BANGLADESH INVESTMENT SUMMIT: IMS likely to be hired on direct purchase method

The government is likely to appoint the Integrated Marketing Service Ltd for management of the upcoming ‘Bangladesh Investment Summit 2025’ to be held in the capital in Aril 7-10, said officials.

www.newagebd.net

BANGLADESH INVESTMENT SUMMIT: IMS likely to be hired on direct purchase method
Staff Correspondent 08 March, 2025, 23:10

The government is likely to appoint the Integrated Marketing Service Ltd for management of the upcoming ‘Bangladesh Investment Summit 2025’ to be held in the capital in Aril 7-10, said officials.

Last week, the Bangladesh Investment Development Authority received consent from the advisory council on economic affairs for appointing a firm with the direct purchase method with an estimated contract price of Tk 2.12 crore.

BIDA’s previous bid to select a firm through open tendering in January failed to bring any desired outcome.

Officials said that the Integrated Marketing Service Ltd along with 10 other firms competed in the tender but failed to meet all criteria of the tender.

Because of shortage of time, BIDA is going seek the advisory council of the government purchase soon to appoint the Integrated Marketing Service Ltd on the direct purchase method.

IMS executive director Nazmus Sakib Rahman on Saturday said that they were not aware about the development regarding the appointment of their company in the upcoming event management.

Admitting that they have competed in the bid, he said that he could only explain the nature of management once his company signed a contract with the BIDA.

Chief adviser Muhammad Yunus is expected to inaugurate the event.

BIDA expects that they will redefine the future of investment in Bangladesh, one of the world’s most dynamic markets, by the event to be participated by investors at home and abroad.

The event is going to be arranged against the backdrop that the foreign direct investment flow to the country in FY23–24 dropped to a decade low amid negative credit rating, dollar shortage, political uncertainty, inefficient bureaucracy, and corruption.

The FDI, however, in FY23–24 fell by 8.80 per cent to $1.47 billion from $1.6 billion in FY22–23 and $3.44 billion in FY21–22, according to Bangladesh Bank.

The FDI flow in FY23–24 has been the lowest in the past decade.

In FY13–14, the country received $1.48 billion, according to the central bank.

The last BIDA summit-- the International Investment Summit—was held in November 2021. In 2023, the Bangladesh Securities and Exchange Commission and the BIDA held a roadshow in Japan to reach out to non-resident Bangladeshi investors and attract foreign investment.​