[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

BEPZA to start allocating plots in Jashore EPZ in 2026

Bangladesh Export Processing Zones Authority (BEPZA) is expected to start allocating plots for investors in Jashore Export Processing Zone (EPZ) by the end of 2026. “The land development works of Jashore EPZ will start soon after completing the tender process. Despite the low land of the EPZ

thefinancialexpress.com.bd

BEPZA to start allocating plots in Jashore EPZ in 2026
BSS
Published :
Apr 18, 2025 17:48
Updated :
Apr 18, 2025 17:48

Bangladesh Export Processing Zones Authority (BEPZA) is expected to start allocating plots for investors in Jashore Export Processing Zone (EPZ) by the end of 2026.

“The land development works of Jashore EPZ will start soon after completing the tender process. Despite the low land of the EPZ area, I think, we can start allocating plots for investors from the end of 2026. Factory construction work and land development will continue simultaneously,” said BEPZA Executive Chairman Major General Abul Kalam Mohammad Ziaur Rahman.

In a recent interview with BSS, Ziaur Rahman said the government has taken the initiative to establish the EPZ in Jashore to attract US$2 billion in foreign direct investment and achieve $2.4 billion in annual exports.

Once fully operational, the EPZ, is being set up on an area spanning around 503 acres of land in Abhaynagar upazila, which will create direct employment opportunities for 1.5 lakh local people and indirect employment for another three lakh people, he added.

He said around 400 industrial plots will be developed in the EPZ.

Ziaur Rahman, however, said BEPZA is establishing the EPZ in Jashore for the socio-economic development of the southwestern region of the country.

Establishing EPZs in the southwest of the country and making use of the Padma Bridge will contribute to the balanced development of the country, he added.

The Executive Committee of the National Economic Council (ECNEC) approved the Taka 1,642.73 crore projects in November 2023.

BEPZA is a government body empowered and responsible for the creation, development, operation and management of industrial zone like Export Processing Zones as well as the promoting investment in Bangladesh.

Over the past four decades, BEPZA has established a remarkable track record attracting investment from 38 countries to its nine zones consistently generating 18-20 percent of the country’s annual exports.

The nine zones are Chattogram EPZ, Dhaka EPZ, Mongla EPZ, Uttara EPZ, Ishwardi EPZ, Cumilla EPZ, Adamjee EPZ, Karnaphuli EPZ and BEPZA EZ.

At present, investments in 448 industries in these EPZs amount to more than $6.96 billion. These zones produce export goods worth $116.30 billion.

Around 5.30 lakh skilled workers in the country’s EPZs are manufacturing multi-variety products for world-famous brands.​

 

[Saif]

Bangladesh and its future economy: addressing the challenges

Despite facing political challenges, Bangladesh has shown remarkable economic resilience with an impressive economic growth. However, structural weaknesses persist. Bangladesh's low rankings on global indices, such as 108th in the International Property Rights Index and 127th in the Economic Freedo

thefinancialexpress.com.bd

Bangladesh and its future economy: addressing the challenges
Shahriar Kabir, Mahfuz Kabir and Carmelo Ferlito
Published :
Apr 19, 2025 22:34
Updated :
Apr 19, 2025 22:34

Despite facing political challenges, Bangladesh has shown remarkable economic resilience with an impressive economic growth. However, structural weaknesses persist. Bangladesh's low rankings on global indices, such as 108th in the International Property Rights Index and 127th in the Economic Freedom of the World Index, reflect a poor state requiring urgent battention. Furthermore, the country's tax-to-GDP ratio remains merely around 8 per cent, which is one of the lowest in South Asia, significantly below the Asia-Pacific average of 19.3 per cent and the OECD average of 34 per cent highlighting the limitations of its fiscal policy.

Since its independence, labour migration has been crucial for increasing household incomes, reducing poverty, and fostering micro-enterprises in Bangladesh. Additionally, remittances have become a primary source of foreign currency for the country. The steady growth of remittance inflows over the years has not only bolstered Bangladesh's economy but also improved its social indicators and helped rebuild the forex reserve from a vulnerable level.

Remittances play a vital role in strengthening the country's GDP and maintaining the balance of payments (BoP), helping to partially offset the trade deficit. Second, the social impact of remittances is significant, contributing to income stabilisation, reducing vulnerability, and improving living standards at the household level. However, the impact largely depends on individual consumption, saving, and investment behaviours. Overall, remittances have led to improvements in rural education, healthcare, and financial inclusion.

While migration and remittance growth are essential for Bangladesh's future income generation and unemployment reduction, several challenges remain. High processing costs, debt burdens, information gaps, exploitation, and informal migration practices are major barriers to the growth of overseas employment of Bangladeshi workers through formal channel. To address these challenges, stronger monitoring of the migration process, improved policy collaboration with foreign governments in potential destination countries, and a reduction in bureaucratic obstacles can help foster manpower export.

Furthermore, skilled migration is becoming increasingly important for future growth, though most Bangladeshi migrations still fall within the low-skilled category. Proper policy formulation is needed to facilitate the country's participation in skilled migration. Such policies should focus on reforming basic education to develop character, ethics, and foundational skills, language of the host country, while higher education should emphasise practical knowledge and adaptive skills. A public-private partnership is essential for driving nationwide educational reform and preparing the future workforce to compete effectively in the global job market.

The Ready-Made Garment (RMG) sector has long been a cornerstone of Bangladesh's economy, accounting for about 85 per cent of merchandised export earnings. The sector has provided over 4 million jobs, with about 70 per cent of the workforce being women. Since 1980s, the RMG sector has been playing a crucial role in poverty reduction and women's empowerment. Additionally, the sector benefits from globally competitive low wages, high adaptability, and policy support, including bonded warehouses and tax exemptions.

However, the RMG sector in Bangladesh faces significant challenges. One of the primary concerns is the gradual erosion of its competitive and comparative advantage, especially in the face of increasing global competition. Key factors contributing to this decline include low productivity, labour unrest, inadequate diversification and overwhelming dependence on low and medium-range products. Recent imposition of reciprocal tariff by the United States, with a breathing period for three months, has added a new dimension into its ongoing challenges.

The risk of losing comparative advantage in the RMG sector is largely cultural and traditional. For generations, Bangladeshi women, motivated by cultural factors, have developed sewing skills from childhood. This long-standing tradition has given Bangladesh a strong competitive edge in the global RMG market. However, this tradition of early skill development has started to diminish in both urban and rural areas in recent years, potentially leading to a skill gap in the workforce in the long term. To mitigate this risk, a focus on automation and innovation is essential.

Labor productivity, skill development and human capital formation significantly depend on health policy, public expenditure on healthcare and nutrition. Since its independence, Bangladesh's healthcare sector has struggled to receive the necessary and effective policy attention. Some notable successes in healthcare include reductions in child and maternal mortality, improvements in life expectancy, and wide vaccination coverage, which have largely been driven by international development agencies, NGOs, and private sector involvement. However, the sector remains hindered by a lack of proper infrastructure, a shortage of skilled professionals and modern medical technologies, and inefficient governance, all of which severely limit its growth.

Moreover, about 1 per cent of real GDP is allocated to healthcare, while about two-thirds of medical expenses are paid out-of-pocket by patients. This creates significant inequities in access to healthcare, with many people (particularly those who can afford it) opting to seek critical treatments at foreign hospitals. This trend places additional pressure on the foreign exchange market.

Overall, Bangladesh's healthcare sector requires stronger policy focus and improved governance in line with the report of the reform commission on health sector formed by the current interim government. Collaboration with internationally renowned hospital management groups to enhance the governance of public hospitals, attracting foreign investment, and introducing universal health coverage are crucial steps toward building a robust healthcare system in the country.

Bangladesh has significant potential to build a strong and sustainable economy in the future, although the path ahead will be challenging. The success of this endeavour hinges on political will, national unity, inclusiveness, and the implementation of progressive, strategic policies-both for domestic development and foreign relations.

Dr. Shahriar Kabir, Professor, Department of Economics, Independent University Bangladesh (IUB)

Dr. Mahfuz Kabir Research Director, Bangladesh Institute of International Strategic Studies (BIISS)

Dr Carmelo Ferlito CEO - Centre for Market Education, Malaysia, International Senior Fellow - Tholos Foundation, USA.​

 

[Bilal9]

Bilal bhai, we have to diversify our export products and also our export markets. What do you say?

Absolutely bhai - but policy support is needed right now.

Hasina the Indian stooge had listened to her Indian work masters and never worked to provide incentives for this diverisification. I believe we should look at three sectors:

1. Footwear,
2. Pharma,
3. Plastic items like Toys and Household items.

to start with. Asia's tiger economies did all this, but not Pharma, that is a unique benefit just for us as a large populous country.

Don't know if I forgot anything. later down the line, shipbuilding will need a boost as well.

 

[Saif]

Absolutely bhai - but policy support is needed right now.

Hasina the Indian stooge had listened to her Indian work masters and never worked to provide incentives for this diverisification. I believe we should look at three sectors:

1. Footwear,
2. Pharma,
3. Plastic items like Toys and Household items.

to start with. Asia's tiger economies did all this, but not Pharma, that is a unique benefit just for us as a large populous country.

Don't know if I forgot anything. later down the line, shipbuilding will need a boost as well.

We should include light engineering in the list also. It is a promising industry which can turn itself into another apparel industry for Bangladesh if policy and financial supports are given.

 

[Saif]

Expatriates sent $1.78b in remittances in first 19 days of April

The strong inflow of remittances has continued into April, with expatriates sending $1.78 billion in the first 19 days of the month. This follows a record-breaking $3.29 billion received in March, reports UNB. Bangladesh Bank’s latest update revealed that Bangladeshi expatriates have sent a

thefinancialexpress.com.bd

Expatriates sent $1.78b in remittances in first 19 days of April
FE Online Desk
Published :
Apr 20, 2025 18:39
Updated :
Apr 20, 2025 18:39

The strong inflow of remittances has continued into April, with expatriates sending $1.78 billion in the first 19 days of the month.

This follows a record-breaking $3.29 billion received in March, reports UNB.

Bangladesh Bank’s latest update revealed that Bangladeshi expatriates have sent around US$ 1.72 billion in inward remittance in 1-19 days of April.

In April last year, the expatriates sent $2.04 billion in remittances, while in the 19 days of April this year, they sent $1.78 billion in remittances.

Accordingly, Bangladesh received $90.45 million in remittances so far in each day of April.

The state-owned commercial banks received a total of $639.7 million, two specialised banks received $90.26 million, private banks received $985.42 million, and foreign banks received $3.35 million.

Among the banks, Sonali Bank PLC received the highest amount, $278.09 million; Islami Bank Bangladesh PLC received the second highest amount, $266.88 million; and Agrani Bank PLC received the third highest amount, $183.41 million, in 19 days of April.

The expertise sent $21.77 billion in remittances in the 9 months (July-March) of the current fiscal year, FY2024-25. On the other hand, remittances of $17.07 billion were received in the first 9 months of the previous FY2023-24.

March $3.29 billion

February $2.53 billion

January $2.19 billion

December $2.64 billion

November $2.2 billion

October $2.39 billion

September $2.4 billion

August $2.22 billion

In July $ 1.91 billion​

 

[Saif]

Economic reforms: Govt initiatives not sufficient

The White paper drafting committee and the taskforce on redefining economic strategy, formed by the interim government with the aim of pursuing economic reforms, have submitted their respective reports in due time. These efforts have been widely appreciated. However, the lack of effective...

en.prothomalo.com

Economic reforms: Govt initiatives not sufficient
Editorial Desk
Published: 20 Apr 2025, 20: 24

The White paper drafting committee and the taskforce on redefining economic strategy, formed by the interim government with the aim of pursuing economic reforms, have submitted their respective reports in due time. These efforts have been widely appreciated. However, the lack of effective government action in implementing the recommendations of the White paper committee has prompted expressions of dissatisfaction from the committee’s chair, Debapriya Bhattacharya.

Speaking at the ‘Sixth Bangladesh Economics Summit-2025’ on Thursday, he noted that the interim government has suspended the eighth five-year plan and other medium-term plans initiated by the previous (Awami League) administration. However, no alternative medium-term plan has been adopted in their place. As a result, investors are lacking confidence. They are also uncertain as to whether the current policy measures will be sustained in the future.

There are two issues here — first, no new plan has been adopted to replace the interim plan of the former government that was scrapped. Second, it is uncertain whether the policies introduced by the current government will remain in place in the future.

The white paper committee’s report recommended a medium-term plan spanning at least two years. Debapriya Bhattacharya indicated that the government’s failure to adopt such a plan has negatively affected private sector investment. Investment is the principal driving force of a country’s economy. Without investment, employment opportunities will not be created and production across all sectors- industry, agriculture and more will inevitably decline.

Naturally, businesspeople want the government's policies and plans to remain consistent despite changes in power. At the recently held investment summit, organised with much fanfare by the government, businesspeople also raised these concerns.

We believe there is ample reason to question why the recommendations of the White Paper Drafting Committee and the Task Force on Redefining Economic Strategy are not being implemented. If the government chooses not to act on a committee’s recommendations, it must also provide an explanation to the public.

According to the White Paper Committee’s report, a staggering USD 2,340 billion has been laundered abroad during the tenure of the Awami League government. Furthermore, an estimated amount ranging from BDT 1.61 trillion (1 lakh 61 thousand crore) to BDT 2.80 trillion (2 lakh 80 thousand) was exchanged as bribes within government projects. These findings are expected to aid in bringing corrupt individuals to justice. Legal action has already been initiated against several individuals.

The White Paper Committee recommended several measures to ensure economic stability, including the formulation of the budget framework for the 2025–26 fiscal year, planning for the 2025–27 period, setting priorities for reform and establishing strategies for the country's graduation from LDC status. However, government actions in these critical areas remain largely invisible.

After taking responsibility, the interim government has made progress in restoring discipline to the financial sector. Nonetheless, there remains a lack of effective and sustainable initiatives aimed at revitalising the broader economy. Due to the decrease in private sector investment, employment opportunities are not expanding—despite an annual influx of 2.4 million (24 lakh) young individuals entering the labour market.

There is also growing public concern regarding the upcoming 2025–26 fiscal budget. In the past, successive governments have followed a policy of favouring influential groups. Should the interim government continue along the same path, it will offer little in terms of positive outcomes for the wider population. If the government opts to impose the tax burden disproportionately on ordinary citizens, without expanding the tax base, inflation will remain unchecked. The situation witnessed during the last Ramadan should not be accepted as an unchangeable reality. Already, prices of essential commodities are once again on the rise and immediate action is necessary to stop this trend.

It must be remembered by policymakers that without economic reform, political reform cannot be sustainable. It is therefore expected that they will take a proactive role in implementing the recommendations set forth by the white paper committee and the economic strategy taskforce.​

 

[Saif]

https://thefinancialexpress.com.bd/views/should-bangladesh-create-a-sovereign-wealth-fund

Should Bangladesh create a sovereign wealth fund?
Syed Abul Basher
Published :
Apr 22, 2025 23:03
Updated :
Apr 22, 2025 23:03

The answer is undoubtedly yes. A sovereign wealth fund (SWF) is a state-owned investment vehicle designed to manage national assets strategically for long-term wealth creation and intergenerational equity. In many ways, SWFs function is similar to how households or families approach long-term investments in housing, stocks, or other financial assets seeking to build wealth over time through strategic asset allocation rather than focusing solely on immediate liquidity.

One might ask why do we need a SWF when we have foreign exchange reserves in the central bank? This is where the function of a SWF becomes clear. Usually the foreign exchange reserves are invested in low-risk, low-yield liquid bonds, so that they can be sold quickly in times of need. This is the 'liquidity' purpose of foreign exchange management, just like keeping money in a current account and withdrawing it on demand. Whereas there are no rigid rules for designing a SWF, countries can invest their SWF in equities or in specific projects. For example, recently Singapore's wealth fund Temasek has invested in India's Haldiram, a multi-national fast-food restaurant chain. This is the 'investment' purpose of the SWF, which serves a different role than that of foreign exchange reserves whose main function is liquidity.

So, where would the money come from, usually in US dollars, to create such a SWF for Bangladesh? As a starter, we could create a SWF with 10 billion dollars, which would provide a meaningful foundation for future growth. There are several possible avenues which we could explore to raise the initial 10 billion dollars. First, the government (current and future) could work hard to recover partial money stolen from Bangladesh over the last one and half decades. Suppose this attempt generates 3-4 billion dollars. Second, the government could purchase 3-4 billion dollars from the inflows of remittance and export earnings. Another 2-3 billion can be obtained by strategic selling or leasing of public assets inside the country (for example, underutilised government land, stakes in state-owned enterprises, or infrastructure concessions). These sources can collectively provide a solid starting pool. There are of course other imaginative ways of designing funding modalities.

Now, let's consider what could happen if we manage to raise 10 billion dollars to create the first SWF for Bangladesh. Let's imagine what the power of mathematical compounding could do even to this modest initial investment over time. If managed effectively, the proposed $10 billion fund could transform the national finances over decades. At an annual return of 8 per cent, a $10 billion Bangladesh SWF could grow to $46.6 billion in 20 years. At 10 per cent annual returns, it would reach $67.3 billion, and at 12 per cent, nearly $97 billion. An annual return of 10 per cent is not unrealistic, considering that the S&P 500 has delivered similar total returns over the past two decades. However, targeting such returns requires calculated exposure to higher-volatility assets. A phased investment strategy-beginning with stable infrastructure projects and gradually expanding into global equities-could help manage both risk and learning curves. For Bangladesh's $460 billion economy, these figures represent significant potential. In 40 years, assuming consistent 10 per cent returns, the fund could reach approximately $453 billion-nearly equivalent to Bangladesh's current GDP. This potential for wealth creation cannot be ignored, especially given the country's development needs and demographic challenges.

With these possibilities in mind, why not consider creating a SWF seriously? Before moving further, let's address some common questions about this proposal. One likely concern could be that when Bangladesh's current official reserves are hovering between $20-25 billion, covering roughly four months of imports, establishing a SWF seems premature.

This concern is understandable, but it fails to recognise several important considerations. First, the traditional approach of holding all reserves in low-yielding sovereign bonds represents a significant opportunity cost. Even allocating a small portion of these assets to a professionally managed SWF could generate substantially higher returns over time without materially affecting the country's ability to weather short-term financial shocks.

Moreover, a SWF serves different strategic purposes than foreign exchange reserves. Whereas reserves primarily function as insurance against balance of payments crises, a SWF acts as an investment vehicle for long-term wealth creation. These complementary roles suggest that both should exist in parallel, rather than viewing them as mutually exclusive alternatives.

Second, critics might argue that usually only countries with net positive savings such as Norway or the UAE can create such funds, whereas Bangladesh is a net debtor country. But being cash-poor is not a valid financial justification for avoiding the creation of a SWF. Years of academic research have shown that even very low-income households actively save and invest despite limited resources, often prioritising asset building alongside managing debt.

Although Bangladesh is cash-constrained, it is not poor in assets. Bangladesh's current public debt stands at approximately 40 per cent of GDP, but the government owns significant land, buildings, state-owned enterprises, natural resources, and infrastructure that could be strategically monetised. Bangladesh ranks favourably in terms of agricultural land fertility, with the Ganges-Brahmaputra delta creating some of the most productive soil in the world. The Bay of Bengal offers maritime resources that remain largely untapped. The country's strategic location between South and Southeast Asia gives it geographical value that cannot be calculated on standard balance sheets. The government could monetise a portion of these dormant assets, putting them to work generating returns far superior to the meager yields of sovereign bonds. This asset monetization strategy addresses the apparent paradox of creating a wealth fund amid limited liquidity.

Another key challenge is the risk of mismanagement. A major concern around setting up a SWF in Bangladesh is the risk of corruption or poor management. Given the country's track record of financial misconduct in both public and private sectors, such concerns are understandable. High-profile cases like Malaysia's 1MDB scandal, where about USD 4.5 billion was misused, serve as clear warnings.

Yet, despite these risks, many countries have succeeded. It's worth noting that today over 200 SWFs operate across more than 80 countries, most without major scandals. Botswana's Pula Fund, launched in 1994 with diamond revenues, is a good example. Despite being a middle-income country, Botswana has managed the fund well, using it to support long-term stability.

Norway established its fund in 1990 with a modest amount of $300 million, which now stands at $1.7 trillion! Singapore launched Temasek in 1974 during a period of uncertainty following its separation from Malaysia. These examples show that the key requirement isn't having a large fiscal surplus-it's the willingness to treat land, resources, and people as long-term assets. Wealth is not something to wait for; it's something to build through timely decisions. Doing nothing carries its own risk-especially in the face of inflation and underutilised savings.

The proposed SWF must be guided by professional investment judgment, not held back by bureaucratic red tape. Fund managers should follow private sector standards, free from the overly cautious mindset often found in central banks and other public institutions. This requires a governance structure that ensures both independence and accountability. A dual-key model, where investment decisions require joint approval from fund managers and a legislative oversight body, could balance autonomy with public trust. To attract skilled professionals, the fund should offer competitive pay, performance-based incentives, and the freedom to operate within clear strategic guidelines. Bangladesh can look to successful global models while putting in place safeguards like independent audits (e.g., IMF-reviewed), oversight committees, and transparent reporting. These measures are key to ensuring the fund serves the country's long-term interests.

Starting a SWF now, even on a small scale, gives Bangladesh the chance to build the skills, systems, and experience needed for long-term success. Delaying until reserves are "sufficient" only pushes back learning and growth. Meanwhile, parking savings in low-yield bonds while paying higher interest on foreign debt locks the country into a losing cycle. An SWF won't solve all problems overnight, but it can help shift the mindset from short-term spending to long-term asset-building. And the right time to begin is now.

Syed Abul Basher is an economist and researcher.​

 

[Saif]

BD receives record $23.75b so far this fiscal

Bangladesh is poised to see a new record in yearly remittance receipt as the country has already received US$23.751 billion in less than 10 months of this fiscal, in much-needed props to its forex reserves. And this accumulated remittance figure is 96 per cent of the recorded remittance in

thefinancialexpress.com.bd

Remittance rebound in higher gear
BD receives record $23.75b so far this fiscal
Less-than-10-month figure 96pc of entire FY'21 receipt

JUBAIR HASAN
Published :
Apr 23, 2025 00:32
Updated :
Apr 23, 2025 00:32

Bangladesh is poised to see a new record in yearly remittance receipt as the country has already received US$23.751 billion in less than 10 months of this fiscal, in much-needed props to its forex reserves.

And this accumulated remittance figure is 96 per cent of the recorded remittance inflow of $24.777 billion registered in FY'21, officials and bankers said Tuesday.

Monthly receipt also continues on a steady rise. According to the latest data with Bangladesh Bank, the country's central bank, Bangladeshi citizens working abroad sent in remittances equivalent to $1.97 billion in the first 21 days of this month, which is 40 per cent higher of the corresponding period of the last fiscal.

With the latest, the country has so far received $23.751 billion in this current fiscal and is now just $1.03 billion away from setting a new record that is expected to be achieved by maximum early next month (May).

Since the financial year 2020-21, according to the official data, the $450-billion economy had earned $21.03 billion, $21.61 billion and $23.91 billion in FY'22, FY'23 and FY'24 respectively.

Seeking anonymity, a BB official said the rising trend in remittance continued following stability in exchange rate over the last several months.

Simultaneously, says the official, operation of the informal channels for remittance remained inactive because of close regulatory watch since the changeover in state power after the July-August mass uprising.

"These factors keep alluring the remitters into sending more money back home through banking channel. As a matter of fact, the remittance inflows came at such a pace never seen before," the central banker told the FE, on an upbeat note about the change on the foreign-exchange front.


Citing the current trend in inbound remittance, he said the remitters sent $93 million daily on average. With this pace, the receipt is expected to cross $24-billion mark within this month and break the record maximum by early next month.

Talking to the FE, managing director and chief executive officer of Mutual Trust Bank (MTB) PLC Syed Mahbubur Rahman said the banking industry continued receiving huge volumes of remittance in recent months, which is a "good sign" for the economy in the current macroeconomic context.

This upturn in remittance is not only helping bolster the country's foreign-exchange reserves but also enhancing banks' capability to meet their overseas payment obligations, the experienced banker said.

Dr M Masrur Reaz, an economist and chairman of Policy Exchange of Bangladesh, says cross-border siphoning off money has significantly declined after the latest mass uprising and it naturally decreased the supply and demand in informal channel.

On the other hand, the exchange rate remained fairly stable for the last few months which helps cut speculation on the market. "These twin factors are basically encouraging the remitters to send more money back home," says the economist.

The rising supply of foreign currencies is very important for BoP or balance of payments and currency stabilisation. It also helps increase consumption, which will help vibrate the economy in the coming days, he adds.

"This increase (forex) helps BB bolster its foreign-currency reserves, which will be critical for full normalisation of import. Ultimately, it supports the inflation-combating drives of the interim government," Mr Masrur explains the knock-on economic effect of remittance rises.​

 

[Saif]

It’s high time to overhaul our tax system

Existing tax system has become a major hurdle to Bangladesh’s fiscal progress

www.thedailystar.net

It’s high time to overhaul our tax system
Existing tax system has become a major hurdle to Bangladesh’s fiscal progress

VISUAL: STAR

According to a recent report by the Centre for Policy Dialogue (CPD), Bangladesh lost an estimated Tk 226,236 crore in potential revenue due to tax evasion and avoidance in FY 2022-23. This is an extremely troubling finding. While it is generally known that tax irregularities are widespread in Bangladesh, the extent of the resultant loss, as estimated by the CPD, is staggering. To put it into perspective, the lost amount from FY23 could have funded the construction of approximately seven metro rail lines, provided each cost as much as the revised budget of Tk 33,472 crore for Metro Rail Line-6 connecting Uttara to Kamalapur.

In other words, had the National Board of Revenue (NBR) managed to collect some portion of the Tk 2.26 lakh crore lost to tax evasion, it could have easily met its revenue target for that year—which it fell short of by Tk 44,728 crore, according to provisional data. Therefore, the fact that the NBR has a history of missing its revenue targets is clearly not a fait accompli, but rather something that can be rectified.

According to the CPD report, corporate tax evasion alone accounted for roughly half of the total loss in FY23—about Tk 113,118 crore—highlighting a concerning trend of rising evasion since 2011. The estimated loss in 2012 was Tk 96,503 crore, which surged to Tk 133,673 crore by 2015. According to CPD, corruption and a range of structural issues, including high tax rates, weak enforcement, and a labyrinthine legal framework, have been fuelling this rampant tax evasion.

For instance, nearly half of the firms surveyed in the study alleged that they were asked for bribes by officials while seeking tax-related services in FY23. Additionally, 40 percent of surveyed companies reported problems when adjusting their tax refunds. Moreover, 79 percent of firms pointed to a lack of accountability among tax officials, while 72 percent cited widespread corruption in the tax administration. Furthermore, 65 percent of businesses reported persistent disputes with tax officials over the calculation of their payable tax amounts. Another controversial factor that deserves scrutiny is the policy on tax expenditure and incentives. According to CPD, Bangladesh's current tax incentive structure is deeply entangled with political interests, rather than being merit-based and time-bound.

Clearly, much work is needed to improve our overall tax system. In fact, the entire structure appears to require a significant overhaul. Firstly, the tax submission process must be fully digitalised, with a unified system of financial transactions to ensure that every transaction is traceable and verifiable, thereby creating a barrier against corruption and fraud. Secondly, the NBR must significantly expand its corporate tax net, raising the proportion of tax-paying firms to at least 59 percent of registered companies—up from the current estimate of just 9 percent. Without such transformative reforms, Bangladesh's fiscal progress will remain severely hampered.​

 

[Saif]

How BD can withstand India's transshipment withdrawal

The old proverb "when life gives you lemons, make lemonade" inspires optimism and a proactive approach in the face of adversity. Even though it is viewed as a simple encouragement at personal level, history suggests that adversity can indeed be the mother of invention even on a national scale. Fo

thefinancialexpress.com.bd

How BD can withstand India's transshipment withdrawal
Atiqul Kabir Tuhin
Published :
Apr 23, 2025 23:42
Updated :
Apr 23, 2025 23:42

The old proverb "when life gives you lemons, make lemonade" inspires optimism and a proactive approach in the face of adversity. Even though it is viewed as a simple encouragement at personal level, history suggests that adversity can indeed be the mother of invention even on a national scale.

For Bangladesh, unexpected challenges imposed by its neighbour, India, have paradoxically spurred domestic growth and self-reliance in key sectors. Take the example of India's 2014 ban on cattle exports, which catalysed a surge in local cattle rearing, ultimately leading Bangladesh towards self-sufficiency in meat production and empowering hundreds of thousands of farmers and traders. Similarly, India's onion export restrictions in 2020, even though initially caused a record price hike, ultimately led to a notable rise in Bangladesh's domestic onion production in the following years.

Now, with India abruptly halting Bangladesh's transshipment facility-which had enabled the export of goods to third countries via Indian airports-Bangladeshi apparel exporters, particularly those dealing in fast fashion and seasonal wear that require short lead times, are left without a fast and cost-effective export route.

It is worth mentioning that the transshipment facility was introduced in 2020 as part of a bilateral agreement, and Bangladeshi exporters have been using it by paying a certain fee. Clearly, it had been a win-win arrangement for both countries, and India stands to gain no apparent benefit from withdrawing the facility. In fact, the move is widely seen as politically motivated as one Indian news outlet reports "How India Is Making Bangladesh's Yunus Pay for Cozying Up With Pakistan, China."

However, there is little reason for Dhaka to be unnerved by India's unilateral decision, as the volume of Bangladesh's RMG exports routed through the Indian transshipment facility is negligible compared to its total volume of exports. And, Bangladesh is well-positioned to overcome this challenge through its own arrangements.

Although the seaports are the primary gateway for Bangladesh's exports and imports, there is an annual demand to export over 200,000 tonnes of garments by air, which is growing by the year. This demand primarily stems from garments produced for specific seasons or under the fast fashion segment, where trends change rapidly. Products under this segment are treated as perishable goods as delayed delivery can result in order cancellations. Air shipment is also vital for the delivery of agricultural goods where time is of the essence.

Apparel makers are under constant pressure to reduce lead times. However, bureaucratic hurdles which causes delay in custom clearance as well as limited storage facility, a lack of adequate scanning facilities, and frequent equipment failures - such as scanning machines frequently going out of order-create significant obstacles to smooth export processes. These challenges hinder manufacturers' efforts to quickly deliver products.

Moreover, due to higher jet fuel prices along with higher taxes, ground handling fees, and other airport charges, it has often been more economical for exporters to transship goods via Indian airports like Kolkata or Delhi rather than directly through Dhaka.

Despite this, of the annual 200,000-tonne air shipment demand, approximately 80 to 85 per cent was already being handled through Hazrat Shahjalal International Airport (HSIA), with only 15 to 20 per cent previously routed via Indian airports under the transshipment arrangement. To put this into perspective, between January 2024 and March 2025, just over 34,900 tonnes of garments-worth $462 million -were shipped through India. For a country that exports over $40 billion worth of garments annually, managing this small portion of redirected shipments is not supposed to be a big deal.

As a matter of fact, there is a silver lining in this disruption. The authorities here in Bangladesh started considering it is an opportunity for Bangladesh to enhance its air-cargo shipment capacity, which will pave the way for greater control over its supply chain. Needless to say, it would also greatly boost government's revenue. The authorities have already decided to begin air cargo operations from both Sylhet and Chattogram airports, with air shipment from Sylhet set to commence on April 27.

Meanwhile, efforts are being ramped up to accelerate the operation of the third terminal at HSIA by as early as October this year. The third terminal is expected to boost HSIA's cargo handling capacity to 546,000 tonnes annually-a significant increase from the current capacity of 200,000 tonnes handled by Terminals 1 and 2. That means the third terminal will triple the airport's export cargo handling capability.

Although a "soft inauguration" of the terminal was held by the then-Awami League government in October 2023 ahead of the national election, it was nothing but a farce. The terminal is yet to become operational. The latest report suggests that 98 per cent of the terminal's construction is complete, with only exterior infrastructure works remaining, which are going on in full swing. Several operational components-including equipment installation, calibration, and testing-are being carried. The Civil Aviation Authority is currently in talks with the Japan International Cooperation Agency (JICA) regarding ground-handling services. The authorities are hopeful of completing these tasks by June of this year. Once completed, the terminal could be a game changer for the country's aviation sector.

So, while India's withdrawal of the transshipment facility may initially pose challenges and raise export costs to some extent, with foresight, policy backing, and strategic investment, Bangladesh can transform this setback into a catalyst for boosting air cargo logistics and port infrastructure. Bangladesh must seize this moment by streamlining regulatory reforms, reducing costs and leveraging its expanding airport capacity.​

 

[Saif]

Tradable savings instruments

The idea of making government’s savings instruments tradable is quite interesting. Its practical benefits are likely to be wide, adding a new dimension to private savings and even the country's economy. Right now the money invested in savings tools has little opportunity to roll and speed up

thefinancialexpress.com.bd

Tradable savings instruments
FE
Published :
Apr 23, 2025 23:44
Updated :
Apr 23, 2025 23:44

The idea of making government’s savings instruments tradable is quite interesting. Its practical benefits are likely to be wide, adding a new dimension to private savings and even the country's economy. Right now the money invested in savings tools has little opportunity to roll and speed up the process of 'money begets money' other than contributing to government fund for its expenditure. If the savings instruments like sanchaypatras of different categories become tradable in the secondary market, their dynamic provisions may have a multiplier effect on the bourse, private savings and the economy in general. Already popular, sanchaypatras will be more attractive because of the flexibility and dynamism the Finance Division's initiative will add to those instruments. People will be able to sell those in time of emergency and once the exigency is met, they can buy instruments similar to the ones they sold instead of going the whole hog of opening a fresh savings tool with the bank.

Another feature of immense merit with highly practical use will be its collateral value. Currently, fixed deposit receipt (FDR) enjoys the mortgage value and can be used as collateral for obtaining loan but sanchaypatras do not enjoy the same status. This is plainly contradictory. FDR is savings for a certain period and the agreement is made between an account holder and the bank concerned. If the bank collapses, there is no guarantee that the depositors will get their money back. In case of sanchaypatra, the government or the state is the guarantor of the investment and the money with interests has to be paid back unfailingly. So, the use of savings instruments as collateral is more than justified. How much loan against those can be sanctioned is a matter that can be meticulously worked out. Understandably, the nitty-gritty will be specified in clear terms to avoid confusion and loan default.

In this context, a perusal of the total amount of the savings certificates sold in 2024 and the repaid amount present a clear picture of depositors' financial constraints. By issuing savings certificates, the country's banking channel had an infusion of Tk788.47 billion while the repaid amount stood at Tk999.72 billion, registering a decline in sale by Tk211.24 billion. The reason is not far to seek. Inflation and ill health of the economy compelled more people to encash their savings instruments in order to stay afloat. Many of the savings account holders did so prematurely. Had there been the opportunity to sell savings tools in the secondary market or receive loans against those, many of them would not have encashed their sanchaypatras.

Sure enough, trading of government's savings instruments in the secondary market is a smart way of mobilising government fund. More importantly, the dynamism it will lend to money is likely to make idle money's use productive. Small entrepreneurs can make the best use of this limited but highly useful fund if the commercial aspect can be made compatible with investment in their small and medium enterprises (SMEs). Mobilisation of fund alone without its productive use and circulation in manufacturing units, businesses and market does not make an economy dynamic and strong. The range and scope of government's treasury bills and bonds in expediting such economic activities at the grassroots level can as well be widened to complement such an effort.​

 

[Saif]

IMF hints at Bangladesh’s economic recovery

Bangladesh’s economy is showing signs of recovery, with the latest forecast from the International Monetary Fund (IMF) projecting a significant upturn.

en.prothomalo.com

IMF hints at Bangladesh’s economic recovery
UNB Dhaka
Published: 23 Apr 2025, 16: 53

Bangladesh’s economy is showing signs of recovery, with the latest forecast from the International Monetary Fund (IMF) projecting a significant upturn.

In its World Economic Outlook released on Tuesday night (Washington time), the IMF projected a GDP growth of 3.8 per cent for Bangladesh in the current fiscal year of 2024-25.

The outlook further anticipates an increase in growth to 6.5 per cent in the following fiscal year of 2025-26.

The report was unveiled on the second day of the World Bank-IMF Spring Meetings, currently taking place in Washington, USA.

Alongside global trends, the IMF updated country-specific data in this outlook. It projects inflation in Bangladesh to remain at 10 per cent.

The country has been grappling with persistent inflationary pressure over the past two years.

According to the Bangladesh Bureau of Statistics (BBS), inflation stood at 9.35 per cent in March, with an annual average of 10.26 per cent over the past year.

The Awami League government initially targeted a GDP growth rate of 6.75 per cent when it presented the budget for FY 2024-25 in June.

But, the interim administration recently revised the target downward to 5.25 per cent, citing ongoing financial challenges, business stagnation, and political instability following the change in government.

Earlier this month, the Asian Development Bank (ADB) projected a GDP growth of 3.9 per cent for Bangladesh this fiscal year—slightly higher than the IMF’s updated estimate.

Globally, the IMF expects average GDP growth to be 2.8 per cent, while the average for Asia is forecast to be 4.5 per cent.

A 15-member Bangladesh delegation, led by finance advisor Dr Salehuddin Ahmed, is participating in the Spring Meetings, which began on 21 April and will continue until 26 April.​