[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

undefined | The Financial Express

thefinancialexpress.com.bd

Loan review team disclosure today
IMF may disburse $1.14b in twin tranches

Total funds may rise to $1.3b on last-minute consensus
Syful Islam
Published :
Apr 17, 2025 00:28
Updated :
Apr 17, 2025 00:28

Bangladesh may receive US$1.14 billion in two instalments together from a package loan extended by the International Monetary Fund (IMF), finance officials expect as a latest review of the lending terms concludes.

An announcement to this effect will be given today (Thursday) in tune with staff-level agreements the multilateral lender has reached with the Bangladesh authority, they said.

The IMF review mission had a wrap-up discussion with Finance Adviser of the interim government Dr Salehuddin Ahmed at his office on Wednesday afternoon that ended on a positive note, according to the officials.

Headed by Chris Papageorgiou, IMF's Mission Chief for Bangladesh, came to Dhaka on April 6 and its mission would end with the announcement.

The $1.14-billion fund is coming under fourth and fifth tranches in $570 million each. The fourth tranche was scheduled to come by the first week of February, but got stuck.

Approval for the instalment was deferred by the IMF citing Bangladesh's failure to accomplish two prior actions-additional revenue mobilisation and exchange-rate flexibility.

The Washington-headquartered lender later informed Bangladeshi officials that approval for the fourth tranche would be taken together with review of achievements for the fifth tranche of the $4.7-billion lending programme.

Finance Ministry officials, however, could not confirm whether the lender will also provide an additional $750 million that the two sides had agreed in September last.

"It is certain that we are getting two instalments together," said one finance official, referring to their nearly two-week-long discussions with the IMF team.

However, he was hesitant to confirm that Bangladesh is also getting the additional $750 million.

The IMF granted the $4.7-billion loan to Bangladesh in January 2023 to help support the country's dwindling economy to accomplish stability. The loan was scheduled to be given in seven instalments by May 2026.

Finance Ministry officials say the National Board of Revenue (NBR) has made a commitment to generating additional revenue as suggested by the IMF. The Fund had been pushing to set a higher revenue target in the next fiscal budget aiming to raise the tax-GDP ratio by 0.9%.

On exchange-rate flexibility, the two sides have reached a sort of consensus, but still some differences remained pending, officials have said.

So, they say, the two instalments' coming together has been confirmed.

However, another official says, the total amount can even increase to $1.3 billion, each tranche bearing $650 million, if a last-minute consensus reached on some pending issues.

Contacted Wednesday, an IMF official in Dhaka did not make any comment regarding the mission outcome before a formal announcement.​

 

[Saif]

IMF delays staff level agreement with Bangladesh

The International Monetary Fund (IMF) has delayed reaching a staff level agreement due to existence of some differences with the Bangladeshi authorities. A visiting team of the IMF, headed by Chris Papageorgiou, the agency’s Mission Chief for Bangladesh, made the announcement on Thursday at

thefinancialexpress.com.bd

IMF delays staff level agreement with Bangladesh
FE ONLINE REPORT
Published :
Apr 17, 2025 17:00
Updated :
Apr 17, 2025 17:00

The International Monetary Fund (IMF) has delayed reaching a staff level agreement due to existence of some differences with the Bangladeshi authorities.

A visiting team of the IMF, headed by Chris Papageorgiou, the agency’s Mission Chief for Bangladesh, made the announcement on Thursday at a press conference in the capital.

“Discussions are continuing with the objective of reaching a staff-level agreement in the near term- including during April 2025 IMF-World Bank Spring Meetings in Washington, DC-to pave the way for the completion of the combined third and fourth programme review,” Mr Papageorgiou said.

However, Jayendu De, Resident Representative of IMF in Dhaka, said the agency will try to release the fourth and fifth tranches of the $4.7 billion loan before the end of the current fiscal year.​

 

[Saif]

No sign of taming inflation and getting at the root of problems

In this country what the businesses demand, they get and they get it at the cost of the consumers. The public are a disparate lot and in the absence of a unified platform, their demands are met with indifference. Contrary to this, traders take resort to all kinds of tactics ---from creation of arti

thefinancialexpress.com.bd

No sign of taming inflation and getting at the root of problems
Nilratan Halder
Published :
Apr 17, 2025 21:50
Updated :
Apr 17, 2025 21:50

In this country what the businesses demand, they get and they get it at the cost of the consumers. The public are a disparate lot and in the absence of a unified platform, their demands are met with indifference. Contrary to this, traders take resort to all kinds of tactics ---from creation of artificial crisis to arm-twisting to unilateral price hike ---in order to get their way. A case in point right now is the price increase of soybean oil by Tk 14 and Tk 12 to Tk 189 and Tk169 a litre for the bottled and loose varieties respectively. Palm oil price has also shot up by Tk 12 to Tk169 a litre. The importers and millers of the cooking oil had been clamouring for long to get the prices increased. But after the increase, they still grumble that the price of soybean oil justified a hike of Tk 21 a litre. They have foregone the profit of Tk 7.0 a litre considering the greater good of the consumers! How condescending!

The truth is that this time businesses involved with cooking oils have at least a valid excuse for hiking prices. With the government withdrawing the 10 per cent duty waiver from the 15 per cent granted earlier for keeping the prices at a tolerable level during the month of Ramadan, they are unlikely to sell cooking oil at the same prices as before. But is the claim made by the Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association (BVORVMA) that the withdrawal of duty waiver justified a Tk21 increase? Did the ministry concerned take a meticulous account of the import, transport and production costs before agreeing to the BVORVMA's demand for the record price rise? Price of soybean oil was increased by Tk8.0 a litre in December last. Since then its price has declined in the international market.

The question is, can the common people afford cooking oils at these atrocious prices? Even the commerce adviser had to admit that the current levels of cooking oil prices "would pose challenges for consumers". But then, on the question of VAT waiver, he flatly denied the government had any other option. Duty waiver at the moment is a highly sensitive matter, he claimed. How ludicrous! The compulsion of revenue collection and no concessions in matters of tariff as dictated by the International Monetary Fund (IMF) have proved more sensitive than the unpopular price hike drawing public flak!

What about the release of the fourth and fifth tranches of the $4.7 billion IMF loan? After an IMF team's visit to Dhaka, the news about it has almost gone blank. Although there is a casual report on the release of the two tranches together in June, there may be more to it than meets the eye. Once a least developed or developing country seeks help from the multilateral organisations, particularly the Bretton Woods Institutions, the compulsion for going by the recipes, stinging as they may be, is overwhelming. No wonder, the diktat from such organisations has to be complied with even if the people are left to bleed.

What is particularly galling is that cooking oil is not the only essential item that has registered such an outrageous price hike. Onion, egg and vegetables have followed suit. All this comes right at a time when gas price for new factories and industries as well as for the existing ones using the fuel in excess of the approved load has been increased by 33 per cent. According to the Petrobangla, a total of 147.8 million cubic metre of gas was used in excess of the approved load by the country's industrial units between November 2023 and October 2024. The captive power plants also used an additional 57.6 million cubic metre of gas to their approved quota. Now the 33 per cent increased price will be applicable on this volume of gas.

The implications and indications of all these transpire a further escalation of prices of commodities. It was the winter's abundant supply of vegetables and items of a short-duration shelf life that was mainly responsible for bringing the inflation below the double digit. Nothing goes to the government's credit. In fact, rice -not easily perishable---continued to register price increase even in the peak harvesting season of Aman paddy. Meanwhile, wheat has also become costlier by Tk 2.0-5.0 a kilogram. The government's policy failure becomes more glaring when it fails to protect the interests of farmers. Right now potato growers are suffering because of low price as well as a lack of storage facility.

Market is most likely to grow further jittery with the onset of the lean season and the monsoon. Already onion has raised the signal that the country will have to grapple with this perennial trouble maker. Construction of a number of modern cold storages and warehouses for some basic food items such as paddy or rice, potato, onion, tomato etc; by the government for meeting emergencies or offsetting market manipulation by business syndicates could be undertaken on a priority basis. A good dispensation ought to be proactive instead of reactive in solving food crises. Unfortunately, the interim government has failed to plan innovatively to deal with the crises of essentials both locally produced in abundance and imported like cooking oil, the share of which is more than 90 per cent. Elimination of the middlemen and putting in place a market mechanism to offset business syndicates' intrigues can make the market stable and rein in inflation.​

 

[Saif]

Balanced, flexible policy needed to tame inflation

The interim government is reportedly going to be tightfisted while preparing the next national budget with a view to curbing inflation. It aims to bring the inflation down to 6.5 per cent by the next fiscal year (FY2025-26). However, in the current fiscal (FY2024-25) under the revised budget, the F

thefinancialexpress.com.bd

Balanced, flexible policy needed to tame inflation
Published :
Apr 18, 2025 22:39
Updated :
Apr 18, 2025 22:39

The interim government is reportedly going to be tightfisted while preparing the next national budget with a view to curbing inflation. It aims to bring the inflation down to 6.5 per cent by the next fiscal year (FY2025-26). However, in the current fiscal (FY2024-25) under the revised budget, the Finance Ministry has projected the inflation rate to be at 8.5 per cent, though the overall inflation rate was 9.35 per cent last month (March), slightly higher (driven by non-food items) than the previous month this year, according to the Bangladesh Bureau of Statistics (BBS). Notably, the inflation rate has remained above 9.0 per cent for the last 23 months. In fact, the major driver of the rise in inflation rate in Bangladesh is generally attributed to high price of essential commodities. Now, one wonders, how can the government expect to rein in the inflation rate since just after the Eid it, reportedly, following consultations with the refiners, did substantially raise the per litre retail price of bottled soybean oil by Tk 14 and those of non-bottled varieties of soybean and palm oils by Tk12.

Both these items being kitchen essentials, the decision is definitely going to hit the lives of the low-income section of the population hard by increasing its cost of living further. As it could be gathered, the period of low VAT facility at 5.0 per cent that the oil importers and refiners had been enjoying since mid-December last year having now being over, the prices of the edible oils in question are at present being set according to their rates on the international market. Though the international market for soybean oil reportedly declined by 10 per cent during the January-March period of this year, the government, allegedly, has succumbed to the pressure coming from the edible oil refiners. Prior to the edible oil price hike, there also came an official announcement to raise gas prices by 33 per cent for new industries and gas-based captive power plants. The new measure surely pushes up the cost of production of many industries and discourages new investment at a time when the government has been seriously trying to attract new domestic and foreign investments.

The central bank's decision to continue with the contractionary monetary policy aimed at containing inflation comes into question. What is more important is not any abstract theory that has proved to be effective historically in slowing down economies that get overheated due to high consumer spending. This is a phenomenon often observed in advanced industrial economies and not in a developing economy like Bangladesh where other factors like market distortions caused by syndicates, rent-seeking by powerful quarters while the essential commodities are in transit and disruption of supply chain by various other non-market actors are at work. So, according to some experts, streamlining of inefficient business regulations and untangling supply chains from exploitative practices could help. Also, other means like effective application of stricter law-enforcement measures would be necessary.

Against this backdrop, the government in its upcoming budget would do well to adopt a more balanced and flexible policy to fight inflation while at the same time allowing the economy to grow. The government's actions from various fronts need to be complementary, not contradictory, for the greater good of the country's economy.​

 

[Saif]

Buying local goods in time of trade war

Like much of the world, Bangladesh built its economy around international trade with other countries. This reliance on exports and imports has been one of the cornerstones of the country's economic growth since its independence. It wasn't meant to be a bad thing because for nearly a century, the gl

thefinancialexpress.com.bd

Buying local goods in time of trade war
SYED MUHAMMED SHOWAIB
Published :
Apr 18, 2025 22:37
Updated :
Apr 18, 2025 22:37

Like much of the world, Bangladesh built its economy around international trade with other countries. This reliance on exports and imports has been one of the cornerstones of the country's economic growth since its independence. It wasn't meant to be a bad thing because for nearly a century, the global economy has been driven by countries buying and selling goods. Economists have labelled it as globalisation and have been pushing for it since they believe when countries trade freely, it generates more prosperity for everyone involved with the commerce.

However, that long-held principle is now being tested. With US President Donald Trump's imposition of sweeping trade tariffs, a plan he paused for most countries for three months, the world appears to be turning toward protectionism. While it is still unclear how far-reaching the changes will be, it is evident that countries like Bangladesh that are deeply reliant on exports will likely bear significant impacts.

On April 2, when announcing "reciprocal" tariffs on nearly all imported goods, President Trump said, "If you want your tariff rate to be zero, then you build your product right here in America because there is no tariff if you build your plant, your product in America." This is a protectionist policy intended to discourage US imports. Apparently, Trump administration believes any country's exports to the US has to be balanced with its imports from the US, otherwise it will be penalised with tariffs.

As the world's largest importer of goods, adoption of such a stance by the US has significant global implications. When it treats its trade deficit with another country as a loss and seeks to impose tariffs proportional to that deficit, it risks setting off a chain reaction. As a consequence, affected countries may retaliate or impose their own trade restrictions to protect their balance of payments.

In the last fiscal year, Bangladesh had a $6.2 billion trade surplus with the US largely due to strong demand in the US market for Bangladesh's high-quality, reasonably priced apparel. However, under the new trade logic, it makes Bangladesh a target. While President Trump may think trade deficit as bad, this view is flawed. As argued by Nobel laureate Paul Krugman, no one considers it a problem to have a trade deficit with their local grocery store. The store sells goods to a customer who doesn't necessarily sell anything back, but no one sees this as unfair. If that's not considered negative for an individual, why should it be negative for a country? Nevertheless, as long as the US continues to interpret trade imbalances negatively, Bangladesh must reassess its import-export strategies accordingly.

While enjoying a trade surplus with the US, Bangladesh faces considerable trade deficits with other major partners including approximately $20 billion with China, $10 billion with India and $600 million with Pakistan annually. Should exports to the US face headwinds, the country must adjust by re-evaluating its imports. Bangladesh could consider imposing tariffs on foreign products that have viable local alternatives, especially from countries with whom it runs large trade deficits. Ironically, there are instances where the opposite seems to be occurring. For example, India, which enjoys a significant trade surplus with Bangladesh, imposed non-tariff and para-tariff barriers such as anti-dumping duties on certain Bangladeshi export items. In a new world order of economic nationalism, such disparities must be addressed.

Given that reserves of foreign currency are finite, a reduction in export earnings should be matched by a corresponding decrease in import expenditure. However, this reduction in imports cannot be achieved overnight. Instead, a strategic, long-term plan is needed to reduce reliance on foreign goods. To that end, Bangladesh could adopt a 15-year roadmap to restructure its economy so that it can gradually build capacities to replace imported items with local alternatives.

Among Bangladesh's top imports are cotton and cotton yarn, primarily sourced from China and India, and vital for the dominant readymade garments industry. Currently local cotton production meets only 2.0-3.0 percent of national demand even though the country has suitable climate conditions to produce much more. The good news is Bangladesh has developed high-yielding cotton varieties with desirable fibre quality, which if effectively utilised by local farmers could present significant opportunity for import substitution. To capitalise on this, the government can take proactive steps such as offering incentives to farmers and tax benefits to mills that use locally produced cotton. The transition thus gets encouraged.

Looking ahead, Bangladesh must also diversify its export destinations to reduce risks associated with over-reliance on a single market, as exemplified by the current situation with the US. Nearly one-fifth of Bangladesh's exports go to the US, and this level of dependence can turn into vulnerability. The quality of Bangladeshi products is evident from their acceptance in competitive markets like the US and parts of Europe. To build on this strength, the government should actively pursue diplomatic outreach and trade agreements to identify and cultivate new export markets for these high-quality goods.

Equally important is strengthening domestic self-reliance. Economic nationalism appears to be on the rise in various countries where advocates are calling for spending the taxpayers' money at home as long as the costs remain reasonable. In India, the government under Prime Minister Narendra Modi has promoted the "Make in India" initiative to actively encourage local manufacturing. To avoid appearing overtly protectionist, his administration has strategically combined this push with efforts to attract foreign investment. Similarly, in Bangladesh campaigns urging consumers to boycott some items of foreign origin frequently circulate on social media. Although the impact of these calls on sales may be limited, such campaigns can still damage brand reputations and strengthen public sentiment in favour of local goods.

With a substantial consumer base exceeding 160 million, Bangladesh stands to gain significantly from prioritising local products. Encouraging consumers to choose domestically manufactured goods would not only conserve valuable foreign currency but also create jobs and support the growth of local industries.​

 

[Saif]

Local currency near-competitive with dollar in foreign trade

A price correction in March brings the Bangladesh currency to a more competitive level in foreign trade, after having stayed significantly overvalued against the US dollar in January and February. The real effective exchange rate (REER) index dropped to 101.90 in March 2025, implying that th

thefinancialexpress.com.bd

Local currency near-competitive with dollar in foreign trade
Jasim Uddin Haroon
Published :
Apr 19, 2025 00:16
Updated :
Apr 19, 2025 00:16

A price correction in March brings the Bangladesh currency to a more competitive level in foreign trade, after having stayed significantly overvalued against the US dollar in January and February.

The real effective exchange rate (REER) index dropped to 101.90 in March 2025, implying that the taka is now overvalued just by Tk 2.30 against the greenback in currency exchange.

In its latest report the central bank says the decline in the REER index reflects a marginal improvement in the competitiveness of the taka in international trade, driven by favourable price differentials between Bangladesh and its trading partners.

The Bangladesh Bank regularly reports to the government on the nominal, nominal-effective and real-effective exchange rates of the taka against a basket of 18 currencies. This basket covers more than 85 per cent of the country's trade.

In economic terms, a REER value of 100 signifies balanced trade- competitiveness. A value above 100 means the currency is overvalued, which can hurt exports by making them more expensive in global markets.

Officials at the central bank told the FE that a slight easing in domestic inflation helped reduce the REER. "We're working to bring the REER closer to 100," says one official familiar with the developments on the foreign-exchange front.

Inflation fell to 9.35 per cent in March on a point-to-point basis, while the taka depreciated 3.28 per cent during July-March period compared to the same period a year earlier.

The exchange rate of the taka against the US dollar depreciated by 3.28 per cent during July-March FY25, compared to a 1.49-percent depreciation in the same period of FY24.

Bangladesh's inflation remains higher than that of its major trading partners, which continues to contribute to the currency's overvaluation. The 12-month average inflation was 10.26 per cent as of March.

During the tenure of the previous central-bank governor, Abdur Rouf Talukder, the taka was overvalued as much as by Tk 6.0 to Tk 7.0.

Dr Zahid Hussain, an independent economist, says Bangladesh's persistently high inflation compared to its trading partners is a key reason for the taka overvaluation against the US dollar.

"Although inflation has slightly eased, there's concern it may rise again due to increases in the prices of essential items like soybean oil and some varieties of rice," he notes.

Bangladesh's two largest trading partners, China and India, are experiencing relatively much lower inflation.

China is currently facing deflationary pressure and its inflation stood at 0.7 per cent in March, while India's inflation stood at 3.34 per cent. Together, these two countries account for over 40 per cent of Bangladesh's total imports.

Inflation was also lower in other key trading areas - 3.6 per cent in India and 2.2 per cent in the Eurozone in March.

Dr M. Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, has highlighted that an overvalued currency erodes trade- competitiveness, particularly affecting export performance.

He notes that Bangladesh's exports have been increasing and might increase in the coming months, too, as trade war between the USA and China might give dividend in favour of Bangladesh.

Exports increased by over 3.0 per cent in February, fetching $3.673 billion, according to Export Promotion Bureau (EPB).

However, as an import-dependent economy, Bangladesh also relies heavily on foreign goods for both consumption and production. To modernise its exchange rate and monetary policy, the Bangladesh Bank introduced a series of reforms on December 31, 2024 following the regime change.

It now publishes a daily reference rate based on the weighted average of freely quoted exchange rates from market transactions which on 17 April 2025 (Operation till 05:00 PM) was recorded at 121.8949.

In May 2024, the central bank implemented a Crawling Peg Exchange Rate System for spot dollar transactions, introducing a Crawling Peg Mid Rate (CPMR) of Tk 117.00 per USD.​

 

[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.