Bangladesh wants to expand its investment-to-GDP ratio by 6.57 percentage points within a year as it has set the aspiration in the newly approved five-year development strategy and framework, analysts say.

Economists have termed this "over-ambitious", saying the target is almost impossible to achieve.

Prime Minister Tarique Rahman formally unveiled the cover of the "Five-Year Strategic Framework for Reform and Development-FYSFRD (July 2026 to June 2031)" alongside its complementary Strategic Action Matrix on Wednesday.

Several economic targets, including the investment-to-GDP ratio increase goal, were set there.

Moving decisively away from traditional and rigid bureaucratic planning models, the General Economics Division (GED) under the Planning Commission prepared the dynamic economic blueprint, designed to guide the nation "from fragility to prosperity".

According to the framework's indicator, the government wants to raise the investment-to-GDP ratio to 34.5 per cent within the current fiscal year.

The Bangladesh Bureau of Statistics (BBS) data shows the ratio reduced to 27.93 per cent in FY26 from 28.54 per cent in FY25.

In addition, the government wants to grow the ratio to 40 per cent in FY31.

According to the target, the ratio would reach 35.6 per cent in FY28, 36.8 per cent in FY29, and 37.6 per cent in FY30.

Amid the ongoing austerity and low expenditure capacity of the government, the strategy paper has set a target to increase public investment by one percentage point to 5.6 per cent of GDP within this year from 4.6 per cent estimated in FY26.

It says, "Prudent macroeconomic policies, appropriate supply side measures, and political stability are expected to stabilise the macroeconomic imbalances and reduce vulnerabilities in the near term."

Consequently, real GDP growth is expected to rise from the recent 4.0 per cent to 6.5 per cent in FY27, while CPI inflation is expected to ease to 7.5 per cent, it also says.

Economic growth is projected to accelerate thereafter, reaching 8.5 per cent by the beginning of the next decade, while inflation is projected to decline to 5.0 per cent by FY31, adds the paper.

The GED claims the macroeconomic and sectoral growth projections are made using the dynamic CGE model.

The industry sector's contribution to growth has been steadily declining in recent years owing to the shocks and mismanagement described above, the paper says.

"This is projected to reverse in the acceleration phase of the strategy. Further, a stylised production function estimate finds that capital's contribution to economic growth has also become negative as private investment has ground to a halt because of economic disruptions."

As the economy stabilises and then accelerates, growth is projected to rely more on employment and total factor productivity than had been the case in the past, it adds.

Professor Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue (CPD), tells the FE that he thinks the target is very ambitious and impossible to achieve.

"Bangladesh's business climate is traditionally very poor. Besides, the energy crisis has been added in recent months. So it is really difficult to achieve the target within a year."

Policy Exchange Bangladesh Chairman Dr Masrur Reaz says since the Bangladesh investment climate has not improved and lots of changes have been added in recent times, it is almost impossible to push the investment-to-GDP ratio up to 34.5 per cent.

The government should be realistic in its target and take immediate action to improve the business climate as well as tap more local and foreign investments, he adds.

According to the GED's five-year development strategy, the economic roadmap will be deployed across three strict, sequential operational phases.

The first two years will be treated as "Economic Recovery", where immediate policy prioritisation is directed at stabilising macroeconomic indicators, curbing inflationary pressures, resolving acute banking sector liquidity issues, and aggressively rebuilding depleted foreign exchange reserves.

In the third year, "Restoration & Transition" will be conducted, accelerating institutional banking reforms, modernising trade logistics, and jumpstarting private sector investments.

In the fourth and fifth years, the government would go for "Reconstruction & Acceleration", which will be the final phase and aimed at high-velocity, tech-led growth, absolute poverty reduction, and massive FDI penetration.

Bangladesh is set to begin formal negotiations with the European Union in September on a proposed free-trade agreement (FTA), as the country moves to secure long-term market access ahead of its LDC graduation.

A senior Commerce Ministry official says the ministry's FTA wing has already completed its preparatory work.

"The paperwork is done. We are now ready for the next steps," the official adds.

Formal talks are expected to begin in the second week of next month, although details as to whether the delegations will meet in Europe or in Bangladesh are still being finalised.

The ministry is prioritising the removal of non-tariff barriers (NTBs) and improvements in trade facilitation, including the introduction of a national single-window system. It is also preparing a pool of trade experts to support the negotiations.

"We are addressing issues raised earlier by the EU and working to improve the overall business environment," the official told The Financial Express.

Commerce Minister Khandakar Abdul Muktadir has said Bangladesh is pursuing FTAs with major partners, including the EU, to safeguard preferential market access after graduation from the least-developed country (LDC) status.

"We are working to ensure continued market access for Bangladeshi exporters before graduation," he said.

The EU has also signalled its readiness for exploratory talks but has urged Bangladesh to take concrete steps to remove NTBs and improve the investment climate. Both sides have already discussed trade facilitation, regulatory reforms and investment conditions.

Regarding the FTA with the European bloc, BGMEA President Mahmud Hasan Khan has said informal discussions on the agreement have already begun, while formal negotiations are expected to start in September.

"Bangladesh would also wait for the UN General Assembly, as any delay in the country's LDC graduation would provide some relief to exporters. However, FTA negotiations would continue regardless of the outcome of the graduation process."

BKMEA President Mohammad Hatem says the government has formed a committee and is working on the issue, while the business community is also assisting the government.

He says discussions on the FTA are expected to begin in September and Bangladesh should conclude the negotiations as soon as possible. "With India and Vietnam already having FTAs with the EU, Bangladesh could face intense competition in the European market if it fails to secure a similar agreement."

He feels that Bangladesh should aim to conclude the FTA before 2029 to safeguard its competitiveness on the EU market.

Talking to the FE, Policy Exchange Bangladesh founder Dr M. Masrur Reaz said a comprehensive FTA would be crucial for Bangladesh to remain competitive on the EU market after LDC graduation and the gradual phase-out of preferential schemes.

"Bangladesh has to put together a very serious diplomatic effort to secure the EU's formal interest in starting the FTA negotiations," he added.

The EU remains Bangladesh's largest trading partner, accounting for 21.5 per cent of the country's total goods trade in 2025, according to the European Commission.

According to the EC data, two-way merchandise trade stood at €23.3 billion in 2025, with the EU recording a €19.1-billion deficit. Apparel and textiles made up nearly 94 per cent of Bangladesh's exports to the bloc, while EU exports were led by machinery, appliances and chemicals.

Despite strong trade flows, investment remains limited. EU foreign direct investment stock in Bangladesh stood at €2.5 billion, as of 2024, compared to €86 million from Bangladesh in the EU.

Bangladesh currently benefits from duty-free, quota-free access under the EU's Everything But Arms (EBA) scheme. After LDC graduation, it is expected to retain EBA preferences for three more years, until 2029, and may later seek GSP+ status to maintain preferential access.

Strategic push for post-LDC trade: Dhaka is pursuing FTAs with multiple partners as part of its post-LDC strategy to diversify export markets and reduce reliance on unilateral preferences.

The urgency has increased as competitors such as Vietnam already enjoy an FTA with the EU, giving them stronger market positioning.

EU Ambassador Michael Miller earlier said the bloc is ready for exploratory FTA talks and had already shared a proposal with Bangladesh. Discussions have also covered NTB removal, trade facilitation and investment reforms.

A broader Partnership and Cooperation Agreement (PCA) is also under negotiation, covering trade, governance, human rights, climate action and sustainable development.

Talking to the FE, Dr Mostafa Abid Khan, component manager of the Support to Sustainable Graduation Project (SSGP) and a former member of the Bangladesh Trade and Tariff Commission, said the EU had given Bangladesh a list of non-tariff barriers (NTBs) that it needs to address before starting negotiations.

"If the government addresses these issues beforehand, it will help create a favourable environment at the negotiation table," he said.

The new government is also keen to undertake various reforms, and the trade-negotiation expert notes that the FTA discussions could help facilitate those reforms. "We have to start this immediately, as the trade bloc is an export destination for 45 per cent of our goods," he said.

As Bangladesh's major trading partner, signing an FTA with the EU could be a significant move for the country.

In the EU market, Bangladesh's major apparel competitor India is set to secure duty-free market access, while Vietnam will also enjoy the same facility by 2029 under its FTA with the bloc.

"It might also play a major role as the country is scheduled to graduate from the least-developed-country status," he added.

He also suggests that, beyond signing trade agreements, Bangladesh must complete the necessary reforms to facilitate smooth trade.

The government has waived more than half of the total tax incidence on server imports to promote cloud infrastructure and data centre development amid growing adoption of artificial intelligence.

The National Board of Revenue (NBR) issued a gazette notification on August 17, making the concession effective immediately.

Currently, the total tax incidence on server imports is nearly 24 percent. Following the notification, the rate has been reduced to 9.5 percent, including 7.5 percent advance tax, said a tax official, seeking anonymity.

The move follows stakeholders’ negotiations with the government during the budget session for 2026-27, the official added.

The decision is expected to reduce the cost of server imports and support the expansion of digital infrastructure for businesses and organisations.

According to the NBR notification, the exemption applies to servers imported under HS Code 8471.50.90.

The notification said importers of the specified servers would be exempted from customs duty, regulatory duty, supplementary duty, if applicable, and value-added tax (VAT) as specified in the first schedule of the Customs Act.

The concession comes as demand for computing capacity and data infrastructure is rising with the growth of digital services and technology-driven businesses in Bangladesh.

“As we promised, we are committed to reducing the total cost of servers, as this will support the development of data centres and cloud infrastructure. These facilities will also play a critical role in accelerating artificial intelligence adoption in our country,” said Rehan Asad, telecom and ICT adviser to the prime minister.

Industry stakeholders welcomed the move.

“I think it is a positive move. In the budget, similar benefits were provided for imported laptops, which will help expand digitisation,” said AKM Fahim Mashroor, former president of the Bangladesh Association of Software and Information Services (BASIS).

“However, import duty on smartphones remains very high, resulting in low smartphone penetration,” he said.

“Smartphones are now the primary digital access devices for most people. Therefore, they should be treated in the same way as laptops and servers,” he added.

Investing a portion of remittance inflows in small and medium enterprises (SMEs) will create new jobs, strengthen the local economy and open up new opportunities for future generations, IOM Bangladesh Chief of Mission Laura Tomm Bonde said today (22 August).

"When migration is safe, regular and orderly, its benefits are not limited to an individual migrant," she said while addressing a mock parliamentary debate as chief guest at the Bangladesh Film Development Corporation (FDC) in the capital to mark International Day of Family Remittances 2026.

The event was jointly organised by Debate for Democracy and IOM Bangladesh, with support from the European Union.

Laura Tomm Bonde said safe, regular and orderly migration contributes to the overall development of families, society and the country, while every remittance reflects the hard work, resilience and sense of responsibility of Bangladeshi expatriates.

She emphasised that directing a portion of remittances into the SME sector would boost local economic momentum and create sustainable opportunities for future generations.

"IOM is working closely with the government to improve migration management and ensure the protection of migrants," she added.

Chairing the event, Debate for Democracy Chairman Hasan Ahmed Chowdhury Kiron described expatriate workers as the nation's economic heroes, saying remittances serve as a key driver of the economy and a major pillar of foreign exchange reserves.

He said migration is directly linked to the employment of nearly 25% of Bangladesh's workforce, adding that the national poverty rate would have been roughly 10% higher without overseas employment opportunities.

Kiron stressed the importance of channelling remittances into productive investments, particularly SMEs, rather than using them solely for consumption, to ensure the long-term financial stability of migrant families.

In the debate competition titled "Investing Remittances in the SME Sector is the Best Strategy for Protecting Migrant Families", Dhaka International University emerged as the winner, defeating the debating team from the State University of Bangladesh.

Bangladesh Bank (BB) has signed agreements with seven banks for participating in Tk 410 billion (Tk 41,000 crore) financing packages aimed at supporting productive and priority sectors of the economy.

The agreements were signed on Thursday at Bangladesh Bank headquarters in the presence of Deputy Governor Dr Md Kabir Ahmed, Executive Director Md Enamul Karim Khan and senior officials of the central bank and participating banks, said a press release.

The financing packages are part of a broader Tk 600 billion (Tk 60,000 crore) coordinated financing initiative designed to inject momentum into the economy, create employment, diversify exports and support productive sectors.

Of the Tk 410 billion (Tk 41,000 crore) fund, Tk 200 billion (Tk 20,000 crore) will be provided under a pre-financing scheme for supporting closed industries and the service sector, while Tk 50 billion (Tk 5,000 crore) will be allocated under a refinancing fund for the CMSME sector.

Another Tk 30 billion (Tk 3,000 crore) will be provided under a refinancing scheme to promote export diversification.

A further Tk 100 billion (Tk 10,000 crore) has been earmarked for agriculture and rural sectors to boost agricultural production, ensure food security and create employment.

Besides, Tk 30 billion (Tk 3,000 crore) will be provided under a refinancing scheme to create a special agriculture-based economic hub in northern Bangladesh.

The central bank said the financing initiative is intended to help maintain macroeconomic stability while supporting economic activities, investment and employment.

It also aims to ensure comparatively affordable financing through pre-financing and refinancing mechanisms.

The agreements were initially signed with Sonali Bank PLC, Bank Asia PLC, Eastern Bank PLC, City Bank PLC, Dutch-Bangla Bank PLC, Pubali Bank PLC and BRAC Bank PLC.

On behalf of Bangladesh Bank, Director of the Supervisory Data Management and Analytics Department Md Abdul Mannan signed the agreements, while managing directors of the participating banks signed on behalf of their respective institutions.

Deputy Governor Dr Md Kabir Ahmed highlighted the importance and multifaceted role of the Tk 410 billion (Tk 41,000 crore) fund at the signing ceremony.

Bangladesh Bank expects the participating banks to play an important role in channelling the funds to productive and priority sectors and in implementing the initiative effectively.

Bangladeshi importers have suspended stone imports from India through Sonahat Land Port in Kurigram, protesting alleged substandard supplies, higher prices and reduced shipments by a syndicate of stone traders in Golakganj, Assam.

The indefinite suspension has brought port operations to a standstill since mid-July, leaving thousands dependent on port-related services without work and depriving the government of customs revenue.

Aminul Haque, assistant director (traffic) of Sonahat Land Port, said around 100 Indian trucks carrying stones normally enter the port each day, but imports have remained suspended amid a dispute between traders in the two countries.

“Sonahat Land Port earns more than Tk 4 crore in revenue on average every month. Not a single truck loaded with stone has arrived from India since July 18. As a result, no revenue has been generated,” he said.

Only stone is imported from India through the port, and export trade has not yet started, Aminul said.

Importers said Indian suppliers previously provided high-quality river stone boulders but are now sending smaller and lower-grade stones.

“We do not want to incur losses by importing substandard stones. Imports will remain suspended until quality products are supplied at reasonable prices,” said Abu Hena Masum, joint secretary of the Sonahat Land Port Importers and Exporters Association.

The stones fail to meet required size and quality standards after being processed through auto-crushing machines, making contractors involved in road, bridge and other infrastructure projects reluctant to buy them, he said.

Jahangir Alam Akmal, convener of the Sonahat Land Port Customs Clearing and Forwarding (C&F) Agents Association, said the influence of syndicates in India’s stone trade had increased.

Stone prices have also risen significantly, he said. River stones were previously imported at $11 per tonne, with the total landed cost in Bangladesh at about Tk 1,300 per tonne. The price has now increased to $13.5 per tonne, taking the import cost to around Tk 1,670 per tonne.

Jahangir also said stones were being loaded directly from quarries, resulting in excessive amounts of sand and soil being mixed with the shipments and increasing the risk of financial losses.

The suspension has left stone-crushing workers, loading and unloading labourers, truck drivers, transport workers and small traders in the area idle.

Soharab Hossain, a stone importer at Sonahat Land Port, said, “I had 700 tonnes of stone in stock, but all of it has already been sold. I do not have any stone left to sell. Although traders from different places have been contacting me to buy stone, I am unable to supply them.”

“When trucks loaded with stone arrive from India, the port remains busy and bustling with activity. But as no stone is coming now, the port almost seems haunted. I do not know when this deadlock will end,” he added.

Mofizul Islam, a loading and unloading worker at the port, said, “We have no work because no stones are arriving. We used to earn between Tk 700 and Tk 1,000 a day. Now we have to borrow money to support our families, and some workers are even taking high-interest loans.

“If this situation continues, we will be forced to look for other jobs.”

Another worker, Hamidul Islam, said more than 3,000 labourers were directly involved in stone unloading, crushing and related activities at the port. With imports suspended, all crushing machines have stopped operating, leaving most workers unemployed.

Truck driver Mizanur Rahman said transporting imported stones used to be his primary source of income. “Now the trucks remain idle, and our earnings have dropped sharply,” he said.

Traders and officials remain hopeful that the dispute will be resolved, although they are unsure when.

“We hope operations will return to normal once the problem is resolved,” the port’s assistant director Aminul said.

“It is not possible to say for certain when the deadlock at the land port will end. However, local traders at the port are maintaining regular communication with their Indian counterparts.”

“Discussions are underway between traders from both countries, and imports will resume once the issue is resolved,” Jahangir Alam Akmal said.

Inward remittances through mobile financial services (MFS) declined by nearly 21 per cent in June over the previous month, according to Bangladesh Bank (BB).

According to the BB figures, wage-earner remittances received through MFS stood at Tk 22.29 billion in June compared to Tk 28.18 billion in May.

The decline was recorded in both rural and urban areas, indicating a slowdown in the inflow of wage-earner remittances through digital financial channels during the month.

Remittance inflow through MFS in rural areas fell to Tk 12.40 billion in June from Tk 15.66 billion in May and that of urban areas declined to Tk 9.88 billion from Tk 12.52 billion during the same period.

An MFS official, preferring anonymity, said the fall in the inward remittance through MFS in June could be attributed partly to the seasonal impact following Eid-ul-Azha, which was observed in May this year.

Remittance inflows typically rise ahead of Eid festivals as migrant workers send more money to their families, resulting in a slowdown in the following month, he added.

On the other hand, total remittance inflow also declined by 18.02 per cent to over $2.82 billion in June FY 26 from $ 3.44 billion in May.

Mobile Financial Services (MFS) have significantly expanded financial inclusion in Bangladesh by providing accessible, secure and convenient digital financial services to millions of people, particularly in rural and underserved areas.

The growing use of MFS has made it easier for migrant workers' families to receive remittances quickly and conveniently, while also reducing their dependence on traditional banking channels.

Dr Masrur Reaz, Chairman of Policy Exchange Bangladesh, said the decline in remittances through MFS in June should not necessarily be viewed as a weakening of overall remittance inflows, as the movement of remittances between digital and traditional banking channels can vary from month to month.

He said the growing use of MFS has played an important role in expanding financial inclusion, particularly by connecting rural households and people with limited access to formal banking services to the financial system.

MFS statistics cover major providers such as bKash, Nagad, Rocket and Upay. The providers offer various services, including person-to-person (P2P), business-to-person (B2P) and government-to-person (G2P) transactions.

Meanwhile, the e-money balance held in MFS accounts declined significantly to Tk 195.07 billion in June from Tk 241.65 billion in May.

The number of MFS accounts increased marginally by 0.47 per cent to 256.97 million in June.

Total volume of MFS transactions also fell in June, standing at Tk 2.08 trillion, down 15.59 per cent from the previous month.

Despite the decline in the transaction volume and the amount of inward remittances through MFS, the continued expansion of MFS accounts indicates the growing reach of digital financial services across the country.

Dr Reaz said: "Digital financial services have become an important channel for delivering remittances to households, especially in rural areas. Therefore, any decline in MFS-based remittance needs to be assessed alongside overall remittance flows and the use of other formal channels.

Sustaining the growth of digital financial services would require greater consumer confidence, reliable digital infrastructure, competitive transaction costs and stronger safeguards against fraud and other financial risks, he said.

He further said Bangladesh needs to focus not only on increasing the number of MFS accounts but also on encouraging regular and productive use of those accounts, as deeper digital financial inclusion can help households save, make payments and access a wider range of formal financial services.

The Invest Bangladesh Authority, formed by merging the Bangladesh Investment Development Authority (Bida), Bangladesh Economic Zones Authority (Beza) and Public-Private Partnership Authority (PPPA), formally began operations today (20 August).

The government issued a gazette notification bringing the Invest Bangladesh Act, 2026, into force.

The notification, signed by Principal Secretary to the Prime Minister ABM Abdus Sattar by order of the president, said the government had brought the Act into effect using powers granted under Section 1(2).

However, the full organisational structure of the new authority, including its wings and teams, will be developed in phases, said Nahian Rahman Rochi, former Bida executive member and head of business development.

"With the gazette now in effect, everything will operate under the Invest Bangladesh name. Formation of the new teams and wings, along with the remaining work, will now begin in phases," Rochi told The Business Standard.

He said the authority had formally become operational and the remaining organisational work would proceed gradually.

"We are delighted that, after months of work, Invest Bangladesh has now gone live and begun its journey. The genesis of this initiative came directly from investors telling us that they wanted one front desk for all investor services," Rochi said.

Our objective will be to make Invest Bangladesh that single point of access, providing investors with a more coordinated, seamless and accountable experience throughout their investment journey, he added.

Under the law, the Invest Bangladesh Authority will operate as a statutory body, with its headquarters in Dhaka. With government approval, it will be able to establish branch offices elsewhere in the country and liaison offices abroad.

The authority will have a chairman and seven members to run its regular operations, with the chairman serving as chief executive.

Its key responsibilities will include identifying investment opportunities, promoting domestic and foreign investment, removing investment barriers and coordinating with relevant ministries and government agencies.

Following the merger, all existing assets, records, contracts, liabilities and other matters of Bida, Beza and PPPA will be transferred to the new authority. Employees of the three dissolved agencies will also work under Invest Bangladesh.

The new authority is expected to provide more integrated services to investors and reduce barriers to investment, formally completing the long-running merger process.

The ongoing energy crisis is no longer affecting just the power-intensive industries, but creating risk factors across all sectors, businesses said yesterday, calling for swift steps.

Gas shortages, high fuel costs and unreliable supplies are disrupting production and investment, they said at a seminar “Biannual Economic State in FY2026”, organised by the Dhaka Chamber of Commerce & Industry (DCCI) at its auditorium in Dhaka.
Gas shortages are delaying industrial projects, raising manufacturing costs and creating risks for sectors ranging from pharmaceuticals and garments to ICT and small businesses, said DCCI President Taskeen Ahmed.

Presenting the keynote paper, he warned that the energy crunch is no longer confined to power-intensive industries.

Citing the Munshiganj Active Pharmaceutical Ingredient Industrial Park as an example, he said gas supply constraints are continuing to delay production at the park despite plots having already been allocated to 27 companies.

His remarks continue a months-long pattern of escalating DCCI warnings on the energy crisis. Speaking to The Daily Star on 21 August, he estimated that Bangladesh’s energy crisis is costing the industrial sector up to Tk 2,387 crore a day in lost economic output as factories continue to face supply disruptions.

The DCCI, in the keynote paper, recommended ensuring gas connections or alternative energy sources, along with an operational central effluent treatment plant and other essential infrastructure, to make the industrial park fully functional.

Uninterrupted gas and electricity supplies to industrial zones are essential for reducing production costs and ensuring factories can meet increasingly demanding manufacturing timelines, it said.

The chamber also noted that CMSMEs are bearing the cost of dependence on fossil fuels, and recommended financing rooftop solar installations and energy-efficient machinery to reduce their exposure to rising fuel costs.

It also called on authorities to accelerate these efforts while attracting stronger domestic and international participation in the revised offshore bidding round. It also called for diversifying energy import sources to cushion the economy against external supply and price shocks.

Also speaking at the event, Transcom Group Chief Executive Officer (CEO) Simeen Rahman said uncertainty and disruptions in energy supply have become a major problem for industries across the board.

“We are seeing our production costs rise on a daily basis — costs that none of us had calculated in our annual operating plans. This is directly affecting our bottom line and making companies increasingly vulnerable,” she said.

Higher utility costs are also driving up production costs, while rising raw material prices and operating expenses are adding further pressure, she added.

The Transcom CEO noted that despite a business-friendly budget, private-sector growth faces high interest rates, costly borrowing, persistent inflation, weak confidence, rising non-performing loans and tighter bank lending, constraining investment, expansion and employment.

Consequently, Bangladesh’s global competitiveness is being eroded, she said.

Finance Minister Amir Khosru Mahmud Chowdhury said the issue of the energy sector is a huge problem for the government.

He said, “We are introducing so many policies, carrying out so many reforms, doing so much deregulation, and providing all the support needed to make the private sector-friendly.

“But we cannot solve the electricity and gas problem in one day. This is a problem that we have inherited. And solving the electricity and gas problem will take time.”

He said despite mobilising all the resources and making every possible effort, the government is failing to fully control this timeframe.

The government is looking at what could be done as a stopgap measure in the short term, as well as what could be done in the medium and long term.
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Earlier this month, the minister had said it would take at least two years to fully fix the power and gas shortages.

At yesterday’s seminar, he said the government is negotiating with multiple Floating Storage and Regasification Units (FSRUs) simultaneously.

However, he said securing FSRUs would not immediately solve the gas shortage, as the units must first be negotiated, brought to Bangladesh and installed, with several other steps involved in the process

“At the same time, we are also starting work on shore-based gas reserves. Similarly, for oil, we want to ensure a three-month reserve across the energy sector,” said the minister.

He stated that the government inherited dangerously low energy reserves, some below 15 days, but has raised them to one month and aims to reach three months.

“We are trying to do it in the fastest possible way. The energy crisis will improve slowly. It will improve, but it will improve slowly. And I know the damage this is causing to industry; that goes without saying,” he said.

“Because of the war in the Middle East, our fiscal space has reached a very difficult position. Because of the higher prices, particularly the high cost of fuel, we are already taking a hit of $5 billion,” he added.

Hossain Zillur Rahman, executive chairman at Power and Participation Research Centre (PPRC), said the country’s economy is at a critical juncture.

He noted that if the right decisions are taken at this stage, the economy could gain the desired momentum; otherwise, there is a risk of falling further behind.

He observed that harassment in various areas of the economy has evolved into a negative structural issue, preventing reform initiatives from delivering the desired results.

He stressed that the government must pay due attention to this issue and that reducing such harassment is essential for expanding the tax net.

Mahbubur Rahman, president of the International Chamber of Commerce Bangladesh, said in the current fiscal year, inflation has not yet declined to the desired level, while private-sector credit growth remains at its lowest level in many years.

Investment has remained stagnant and the industrial sector has been unable to operate at full capacity.

He said that high interest rates, rising production and import costs, exchange-rate volatility and uncertainty over energy supplies have significantly increased the cost of doing business.

Zaidi Sattar, chairman, Policy Research Institute of Bangladesh, said there is a significant gap between policy formulation and implementation in Bangladesh, resulting in the country failing to achieve the desired benefits.

He said that while Bangladesh maintains relatively liberal policies for export product and market diversification, its policies on imports remain restrictive, with high tariff rates contributing to higher domestic inflation and increased prices of goods.

He also called for the formulation and implementation of appropriate strategies within the available timeframe for Bangladesh’s LDC graduation.

Professor Mustafizur Rahman, distinguished fellow at Centre for Policy Dialogue, said that a revolution in tax collection is essential for implementing the Annual Development Programme, while there is very little possibility of achieving the revenue collection target set in the national budget.

Bangladesh has sought US$ 5.3 billion in financing from the World Bank to build MRT Line-2, its proposed fifth metro rail line, as the government moves to secure external funding for the major transport project.
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The Ministry of Road Transport and Bridges (MoRT&B) has recently sent a preliminary development project proposal (PDPP) to the Planning Commission, seeking approval and confirmation of overseas financing for the project, officials said.

"We have started work to build Dhaka's fifth metro line, for which Tk 650 billion (US$ 5.3 billion) in investment will be required," said an official at the MoRT&B.

A preliminary development project proposal (PDPP) has been sent to the Planning Commission (PC) for approval and confirmation of overseas financing, he added.

"We have received the PDPP from the ministry. The proposal has been scrutinised. It will be sent to the Economic Relations Division (ERD) next week to obtain confirmation of external financing," said Kabir Ahmed, Chief of the PC, last week.

He said the proposed MRT-2 is a very important transport line as it will cover Old Dhaka, which is densely populated and a major commercial area.

The MRT Line-2, to be built between the capital's Gabtoli and Narayanganj, will require around Tk650 billion in funding, with the World Bank having already shown interest in financing the project, another MoRT&B official said.

The World Bank last year provided technical assistance to the government for conducting feasibility and detailed-design studies for the long-proposed MRT Line-2, he added.

The ministry official said the World Bank had recently met with them and made a presentation on financing the MRT-2 project. "We have requested the global lender to finance the $5.3 billion project," the ministry official said.

Another development partner, the Asian Infrastructure Investment Bank (AIIB), has also shown interest and met with officials in the middle of this month.

"Since the project will require nearly $5.3 billion in funding, we may even prefer a co-financing arrangement with the World Bank," he added.

An ERD official said the World Bank had already provided a grant of US$2.5 million to Dhaka Mass Transit Company Limited (DMTCL) for pre-construction studies on MRT Line-2, planned to run from Gabtoli to Narayanganj.

The proposed 35-kilometre line would pass through Gabtoli, Dhaka Udyan, Mohammadpur, Jhigatola, Science Laboratory, New Market, Azimpur, Palashi, Dhaka Medical College, Gulistan, Motijheel, Kamalapur, Manda, Dakhingaon, Dhamripara, Signboard, Bhuighar and Jalkuri before reaching Narayanganj.

A spur line branching off from Gulistan to Sadarghat is also being considered, although its feasibility has yet to be explored.

Meanwhile, the DMTCL is working to prepare the feasibility study and detailed design for the MRT-2 line.

ERD officials said this would be the World Bank's first involvement in Bangladesh's mass rapid transit (MRT) infrastructure development after a long hiatus since the Washington-based lender withdrew from funding development in the country's road and communications sector.

The lender suspended funding for the country's transport sector more than a decade ago, citing corruption and mismanagement by relevant government authorities.

Japan, the Asian Development Bank (ADB) and South Korea are already involved in mass rapid transit projects in Bangladesh.

Officials said Wednesday that the World Bank had recently agreed to provide technical assistance to the government to conduct feasibility and detailed-design studies for the long-proposed MRT Line-2.

According to DMTCL estimates, construction of MRT Line-2 may cost around Tk650 billion, a figure that will be refined after completion of the feasibility study and detailed design.

The government formed DMTCL in July 2013 to build and operate metro rail services, and the company has since adopted a time-bound action plan to construct a 140-kilometre metro rail network comprising six lines across Dhaka by 2030, aiming to reduce traffic congestion and air pollution.

Currently, MRT Line-6, funded by Japan, is operational between Uttara and Motijheel, with an extension to Kamalapur expected to open by the end of 2026.

DMTCL is now working to build MRT-1, MRT-5 North and MRT-5 South with financial assistance from Japan and the ADB.

Restoring depositors' confidence in the banking sector was a major challenge for the BNP government as it inherited the most troubled financial sector in the country's history, with the default loan ratio exceeding 36% and dozens of banks unable to repay depositors.

However, in the first six months of the new government, the country's banking sector gradually stabilised, while a majority of depositors of the five merged banks received their money from government allocations. The Bangladesh Bank also moved to repay depositors by liquidating five non-bank financial institutions that are no longer viable.

The cabinet also approved the draft of the Bank Resolution (Amendment) Act, 2026, repealing the controversial provision that allowed former directors or owners of banks undergoing or slated for mergers to regain control under relatively favourable terms.

Under the amended law, the Bangladesh Bank moved to restructure the troubled financial sector by restricting, merging and liquidating ailing financial institutions, sending a strong message to owners to strengthen corporate governance.

However, managing default loans remained a major challenge for the banking sector as more than 20 banks have been facing a combined capital deficit of over Tk2 lakh crore, constraining their lending capacity.

In this context, the Bangladesh Bank introduced a Tk60,000 crore stimulus and refinancing package to revive closed factories, support struggling industries and restore private-sector investment. The package includes a Tk41,000 crore fund pooled from banks with excess liquidity and a Tk19,000 crore direct allocation from the central bank.

The foreign exchange market has also remained broadly stable, with the dollar rate holding steady while foreign exchange reserves increased by over $2 billion to more than $32 billion in the last six months, according to International Monetary Fund calculations.

However, inflation, which is one of the central bank's core monetary policy objectives, has not yet fallen to the expected level despite some decline.

Inflation fell to 8.32% in July from 9.13% in February, when the BNP government took office.

Muhammad A (Rumee) Ali, former deputy governor of Bangladesh Bank, said the government would have to take some tough decisions to address problems regarding capital adequacy, non-performing loans (NPLs), and lack of governance.

He questioned the policy of using taxpayers' money to keep weak banks afloat, saying it would require a huge amount of funding, the burden of which would ultimately fall on taxpayers.

He also placed particular emphasis on the autonomy of the central bank and the government's control over state-owned banks.

Rumee said, "The government will have to set specific targets and implement them while taking political realities into account."

Bangladesh's risk has increased internationally because of weaknesses in the banking sector, he said. "As a result, the cost of LC confirmation has risen, imported goods have become more expensive, and the overall supply chain is facing additional costs."

Despite these challenges, however, Rumee believes the government is making its best efforts to address the situation.

Fahmida Khatun, executive director of the Centre for Policy Dialogue, said several positive steps had been taken to improve the banking sector during the government's first six months. In particular, the government introduced a stimulus package worth around Tk60,000 crore to create employment and expand banking business, she said.

"The Bangladesh Bank now needs to properly monitor the implementation of these packages and ensure that the funds are used appropriately, Fahmida said.

She said restoring depositors' confidence must be given the highest priority. "Without regaining depositors' trust, there is no scope for the banking sector to recover. In particular, the new bank created through the government's merger initiative is a major test for the government. The initiative must be made successful at any cost."

Fahmida said as export earnings have not recorded significant growth, the government needs to take initiatives to engage expatriate Bangladeshis more closely in strengthening the economy. It should focus on improving their skills and ensuring non-stop services for expatriates, she said.

Referring to the government's commitment to ensuring Bangladesh Bank's autonomy and keeping state-owned banks free from the intervention of the finance ministry, the economist said the government must prioritise these issues and take effective steps within a short period.

"Above all, full transparency and good governance must be ensured in the banking sector. The government must ensure that the scale of losses suffered in the past is not repeated and that there is no further misuse or misappropriation of loans," she said.

Measures taken to revive the economy, accelerate digital transformation
During the government's first six months, the key positive initiatives in the banking sector included recovering defaulted loans, expanding digital transactions, stabilising the foreign exchange market, and increasing the flow of funds to productive sectors.

The integrated stimulus package introduced to increase the flow of funds to various critical sectors of the economy is expected to help create around 25 lakh new jobs.

While the normal lending rate in the banking sector stands at around 13%-14%, loans under these stimulus packages are being offered at much lower interest rates of just 4%-6%. This has provided significant relief to industrial entrepreneurs and is expected to support the revival of industries and new investment.

Special lending programmes through banks have been strengthened to ensure timely financing for farmers and widen access to loans for startups, young entrepreneurs and small businesses, moving beyond collateral-based lending.

The central bank has taken major steps to expand and make "Bangla QR" more effective as part of efforts to reduce reliance on cash and expand the use of digital transactions across the economy. Until now, it has primarily been used for payments at shops and merchant outlets. However, preparations are now underway to introduce person-to-person transactions through the system.

Recent Bangladesh Bank data also show a sharp rise in the use of Bangla QR. In January this year, around 723,000 transactions were conducted through Bangla QR, but the number surged to 6.255 million in July. Over the same period, the value of transactions increased from Tk212 crore to around Tk1,476 crore.

Long-term roadmap to reduce NPLs, strengthen governance
When the BNP government took office, non-performing loans (NPLs) accounted for around 32% of total loans, placing Bangladesh among the countries with the highest NPL ratios in the world. To reduce bad loans and restore good governance in the banking sector, both short- and long-term reform measures are being prioritised.

To expedite loan recovery, steps are being taken to speed up the resolution of pending court cases and strengthen banks' own recovery mechanisms.

In March 2026, detailed guidelines were issued for implementing the international accounting standard IFRS 9. Under the framework, banks will have to calculate potential credit losses in advance using the Expected Credit Loss approach from 2028. In addition, a fresh Asset Quality Review is being undertaken to accurately assess banks' loan portfolios, the actual quality of their assets, non-performing loans and potential losses, without concealing the extent of the risks.

Facilitating foreign transactions and preventing money laundering
During the first six months of the BNP government, the Bangladesh Bank took several notable measures to facilitate foreign currency transactions, bring remittances and export proceeds into the country, and restore stability to the dollar market.

The Bangladesh Bank has allowed authorised dealer banks to partner with cross-border digital payment service providers, such as PayPal and Payoneer, to facilitate foreign transactions and the processing of outward remittances. This has made it easier for freelancers and online businesses to bring their earnings into the country. The process for making tuition fee payments to foreign universities through banking channels has also been made easier.

Efforts to recover money allegedly siphoned abroad have been significantly strengthened through international legal initiatives in the banking sector. For the first time, banks have been directed to engage international law firms to identify funds and assets linked to the country's top 10 business groups accused of siphoning money abroad. Subsequently, another 42 companies – each with more than Tk200 crore in default loans – were brought under the initiative, with plans underway to engage eight more international law firms.

Moves that drew criticism
Alongside its positive initiatives, several weak policy decisions, controversial appointments and institutional short-sightedness on the part of the government have further deepened the crisis in the banking sector.

Amid efforts to reform the banking sector, a government decision sparked widespread controversy. Section 18(a) was newly inserted into the Bank Resolution Act, 2026, which was passed by parliament on 10 April this year. The controversial provision allowed former shareholders or disputed owners of banks undergoing mergers or resolution to apply, subject to certain conditions, to regain shares, assets and liabilities of those banks.

The provision drew strong criticism from bankers, economists, governance advocates and others amid concerns that it could create an opportunity for former owners linked to irregularities, loan fraud and poor management in the banking sector to regain control. Transparency International Bangladesh described the provision as posing a risk of "impunity" in the banking sector and the recurrence of past irregularities.

Ultimately, following intense criticism, the government was forced to reconsider its position. On 11 August, the Cabinet approved the draft Bank Resolution (Amendment) Act, 2026, which completely repealed the controversial provision.

During this period, the Bangladesh Bank issued a controversial "exit policy" or circular as part of its efforts to reduce non-performing loans. Under the circular, defaulting borrowers of banks and financial institutions have been given a significant one-time concession, allowing them to have both accrued and unaccrued interest waived if they repay only the principal amount of their loans.

While the measure may temporarily help clean up banks' balance sheets by reducing the burden of non-performing loans, it has raised concerns among bankers and economists who warn that the measure could significantly increase the risk of wilful default becoming more widespread across the banking sector.

The BNP made a major commitment in its election manifesto to increase the autonomy of the Bangladesh Bank as part of financial-sector reforms and to remove state-owned banks from the administrative control of the Financial Institutions Division of the finance ministry, placing them fully under the control of the central bank. However, even after the first six months of the government, no major or effective steps have yet been seen in this regard.

Central bankers and stakeholders in the banking sector have stressed that practical institutional reforms are needed to end political and administrative interference in the appointment of the governor and senior officials, the formation of boards of directors, policymaking and the management of state-owned banks.

The lack of progress on these reforms during the first six months means that political and administrative influence over state-owned banks remains largely unchanged, which is considered one of the major factors behind the rise in non-performing loans.

The proposed establishment of a Mortgage Refinance Company (MRC) in Bangladesh could open a new avenue for raising long-term funds from the capital market and help expand access to long-term housing finance.

The institution could mobilise funds by issuing corporate bonds and mortgage-backed securities (MBS), which could then be used to provide long-term refinancing to banks and financial institutions.

The World Bank Group has begun assessing the feasibility of establishing an MRC in Bangladesh following a formal request from the Financial Institutions Division (FID) of the Ministry of Finance.

An MRC could help address a key constraint in Bangladesh's housing finance market, where banks and financial institutions largely rely on short-term deposits to finance long-term housing loans.

By providing a dedicated refinancing facility, the proposed institution could help lenders access longer-term funding and potentially support the development of a deeper market for housing-related securities.

The initiative could also create new investment instruments for institutional investors, including pension funds, insurance companies and other long-term investors, while broadening the country's capital market financing base.

As part of the initiative, a World Bank Group delegation met with the Bangladesh Securities and Exchange Commission (BSEC) yesterday (19 August). BSEC Chairman Masud Khan chaired the meeting at the commission's office.

The meeting discussed the potential structure and operations of the proposed Mortgage Refinance Company (MRC), as well as its possible role in expanding housing finance and deepening the capital market.

An MRC can play an important role in providing long-term liquidity to the housing sector and developing the bond market. Commercial banks typically collect short-term deposits and provide long-term home loans, creating a maturity mismatch and liquidity risk.

An MRC can raise long-term funds through bonds and use the proceeds to refinance banks' mortgage portfolios. This would provide banks with liquidity and enable them to expand their capacity to issue new housing loans.

Similar mortgage refinancing structures are operating in countries such as India, Pakistan and Malaysia. Establishing an independent MRC in Bangladesh could also help expand access to affordable, long-term housing loans, particularly for middle- and lower-income households.

An earlier TBS report, citing a World Bank policy paper, said the proposed MRC could raise funds from the capital market by issuing corporate bonds and mortgage-backed securities. This could increase the supply of long-term fixed-income instruments and create new investment opportunities for institutional investors.

Bangladesh's mortgage market remains underdeveloped

Bangladesh's relatively small mortgage market highlights the need for a Mortgage Refinance Company (MRC).

According to World Bank data, total housing finance loans stood at Tk105,890 crore as of June 2022, equivalent to 7.8% of total private-sector credit and only 2.7% of GDP.

Compared with countries with similar per-capita GDP, Bangladesh's mortgage market remains significantly below its potential. Mortgage debt should be around 6.5% of GDP, according to the World Bank, indicating an additional lending opportunity of around Tk90,000 crore.

Bangladesh also needs around 432,000 new housing units annually, further increasing demand for affordable, long-term housing finance.

The World Bank's 2025 Country Private Sector Diagnostic identified housing for middle-income households as a promising investment sector and recommended developing the legal and regulatory framework for an MRC.

Bond market remains a key challenge

However, Bangladesh's underdeveloped corporate bond market could pose a major challenge to the MRC model.

Experts cited in an earlier TBS report warned that weak demand in the bond market could make MRC bond issuance difficult. Former World Bank economist Zahid Hussain said banks could become the main buyers if the bond market remains weak.

The feasibility study will therefore need to assess the MRC's capital structure, regulatory framework, refinancing model and ability to raise funds from the capital market.

Bangladesh Bank's special loan scheme 'Udyog' to facilitate new-generation entrepreneurs with collateral-free financing is set to be rolled out within this month, opening up a new avenue of commercial lending.

Sources at the central bank said as part of the plan to lend the young generation low-cost funds, the banking regulator would initially launch the scheme for all upazilas in eight districts of the country's eight divisions from later this month before its countrywide implementation from January next.

The BB comes up with the special lending scheme to uphold aspirations of the young generation, who led the July-August mass uprising in 2024 that toppled Sheikh Hasina's governing regime for building a new Bangladesh where there will be no discrimination in access to jobs, funds and other basic facilities

Seeking anonymity, a BB official said they planned to start the lending package having tenure of three years in all upazilas in eight districts under eight divisions from later this August, an eventful month when Bangladesh saw a massive mass uprising two years ago.

"We called this initial implementation of the scheme activation phase but its countrywide replication will start probably from January next," the official said.

The Tk 10-billion lending package will have two portions - loans involving Tk 5.0 billion and grants equivalent to the loan package.

The central banker said the banking regulator would not form any special fund to finance the young entrepreneurs having maximum age limit of 28 years. The loans portion comes from the existing refinancing schemes while the grants money will be initiated with the banks' unused CSR funds and BB's own funds.

Talking about the process from loan application to the stage of approval, another BB official said entrepreneurs having maximum age limit of 28 years can apply for availing the funds and commercial banks will shortlist those on their own through making necessary crosschecks.

Then the shortlisted entrepreneurs will be invited to a daylong session in the upazila concerned to make their presentation about the structure of their business with a plan before a special committee to get their loan approved, he said.

"The special committee will have members from commercial banks, the central bank and renowned entrepreneurs. There will be no one from PEP (politically exposed person) category," he said.

About security of the collateral-free funds, the central banker said each entrepreneur can get loans of up to Tk 1.0 million and an equivalent amount of money will be given as grants.

For example, he said, an entrepreneur is receiving a Tk 1.0-million loan. If he/she fails to pay back the loan in the stipulated time, the grants money equivalent to the defaulted portion will be added up to the loan amount.

"If the entrepreneur pays back the loan amount in time, he/she does not think about the grants. Otherwise, the borrowers will have to pay for both loans and grants on default and will face legal actions," he said.

According to the lending package, 10 entrepreneurs from each upazila will be selected for the special loan scheme.

The Bangladesh Financial Intelligence Unit (BFIU) has directed banks and other reporting agencies to immediately report details of accounts linked to any account they are ordered to freeze.

The directive was issued today (19 August) in a circular letter to the managing directors and chief executive officers of all reporting agencies in the country as part of efforts to prevent money laundering and terrorist financing.

Under the directive, once a reporting agency receives an order from the BFIU to freeze an account, it must promptly provide the intelligence unit with the basis for the freeze and details of other accounts linked to the frozen account.

In other words, if an account belonging to a person or entity is frozen over suspicious transactions, money laundering or related offences, the agency cannot stop at freezing that account. It must also identify other accounts linked to the same person or entity and provide their details to the BFIU.

The BFIU said Rule 26(4) of the Money Laundering Prevention Rules, 2019, specifically requires reporting agencies to provide information on the basis of a freeze and other accounts linked to the frozen account when ordered by the intelligence unit.

The circular stated that the directive was issued under powers granted by Section 23(1)(d) of the Money Laundering Prevention Act, 2012, and Section 15(1)(d) of the Anti-Terrorism Act, 2009.

The BFIU said the directive would strengthen the monitoring of other accounts held by the same person or entity after a suspicious account is frozen.

It is particularly intended to help identify and collect information on related accounts when money linked to money laundering or terrorist financing is transferred through or spread across multiple bank accounts, it added.

The government has taken up a Tk683 crore project to provide freelancing training to more than 51,000 unemployed and job-seeking youths in 13 metropolitan cities, aiming to create employment opportunities and foster new entrepreneurs.

The Department of Youth Development has prepared a Development Project Proposal "Creating Employment through Freelancing Training for Unemployed Youths in All Metropolitan Cities."

Under the proposed project, which has already been sent to the Planning Commission for approval and will run from 1 July 2026 to 30 June 2031, young men and women will receive demand-driven freelancing training to help them earn income from both domestic and international markets.

According to the proposal, the initiative aims to reduce unemployment in metropolitan areas and increase young people's self-reliance by equipping them with the skills needed to work on international and local online marketplaces.

At least 60-70% of trainees are expected to engage in income-generating activities after completing the training.

The training will cover practical skills such as working on online marketplaces, creating professional profiles and portfolios, bidding for jobs, communicating with clients and managing assignments. The target is for trainees to start earning within three to six months of completing the course.

Participants will receive certificates, job linkages, mentorship and follow-up support to help them establish sustainable careers. The project aims to keep the dropout rate below 20%.

Where necessary, trainees will also receive technological assistance, including laptops or other equipment, enabling them to start working immediately after completing their training.

The project also plans to develop a strong network of freelancers in the long term, allowing experienced workers to support newcomers and helping create a sustainable digital employment ecosystem.

Low-income and marginalised youths and women will receive priority under the project, with a target of ensuring 30-40% female participation.

A functional freelancing model will first be developed in Dhaka city, which could later be replicated in other cities and districts.

Priyasindhu Talukder, director (Training) of the Department of Youth Development, said the domestic job market has limited opportunities, while freelancing gives young people access to the global market.

"Through online work, it is possible to get jobs from both domestic and foreign clients," he said.

The director said Bangladesh's relatively low cost of living gives its freelancers a competitive advantage, allowing them to offer services at competitive rates to international clients.

"For this reason, the government is giving special importance to freelancing training at the city corporation level," he said, adding that metropolitan areas host young people from almost every district of the country.

"Students and young people from different districts come to live in cities such as Dhaka, Chattogram and Rajshahi. So, providing training in these cities will make the initiative more effective," he added.

According to Talukder, freelancing training is not a new initiative of the government. The programme initially started in 16 districts, was gradually expanded to 48 districts and is now available in all 64 districts.

He said freelancing also allows Bangladeshi workers to work with foreign clients without needing a visa or passport, making the initiative particularly relevant.

Educational qualifications will not be the primary criterion for selection, he said. Basic computer knowledge and the ability to learn will be more important.

The proposed course will generally run for three months and include two levels, basic and advanced. Trainees who perform well will be promoted to the advanced level.

However, training alone will not guarantee success, Talukder said, stressing that participants must have interest, concentration and dedication to succeed.

The project document says Bangladesh is currently benefiting from a demographic dividend, with a large share of its population in the working-age group. But the opportunity is time-bound and may begin to decline between 2033 and 2040, according to experts.

It is therefore essential to turn the country's large youth population into skilled human resources before the demographic dividend fades, the document says.

According to the latest Bangladesh Bureau of Statistics (BBS) Labour Force Survey, the country's unemployment rate is around 4.63%, with the number of unemployed people estimated at 2.7-2.74 million. A significant portion of the unemployed are young people.

Meanwhile, the global economy is rapidly moving towards digital employment. The global gig economy and freelancing market is estimated at around $455 billion and continues to expand, with strong demand for services such as graphic design, digital marketing, web development, content creation and data processing.

The 13 metropolitan cities covered by the project are Dhaka North, Dhaka South, Chattogram, Gazipur, Narayanganj, Khulna, Rajshahi, Bogura, Sylhet, Rangpur, Barishal, Cumilla and Mymensingh.

These cities are major centres of economic activity and employment, and the project seeks to leverage their concentration of young people to expand access to digital employment.

Bangladesh needs a medicine pricing system that keeps essential drugs affordable for patients while allowing local manufacturers to produce them profitably, experts and industry representatives said at a webinar yesterday.

They said the existing system has failed to keep pace with rising production costs, making some essential medicines commercially unviable and contributing to shortages. At the same time, patients are bearing most healthcare costs themselves.

The comments came at a webinar titled “Medicine Price: Arguments and Way Forward”, organised by the Power and Participation Research Centre (PPRC).

The discussion followed the government’s decision on August 3 to cancel the Essential Medicines List 2026 and Medicine Pricing Method 2026 prepared by the interim government. Until a new list is prepared, the government will follow the 1994 essential medicines list and pricing system.

The interim government had added 135 medicines to the essential list in January, taking the total to 295, following a taskforce recommendation. It also decided to fix prices for all essential medicines to make them more affordable.

After coming to power following the February polls, the BNP government formed a National Drug Advisory Council in June. The council was tasked with advising on the National Drug Policy, preparing a new essential drug list and updating it every two years, and developing the pharmaceutical sector to ensure the availability of essential medicines.

OUTDATED PRICES HURTING SUPPLY

Sayed Abdul Hamid, a professor at the Institute of Health Economics at the University of Dhaka, said the problem with Bangladesh’s essential medicine pricing system dates back decades.

In 1994, prices of 117 essential medicines were fixed using a cost-plus-markup formula covering raw materials, packaging, production, taxes, utilities and profit. But the prices were not regularly reviewed as production costs increased.

Some companies have since stopped producing certain essential medicines, while others continue to make them by using profits from other products to cover losses, he said.

Sayed called for an independent, data-driven authority to review prices regularly using reliable cost information.

Rumana Huque, a professor of economics at the University of Dhaka, said the stakes are high because Bangladeshis spend more than Tk 37,000 crore on medicines each year. Patients pay around Tk 35,000 crore of that amount directly, according to National Health Accounts data.

Government hospitals often run out of medicines within the first 10 to 20 days of a month, forcing patients to buy them from private pharmacies, she said. The problem is more serious in urban areas, where access to free medicines is limited.

Rumana also pointed to widespread self-medication and a lack of reliable data on import costs, manufacturing, distribution, wholesale and retail margins, and promotional expenses. Without such information, it is difficult to identify where costs and profits build up along the supply chain and regulate prices fairly, she said.

Kaiser Kabir, chief executive officer of Renata Limited, said strong competition and a relatively short supply chain have made Bangladesh’s medicine prices among the lowest in the world.

But that does not mean costly medicines are affordable for patients with chronic or serious illnesses.

A locally produced cancer medicine, for example, may cost around Tk 500 per tablet, compared with about Tk 30,000 for an imported version. Even the local price can be unaffordable for patients who need the medicine regularly, he said.

Instead of imposing blanket price controls, Kaiser suggested that the government directly procure expensive essential medicines and provide them free or at subsidised prices.

CALLS FOR TRANSPARENCY AND REFORM

Supreme Court advocate Jyotirmoy Barua questioned the transparency of the pricing system.

He said the government’s much-discussed pricing policy was never formally published, while the list of 117 medicines under the current framework has also not been gazetted.

The 1982 Drug Control Ordinance gave the government authority to set maximum medicine prices through gazette notifications. However, Jyotirmoy said the 2023 Drugs and Cosmetics Act appears to have limited that authority to medicines included in a government-published list.

He cited an example of a 50-tablet pack, without naming the medicine. A pack produced in August 2024 had a maximum retail price of Tk 600, while the same medicine produced a month later was priced at Tk 1,000.

“The issue is not about keeping prices frozen, but ensuring that every increase has a clear and accountable basis,” he said.

Mujshtuo Husain, an adviser at the Institute of Epidemiology, Disease Control and Research, said cancelling the February gazette on essential medicine pricing was a step in the wrong direction.

He said the revised system was better than the 1994 framework because it allowed the essential medicine list to be expanded and prices to be adjusted gradually to market conditions over four years.

Any concerns about the formula could have been addressed through consultations with manufacturers, consumers and other stakeholders, he said.

M Mosaddek Hossain, senior vice-president of the Bangladesh Association of Pharmaceuticals Industries, said local manufacturers now meet around 98 percent of the country’s medicine demand, including medicines for cancer, tuberculosis, malaria and HIV/AIDS.

However, stagnant prices have made some essential products commercially unviable, he said, citing shortages of Monocard 10mg.

He called for a joint review of the pricing formula based on affordability, quality, availability and the long-term sustainability of the pharmaceutical industry.

Moderating the webinar, PPRC Executive Director Hossain Zillur Rahman said the lack of comprehensive health insurance means most healthcare costs are paid directly by patients.

He said policymakers need to address four issues together: reducing patients’ financial burden, keeping the domestic pharmaceutical industry viable, developing an appropriate pricing formula, and ensuring the government fulfils its responsibility to make healthcare affordable, particularly for poorer people.

Bangladesh plans to launch a US$2.0-billion fund in Hong Kong for equity investment in the country's businesses and projects to diversify financing and reduce reliance on conventional borrowing.
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Finance and Planning Minister Amir Khosru Mahmud Chowdhury unveiled the plan on Saturday, explaining that the proposed Bangladesh-dedicated fund would provide equity rather than loans, meaning it would not create a direct debt obligation for the government.

"We are going to have a dedicated fund for Bangladesh in Hong Kong. It will be a $2.0 billion worth of Bangladesh-dedicated fund. This is equity and not a loan," he said at a seminar organised by Dhaka Chamber of Commerce and Industry (DCCI) in Dhaka.

The seminar, titled 'Biannual Economic State in FY2026: Fiscal & Monetary Perspective and Private-Sector Expectations', brought together policymakers, economists, bankers and business leaders.

The proposed fund is part of a broader effort to widen Bangladesh's access to international capital as the government seeks to ease pressure on domestic-financing sources and create more room for private-sector borrowing.

Mr. Khosru said Bangladesh was also considering issuing dollar, panda and samurai bonds to tap different international capital markets.

"We want to go for dollar bonds. We will go for panda bonds and samurai bonds," he said.

The government has already reduced its reliance on bank borrowing to some extent, but the shift would take time, he told his business audience.

"We have already brought down bank borrowing somewhat. But, the process will take time. We are moving in that direction."

The finance minister said reviving Bangladesh's capital market is central to the government's strategy to develop alternative sources of finance.

He said the market has effectively stopped functioning as a reliable source of long-term capital for an extended period, limiting companies' ability to raise funds outside the banking system.

"As there was virtually no functioning capital market in Bangladesh for quite some time, we are trying to revive it as one of the alternative sources of financing."

The government has overhauled the regulatory leadership of the Bangladesh Securities and Exchange Commission, appointing a chairman and four commissioners through what Mr. Khosru described as a transparent selection process.

He said investor confidence was beginning to return, although the market has not yet fully recovered.

"I won't say that the capital market has recovered completely, but confidence is coming back. The market is gaining ground and moving upward."

He said restoring investor confidence alone, however, would not be sufficient. Companies must also believe that the market is credible enough to raise capital through listings.

"Good companies will come for listing only when they have confidence in the market."

Mr. Khosru criticised the previous state of the market, saying that it had become akin to a "casino" in which ordinary investors could lose money while a small group of participants benefited.

The government was seeking to replace that culture with greater transparency, professionalism and institutional governance, he said.

Mr. Khosru said the government did not intend to increase the tax burden on existing taxpayers but wanted to expand the tax base.

"When we talk about increasing taxes, we are not talking about increasing taxes on those who are already paying. We are trying to expand the network."

Automation of tax administration would be important in achieving that goal. Reducing direct interaction between taxpayers and tax officials could improve transparency and limit opportunities for corruption, he said.

The minister also said the government was working to remove regulatory barriers and planned to establish a committee and dedicated website through which businesses could report obstacles to deregulation.

Customs and port procedures would be made more time-bound to reduce business costs and speed up import clearance.

"We are not leaving anything open-ended. Every decision of this government is time-bound," he said.

The government was also reviewing the work of the Bangladesh Bureau of Statistics to improve the credibility of economic data.

Mr. Khosru admitted that the government faced a difficult energy situation and that electricity and gas shortages could not be resolved immediately.

Negotiations were under way for two or more floating storage and regasification units, while efforts were also being made to increase gas reserves.

He noted the government had inherited energy reserves equivalent to only about 15-17 days but had increased them to roughly one month, with a longer-term target of three months.

"The energy crisis will improve slowly. It will improve, but slowly," he said.

The government has introduced measures for businesses affected by circumstances beyond their control, including rescheduling facilities, grace periods and exit option.

He also referred to a Tk600 -billion financing package for small and midsize enterprises, saying that lending would be based on eligibility rather than political influence.

"Those who fulfil the criteria will receive the loans. There will be no political influence in giving loans," he said.

The government also wants to bring artisans, cottage industries, sports, entertainment, theatre, music and other creative activities into the mainstream economy under its concept of "democratisation of the economy".

Support would include credits, skills development, design, branding and marketing, including access to global online marketplaces.

Mr. Khosru said raising the tax-to-GDP ratio is necessary to create fiscal space for welfare, infrastructure, business support and subsidies.

He also said the government had managed to turn around the economy despite inheriting difficult conditions.

"Bangladesh has been unfortunate that whenever the BNP comes to power, it inherits the country at a time when the economy is in a devastated condition," he said.

ICC Bangladesh President Mahbubur Rahman, who was special guest at the event, said inflation remained above the desired level and called for stronger private-sector confidence, competitiveness and a predictable investment environment.

Mr. Rahman said that as Bangladesh enters fiscal year 2027, the economy remains resilient despite the slower growth, persistent inflation, weak private investment, banking-sector stress and global uncertainty.

DCCI President Taskeen Ahmed, in his keynote presentation, said global economic growth in 2026 was projected at 3.1 per cent amid trade barriers, the Middle East crisis, supply-chain disruptions, higher energy prices and rising transport costs.

These pressures were weighing on investment, business and trade.

He highlighted budget measures, including digitising company registration to complete the process within 48 hours, extending bonded-warehouse facilities for the leather, footwear and home-textile sectors, providing duty-free benefits to 10 new sectors, expanding tax automation and speeding up customs procedures.

PPRC Executive Chairman and BRAC Chairman Hossain Zillur Rahman said the economy was at a critical juncture.

He proposed an "Economic Reform Acceleration Unit" to monitor implementation of economic reforms.

PRI Chairman Zaidi Sattar said Bangladesh faced a significant gap between policy formulation and implementation.

He also criticised restrictive import policies and high tariffs, saying they contributed to higher domestic prices and inflation.

He urges the government to formulate and implement strategies within the remaining timeframe before Bangladesh's graduation from least-developed-country status.

CPD distinguished Fellow Mustafizur Rahman said a "revolution" in tax collection was needed to finance the Annual Development Programme and questioned the likelihood of meeting the revenue target in the national budget.

He also called for monetary-policy reforms and greater caution in taking foreign loans and managing debt repayments.

BIDS Director-General Dr. A K Enamul Haque said prolonged high inflation was particularly concerning for a remittance-dependent economy amid global uncertainty.

He called for greater banking-sector liquidity and a more business-friendly environment.

Dr. Haque said that the inflation globally so far predicted that will not be contained on many grounds including supply -chain bottlenecks.

Transcom Group CEO Simeen Rahman said budget measures had yet to restore the desired momentum in private-sector activity, with small and medium-sized enterprises among the hardest hit.

She urges improvements in ports, customs and logistics.

Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman called for closer coordination between monetary and fiscal policies, greater tax digitisation and investment in skilled workers.

DCCI President Taskeen Ahmed delivered the welcome remarks, former DCCI presidents including Abul Kasem Khan and Rizwan Rahman also spoke, among others.

DCCI senior vice-president Razeev H Chowdhury, vice-president Md Salem Sulaiman, board members and public- and private-sector representatives attended the seminar.

Bangladeshi exporters will continue to enjoy preferential access to the UK market after Bangladesh graduates from the least- developed-country status, the United Kingdom has assured.

Economists say the UK's decision provides Bangladesh with valuable policy space and greater certainty on the cusp of transition from the world's poor-country club.

A letter from the British mission in Bangladesh says 92 per cent of goods will continue to qualify for duty-free access without the need for Bangladesh to negotiate a separate trade agreement with the UK.

The letter, dated August 19, from James Goldman, Deputy High Commissioner and Development Director at the British High Commission in Dhaka, was sent to Md Ataur Rahman Khan, Secretary of the Ministry of Commerce.

p1-lead-outlineBangladesh currently enjoys tariff-free access for 99.8 per cent of goods exported to the UK under the UK's Developing Countries Trading Scheme (DCTS).

According to the communication in writing, Bangladesh will retain its existing market access for three years after its LDC graduation, providing exporters with a transition period before moving to a new preferential arrangement.

Following the transition period, Bangladesh will move to the Enhanced Preferences tier of the DCTS, under which 92 per cent of goods will continue to qualify for duty-free access without requiring further renegotiation.

Commerce ministry's senior officials have said apparel and readymade garments are within the 92-percent duty access list, so reduction in ratio won't affect Bangladesh's export.

Talking to the FE on Thursday, Commerce Secretary Md Ataur Rahman Khan termed it a significant assurance allowing Bangladesh to increase its capacity, diversify export and find new market.

"We hope to get three years' extension to stay as LDC until November 2029, so the existing duty benefit will remain unchanged for next three years," he said.

Trade economist Dr Masrur Reaz also takes it as a significant massage from the British High commission that would give a huge comfort to the apparel exporters.

Dr Reaz, chairman of the Policy Exchange Bangladesh, says when all other countries' preferential-trade benefit will expire with the LDC graduation, the UK will retain it.
"The letter made it clear that there is no expiration date of UK's preferential trade benefit," he says.

In this period, he suggests, Bangladesh must act seriously to sign free-trade agreements with the major trade partners to retain the trade benefits to avail after LDC graduation.

In the letter, the British government has also provided specific reassurance to Bangladesh's garment sector, the country's largest export earner.

Dr Mohammad Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID), finds this as a welcome news for Bangladesh as it prepares for LDC exit.

"The UK has provided considerable certainty by confirming that Bangladesh will retain its existing market access for three years after graduation and will then move directly into the Enhanced Preferences tier of the DCTS."

For Bangladesh, he says, the most important aspect is the treatment to garments, which account for the overwhelming majority of the country's exports to the UK.History

"Market access for garments will remain unchanged under the Enhanced Preferences arrangement."

Equally important are the UK's revised rules of origin, which provide substantially greater flexibility in sourcing imported inputs and do not impose a double-transformation requirement.

This is particularly relevant for Bangladesh's garment industry, given its dependence on imported fabrics and other intermediate inputs in several product categories, Dr Razzaque further notes.

It is also important to recognise that the UK Government introduced these changes to its rules of origin autonomously.

"The changes, therefore, demonstrate the UK's recognition of the adjustment challenges facing Bangladesh and other graduating LDCs, while providing particularly important benefits for Bangladesh because of the scale and composition of its exports to the UK."

This is a positive example of how major trading partners can support a smoother LDC transition, he has said.

The combination of the three-year transition period, subsequent access to Enhanced Preferences, and more liberal rules of origin considerably reduce the immediate market-access risks associated with Bangladesh's graduation.

"Preferential access by itself cannot guarantee export growth. The priority should be to improve competitiveness, diversify products, make effective use of the more flexible sourcing provisions, and ensure that exporters understand and utilise the DCTS rules," he suggests.

The challenge for Bangladesh is to translate that opportunity into stronger and more diversified exports, economist observes.

Market access for garments covered by chapters 61 and 62 will remain unchanged under the Enhanced Preferences tier, according to the letter.

The updated rules of origin will also ease compliance requirements for garment exporters.

They will no longer be required to meet the existing "double transformation" requirement to qualify for preferential market access.

The new rules will provide exporters with greater flexibility to source inputs from a wider range of countries while retaining eligibility for preferential tariffs.

The UK is one of Bangladesh's major export destinations, particularly for readymade garments.

The continuation of preferential access is, therefore, considered important for maintaining the competitiveness of Bangladeshi products following graduation.

The British High Commission will also work with the Export Promotion Bureau (EPB) to organise a series of workshops for exporters and other trade stakeholders.

The workshops will focus on helping businesses better understand and utilise the benefits available under the DCTS, the letter reads.

Garment export to the UK registered .91-percent growth in the last fiscal year while it was negative 3.31 per cent in total EU zone.

Global apparel buyers are largely maintaining their orders from Bangladesh despite being concerned whether suppliers can meet deadlines amid the country's prolonged gas crisis.

For now, the orders are holding – but at a growing cost for manufacturers.

Representatives of four leading international buyers told TBS that their companies had no plans to reduce orders, while one said its orders had rather increased slightly in recent weeks.

The buyers said none of their suppliers had delayed shipments, despite factories struggling with the gas shortage and relying on costly alternative fuels to keep production running.

Moyeen Chowdhury, head of the Dhaka office of sportswear brand Puma, said exporters were struggling with rising costs but continuing to meet their commitments.
"We have no plans to reduce orders," he told TBS.

TBS also spoke to six exporters, and except for one, none reported a decline in export orders. However, a textile mill said it was limiting the orders it accepted despite having buyers because it could not ensure adequate production amid the gas shortage.

Bangladesh has been grappling with a gas shortage for the past two years. The crisis intensified following disruptions to global fuel supply chains after the outbreak of conflict in the Middle East and worsened further in July when a floating LNG terminal broke down.

The gas crisis has disrupted production across major industrial belts, forcing some factories to suspend operations and others to rely on expensive alternative fuels. Manufacturers are incurring heavy losses, while concerns are growing over possible worker layoffs.

Against this backdrop, members of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) are scheduled to meet today to determine their next course of action.

Bangladesh, the world's second-largest apparel exporter, shipped $38.7 billion worth of garments in FY26, while total textile exports approached $40 billion.
The textile sector, which forms the backbone of the apparel industry, is heavily dependent on gas. Textile mills use gas to generate captive power and operate boilers to produce yarn and fabric for garment manufacturers.

The government had assured industries that the gas situation would improve by 14 August. But industrialists said there had been no significant improvement as of 20 August.

Buyers remain committed
The head of the Dhaka office of a leading US-based buyer told TBS on condition of anonymity that the company had no plans to reduce orders from Bangladesh.
The brand imports more than $1 billion worth of apparel from Bangladesh annually and has more than 100 local suppliers.
"Almost all of them are delivering on time, although we can see that they are struggling," the representative said. "Factories are having to buy diesel to keep production running, pushing up their costs, but they are still meeting delivery commitments," he said.
The buyer's suppliers include all of Bangladesh's top 10 exporters, including Jaber & Zubair and Square, and none had so far missed delivery deadlines, he added.
A senior official of another European buyer said its suppliers were also continuing to deliver on time. "We have no plans to reduce orders. In fact, our orders have increased slightly in the past two weeks."

The managing director of a leading Bangladeshi exporter with annual exports of more than $600 million said none of its buyers had indicated plans to cut orders. "However, they are regularly checking on the situation. They are concerned and frustrated."
Shovon Islam, managing director of Sparrow Group, which exports around $350 million a year, said they were using diesel to keep factories running but had not missed any shipments.

"None of our buyers has told us they will reduce orders," he said, adding that diesel use was increasing the company's costs by around Tk3 crore a month.

One exporter reports order cut
BKMEA President Mohammad Hatem, who is also MD of MB Knit Fashions, said one of his European buyers had reduced its order by one-third from its original commitment.
"Because of the gas crisis, they don't want to take the risk," he said.

Azhar Khan, chairman of textile mill Methela Group, said gas pressure at his factory was currently just 0-1 PSI against the required level of more than 10 PSI.
"We're using alternatives to keep production running, but even then we can't operate at more than 60% of capacity. Buyers want to place orders, but we are unable to accept them," he told TBS.

Factories turn to costly alternatives
Exporters said many are increasingly turning to solar power, rice husk, diesel, batteries and even wood to keep production running.

"We are using rice husk to run our boilers," said Inamul Hoque Khan Bablu, managing director of Ananta Garments.

Azhar Khan said his company was also using rice husk and diesel to maintain production.

Some weaving mills in Narsingdi have resorted to burning wood, while others are using rice husk to run their boilers, Bablu said.

Many factories are also relying on diesel, which costs three to four times more than gas, significantly raising production costs.

BKMEA to decide next steps
BKMEA members will meet today to discuss the ongoing gas crisis and decide what steps industrialists should take, Hatem said.

"We have arranged the meeting to determine what industrialists should do in the face of the ongoing gas shortage," he said. "We will make a decision after the meeting. We may hold a press conference on Sunday to announce our position," Hatem added.

Remittances channelled through Islamic banks fell 27 percent year-on-year to $448 million in June 2026, according to a Bangladesh Bank (BB) report.

Islamic banks’ share of total remittances received through the banking system stood at 16 percent that month, down from 22 percent a year earlier. In May, the previous month, the share was 19 percent, the BB said in its monthly Islamic Banking and Finance Statistics report for June.

By contrast, conventional banks’ remittance receipts rose 7.25 percent year-on-year to $2.37 billion in June, even as they recorded a month-on-month fall of 15 percent from $2.78 billion in May.

The BB said that despite Islamic banks’ early-year performance, their inability to retain their share of workers’ remittances helped conventional banks’ remittances grow in contrast. “However, recent experience of Islamic banks losing market share highlights an unstable situation in the Islamic banking sector,” it said.

Workers’ remittance receipts play a vital role in building a bank’s foreign currency reserve base, which ultimately helps in settling foreign currency transactions, and Islamic banks may need to pursue reforms with regard to the factors that influence depositors’ confidence in Islamic banks, the report states.

The month-on-month decrease in workers’ remittances in June 2026 may be due to the exceptionally high remittance inflow recorded in May 2026 ahead of Eid-ul-Azha.

Additionally, geopolitical uncertainties in the Middle East, including the Iran crisis, may also have affected remittance inflow patterns, it added.

DEPOSIT, INVESTMENT GROWTH

The BB report said Islamic banks recorded increased deposits in June compared with the same month a year earlier, though deposit growth was much higher at conventional banks in comparison.

As a result, the share of Islamic banks in total banking deposits stood at 21 percent in June 2026, down from over 22 percent a year earlier, while conventional banks’ share increased.

Depositors are gradually shifting towards Islamic banking as they regain confidence, the BB said, following measures taken by the central bank, including increased surveillance in terms of liquidity support, identification of banks’ weaknesses, and recruitment of administrators to improve management capacity.

The share of shariah-based banks in investment remained steady in comparison with conventional banks. At the end of June, conventional banks accounted for three-fourths of total investments, while Islamic banks accounted for the rest.

The report said combined investments by conventional banks stood at Tk 19.25 lakh crore in June this year, registering a 12 percent increase year-on-year.

By contrast, investments by shariah-based banks grew 7 percent year-on-year to Tk 6.12 lakh crore in June 2026.

“The moderate monthly increase reflects a prudent investment strategy, while the year-on-year growth indicates gradual expansion, driven by rising demand for Islamic financing products, particularly profit-and-loss sharing modes,” the BB report said.

The BB said conventional banks were cautious in lending and investment amid macroeconomic challenges, including inflationary pressures, exchange rate volatility, and tighter regulatory oversight in Bangladesh.

According to the BB report, Islamic banks’ share in handling export receipts declined to around 19 percent in June 2026, from 21 percent a year earlier. By contrast, the share of conventional banks in this segment grew, and they accounted for more than 81 percent of export handling.

On the import side, Islamic banks accounted for 15 percent of total import payments processed through the banking system in June 2026, against 85 percent for conventional banks.