Raising tax rates on high-income earners without expanding the tax net could backfire, potentially encouraging money laundering and capital flight, the Metropolitan Chamber of Commerce and Industry (MCCI) said today.

“Raising tax rates on high-income taxpayers may discourage compliant taxpayers and increase the risks of tax evasion or capital flight,” said MCCI President Kamran T Rahman while presenting budget proposals for FY2026-27 at a pre-budget discussion with the National Board of Revenue (NBR) in Dhaka.

“In the context of regional competition, it is essential to keep tax rates reasonable. Expanding the tax base, rather than increasing tax rates, could be a more effective and sustainable solution for boosting revenue,” he added.

The chamber said that maintaining a rational and predictable tax regime is essential to retain investment and ensure compliance in a region marked by growing tax competition.

Instead of raising rates, the trade body recommended broadening the tax base to bring more individuals and businesses, particularly from the informal sector, under the tax net.

Currently, despite having more than one crore registered taxpayers with electronic tax identification numbers (e-TINs), fewer than half regularly file returns, pointing to a structural weakness in the system.

The MCCI proposed introducing a symbolic minimum tax, ranging from Tk 100 to Tk 1,000 annually, along with a simplified one-page digital return-filing system via mobile applications.

"This would encourage first-time taxpayers to enter the formal system and gradually build a culture of compliance," Rahman said.

The chamber also flagged concerns over the effective tax rate faced by businesses, noting that multiple layers of advance income tax (AIT), tax deducted at source (TDS), and various conditionalities often push the actual burden to as high as 40–50 percent, far exceeding statutory rates.

Such distortions reduce the benefits of nominal tax cuts and create disincentives for formal business operations, it said.

MCCI urged policymakers to move towards a simplified, income-based taxation system, reduce conditionalities tied to corporate tax rates, and accelerate digital integration across income tax, VAT, and customs platforms.

It also called for easing compliance requirements, such as the Proof of Submission of Return (PSR), rationalising VAT rates, and ensuring faster, automated input tax credit mechanisms.

For small and medium enterprises (SMEs), which form the backbone of employment and industrial growth, the chamber recommended targeted tax relief, lower turnover taxes, and reduced duties on raw materials to enhance competitiveness.

The MCCI said that revenue policy should balance mobilisation and facilitation, warning that overly aggressive taxation could prove counterproductive in an already fragile economic environment.

The Asian Development Bank (ADB) today approved a US$250 million loan to support Bangladesh in operationalising and institutionalising critical reforms to improve the efficiency, coverage, and effectiveness of the country’s social protection system.

The Subprogram 2 of the Second Strengthening Social Resilience Program aims to strengthen protective and preventive social protection measures to reduce vulnerability, exclusion, and poverty risks, said an ADB press release.

The program focuses on improving social protection system management, expanding its coverage and scope, and enhancing protection for vulnerable populations.

ADB Country Director for Bangladesh Hoe Yun Jeong said this program represents an important milestone in Bangladesh’s transition toward a more modern, inclusive, and resilient social protection system.

By expanding coverage for vulnerable groups -- particularly women -- and introducing contributory protection mechanisms, the reforms, introduced by this program, will help reduce poverty risks while supporting long-term economic stability, said ADB country director

“ADB is proud to partner with Bangladesh in building a system that is more efficient, adaptive, and better equipped to promote inclusive growth and shared prosperity” Jeong added.

Reforms under the program include the development of contributory social protection schemes, which are expected to help ease longer-term fiscal pressure.

The widow allowance program will also extend support to at least 250,000 additional vulnerable women, while adaptive social protection will be strengthened through initiative climate adaptive measures under a core workfare program. In addition, access to financial services for women entrepreneurs will increase by at least 15% through the Bangladesh Bank’s targeted refinancing scheme.

The initiatives under the program are expected to generate significant micro-level outcomes, including enhanced productivity and efficiency, increased female labour force participation, and greater poverty reduction -- leading to positive macroeconomic effects and contributing to inclusive economic growth, added the release.

Oil prices extended their gains on Thursday, rising more than $1 ‌in the wake of stalled peace talks between Iran and the United States and as both nations maintained restrictions on the flow of trade through the Strait of Hormuz.

Brent crude futures rose $1.26, or 1.2 percent, to $103.17 a barrel at 0630 GMT, after settling above $100 for the first time in ​more than two weeks on Wednesday. West Texas Intermediate futures were also up $1.20, or 1.3 percent, at $94.16.

Both benchmarks closed ​more than $3 higher on Wednesday after larger-than-expected gasoline and distillate stock draws in the US, and over the lack of progress on Iran peace talks.

“The oil market is repricing expectations with little sign of progress in ​finding a resolution in the Persian Gulf,” said ING analysts in a note, adding that hopes for a resolution are ​fading as peace talks stall.

“In addition, Iran’s seizure of two vessels attempting to transit the Strait of Hormuz suggests disruptions to shipments are set to continue.”

While US President Donald Trump extended a ceasefire between the countries following a request by Pakistani mediators, Iran and the US are still restricting ​the transit of ships through the strait, which carried about 20 percent of daily global oil supplies until the war began on ​February 28.

Iran seized two ships in the waterway on Wednesday, tightening its grip on the strategic chokepoint.

Trump has also maintained a US Navy ‌blockade ⁠of Iran’s trade by sea, and Iranian parliament speaker and top negotiator Mohammad Baqer Qalibaf said a full ceasefire only made sense if the blockade was lifted.

The US military has intercepted at least three Iranian-flagged tankers in Asian waters and is redirecting them away from positions near India, Malaysia and Sri Lanka, shipping and security sources said on Wednesday.

With his extension of the ​ceasefire on Tuesday, Trump again ​pulled back at the ⁠last moment from warnings to bomb Iran’s power plants and bridges. Trump has not set an end date for the extended ceasefire, White House press secretary Karoline Leavitt told reporters.

US EXPORTS ​SET A RECORD HIGH

On energy trade, total exports of crude oil and petroleum products from the ​United States climbed ⁠by 137,000 barrels per day to a record 12.88 million bpd as Asian and European countries bought up supplies after disruptions tied to the Iran war.

US crude stocks rose while gasoline and distillate inventories fell, the Energy Information Administration said on Wednesday.

Crude inventories ⁠rose by ​1.9 million barrels, compared with expectations in a Reuters poll for a ​1.2 million-barrel draw.

US gasoline stocks fell by 4.6 million barrels, while analysts had expected a 1.5 million-barrel draw. Distillate stockpiles dropped by 3.4 million barrels versus ​expectations for a 2.5 million-barrel drop.

Massive deregulation across major financial sectors of the "over-regulated" country is expected to be reflected in the coming national budget being crafted by the newly elected government.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury dropped a broad hint at such changes on Saturday during an exchange- of- views meeting with editors of print, electronic and online media on the upcoming budget."Bangladesh is an overregulated country and needs deregulation," he says.Bangladesh economic statistics

The meeting, held at the Finance Division, was attended by Finance Secretary Dr Khairuzzaman Mozumder, Bangladesh Bank Governor Md Mostaqur Rahman and Financial Institutions Division (FID) Secretary Nazma Mobarek, among others.

The finance minister says the government is also considering the securitisation of public-infrastructure assets to mobilise funds for new projects.

"The Jamuna Bridge now carries no liabilities. It can be securitised, and the proceeds can be used for other development projects," he explains the new government's financial ideas.

On the size of the budget, the economic pointsman of the government headed by BNP chief Tarique Rahman says a larger outlay is necessary to support economic growth and attract investment.

Addressing demographic challenges, the finance minister stresses the need for increased investment in health and education to harness the country's demographic dividend.

He mentions that out-of-pocket healthcare costs remain high in the country, and for this reason, the government aims to improve the healthcare system.

"Once people become technically skilled, they will find employment both at home and abroad," he says while arguing increased allocation for the education.

The minister reiterates that the government is opposed to printing money. On the capital market, Mr. Chowdhury says the government has significant plans to strengthen the sector.Economic analysis reports

"You will see changes and development in the capital market soon," he says, adding that well-reputed and structured companies have been reluctant to float shares on the market as they believe that this is a "casino".

He hopes deregulation and greater participation by institutional investors could help improve market conditions.

On the recovery of laundered funds, Bangladesh Bank Governor Mr. Rahman says efforts are under way to retrieve such assets.

"We want to ensure that these funds cannot be consumed by plunderers," he tells the press in a strongly worded resolve of the regulator.

He warns that news of money printing could negatively affect the country's credit ratings, increasing borrowing costs for both the government and the private sector.

The new governor rules that fluctuations in government accounts held with the central bank are normal.

FID Secretary Ms. Mobarek says a taskforce has been formed to recover siphoned-off money. "The process is complex."

National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan tells the meet efforts would be intensified to boost tax mobilisation, particularly through value-added tax (VAT).World news updates

He says although Bangladesh has over 12.8 million Taxpayer Identification Numbers (TINs), only about 5.0 million returns are filed.

"We will issue notices to those who have not submitted their tax returns."

He also says that corporate tax rates for both listed and non-listed companies have been reduced over the years from as high as 50 per cent.

Speaking at the programme, The Financial Express Editor, Shamsul Huq Zahid, points out that Bangladesh is facing weak revenue mobilisation, which is further strained by the Middle East crisis.

"In this context, the plan to raise the budget size to around Tk 9.0 trillion will be challenging," he says, cautioning that increased bank borrowing and 'high-powered money' could fuel inflation.

Channel I Head of News Mr. Shykh Seraj stresses the need for greater investment in agricultural research to ensure food security.

Speaking at another event, Finance Minister Amir Khosru has said the government plans to step up spending on health and education to fully harness the country's demographic dividend. A large share of the increase will go for vocational education to build skilled manpower, boost employment and raise remittance inflows.Bangladesh economic statistics

He says the government also aims to tap the "longevity dividend," noting that older citizens can continue contributing to productivity. However, higher allocations may face challenges linked to the inheritance economy.

The minister made the remarks at the pre-budget discussion organised by the Ministry of Finance on the day, attended by members of the Economic Reporters Forum (ERF) and journalists covering the ministry.

He says the economy must recover from past damage caused by money printing and heavy borrowing from local banks. "Such policies," he warns, "drive up interest rates and crowd out private investment, undermining sustainable growth."

The current government, he adds, is committed to avoiding inflationary financing through high-powered money and to easing pressure on the private sector-principles that guide its economic policy.

He alleges that past "patronage politics" concentrated economic power in a few hands, pushing the economy towards oligarchic control. The government is now prioritising the "democratisation of the economy" to reverse this trend.Financial news subscription

To ensure inclusive growth, he says, steps are being taken to empower women directly through the "family card" programme. As primary managers of household finances, women's access to funds can improve both savings and investment outcomes.

The minister stresses expanding primary healthcare to reduce out-of-pocket expenses, which erode living standards. Better access to basic care, he says, effectively raises real incomes.

He describes SMEs and startups as the backbone of the economy, noting that SMEs remain the largest source of employment. Efforts are also underway to integrate rural cottage industries, artisans and the creative economy into the mainstream.

Initiatives to upgrade product design, branding and marketing for rural artisans are being rolled out to help them reach global markets -- boosting both jobs and exports.

He adds that sectors such as sports, culture, theatre, film and music are gaining policy attention as emerging contributors to GDP.

On current challenges, he says the private sector is under strain from weak banking discipline, currency depreciation and persistent inflation, with many industries underperforming.

Raising the tax-to-GDP ratio remains "very difficult" under current conditions, he notes, as stronger business activity is essential for higher revenue collection, though efforts are ongoing.Economic analysis reports

He has also highlighted energy security, with plans to cut import dependence by exploring domestic resources and expanding renewable-energy use.

On market management, he says prices cannot be controlled through enforcement alone. Markets should function based on demand and supply, supported by stronger supply chains and lower business costs.

He concludes that deregulation will be key to attracting investment, as excessive barriers continue to deter investors.

Budget-support funding from foreign financiers seems drying up as only US$750 million has so far been confirmed although the financial year nears end with the economy facing unanticipated shocks amid global crises. Economic analysis reports

The country faces severe fund shortages caused due to heightened subsidy pressure amid the ongoing Mideast mayhem.

Finance Ministry officials say at least two major development partners have deferred talks on providing budget-support credit under regular arrangement and so they are now pursuing the financiers for lending the money in emergency balance-of-payments support.

According to them, the only development partner having confirmed budget support worth $750 million on completion of negotiations is the Asian Development Bank (ADB). The proposal will now be placed in board meeting early May, and if passed, the loan agreement will be signed when ADB President Masato Kanda visits Dhaka late next month.

Confronting such a situation at the very outset, the new government is also trying to secure an additional $250 million from the ADB to finance the additional spending incurred due to the fallouts from war and conflicts in the Middle East that force buying fuel oils and gas at excessive prices.

Sources have confirmed that the World Bank has rejected a government proposal for $250 million in budget-support credit under regular arrangement. Now the finance officials are pursing the World Bank to provide some $500 million under emergency support to meet the deficit being created under war's domino effect.

Also, the Japan International Cooperation Agency (JICA) has deferred a planned budget-support programme until next fiscal year, "leaving nothing for this fiscal year", sources say.

A JICA team on April 29th is scheduled to meet with finance ministry officials to discuss financial assistances. Sources says the finance ministry officials may request the agency team to provide some $500 to $700 million as emergency assistance from the $10-billion fund Japan has created to help its Asian neighbours whose economy is reeling from severe crisis caused by the Iran war.

Sources say the government is also in talks with the Asian Infrastructure Investment Bank (AIIB) for $700 million worth of budget support. However, the confirmation of AIIB financing will depend on consent from the co-financer.

The finance officials are not sure until now whether the AIIB credit will be finally available or not within this fiscal year that expires in little over two months.

Finance and Planning Minister Amir Khasru Mahmud Chowdhury recently visited Washington, DC, to attend the Spring Meetings of the International Monetary Fund and the World Bank Group.

The IMF has yet to give confirmation as to whether two due tranches of an ongoing credit programme, amounting to $1.3 billion, will be released for Bangladesh within this fiscal year, 2025-26.Bangladesh economic statistics

As such, the finance minister, in meetings with top officials of the IMF and the World Bank in Washington, requested emergency assistance worth $1.0 billion each from them to offset the energy shocks of an unprecedented scale amid the blockade of the Strait of Hormuz and Iranian ports.

"All the development partners of Bangladesh are very positive to support us at this crisis moment," the minister told reporters after return from the United States. However, he wouldn't confirm how much assistance was secured so far.

"We are discussing with them emergency assistance," he says. In fiscal year 2024-25, Bangladesh had received around $3.0 billion as budget support from the development partners.

Dr. Zahid Hussain, a former lead economist at the World Bank's Dhaka office, told The Financial Express that getting budget-support credit from development partners in many aspects depends on government's "comfort position" with the IMF, which remains absent for a long.

"We need to cut budgetary spending as much as possible to face the crisis," he says, adding that containing spending will help lower import and thus the requirement of foreign currency will lessen.

He suggests maintaining exchange-rate flexibility and ensuring that no gap remains between domestic and international energy prices.

Bangladesh’s economy is facing renewed pressure from global geopolitical tensions and commodity market disruptions, with risks of elevated inflation, slower growth and mounting fiscal strain, according to Eric Robertsen, global head of research and chief strategist at Standard Chartered.

In an interview with The Daily Star, Robertsen said financial markets appear “overly optimistic” about a swift resolution of the ongoing Gulf tensions and the reopening of the Strait of Hormuz, a critical artery for global energy supplies.

If shipping resumes soon, it could take weeks or months for oil, gas and petrochemical supply chains to normalise, prolonging price pressures worldwide, Eric Robertsen said
He added that even if shipping resumes soon, it could take weeks or months for oil, gas and petrochemical supply chains to normalise, prolonging price pressures worldwide.

“Even when the Strait reopens, it will take time for exports to normalise and for supply chains to stabilise,” he said, adding that such shocks typically leave behind persistent economic damage across vulnerable economies.

He explained that governments tend to follow a predictable policy response during commodity crises, starting with subsidies to cushion consumers and businesses, followed by price caps, rationing and, in some cases, more aggressive interventions.

“What we have seen in this crisis is that many economies, particularly in Asia, have moved through all these steps very quickly,” he said, adding that such measures come at a high fiscal cost.

“There will be a negative impact on fiscal balances as governments step in to support their economies,” he added.

Robertsen also flagged rising risks of stagflation -- a combination of high inflation and weak growth, particularly for emerging economies like Bangladesh.

“The inflation impact is immediate in a commodity shock, but the hit to growth comes with a lag,” he said.

Bangladesh has been witnessing persistently high inflation for the last three years.

“Higher energy prices reduce disposable income and investment capacity, which ultimately weakens demand,” Robertsen said.

He cautioned that central banks face a difficult balancing act in such an environment.

“If policy tightening happens too early or too aggressively, it could worsen the growth outlook,” he said.

However, he noted a key relief factor in the current crisis: the absence of a sharp appreciation of the US dollar.

“This has not turned into a currency crisis, which is extraordinarily good news for central banks,” he said.

About the global outlook, Robertsen highlighted four key risks for emerging economies: higher inflation, weaker growth, potential policy missteps and deteriorating fiscal balances.

“For the next two quarters, there is a need to build a higher risk premium into both market expectations and economic forecasts,” he said.

He also pointed to a longer-term structural shift in the global economy.

“We are moving into a world where control over commodities becomes both an economic and geopolitical tool,” he said, citing recent examples of export restrictions on energy products and critical inputs.

“One of the key lessons is the importance of maintaining strategic reserves of oil and gas,” he said. “Many countries have learned the hard way that they were underprepared.”

As a result, he expects global energy prices to remain structurally higher even after the current crisis subsides.

Naser Ezaz Bijoy, the chief executive officer of Standard Chartered Bangladesh, said in the same interview that Bangladesh’s ongoing economic challenges have been building over several years.

“Bangladesh’s current challenges did not begin with the war. They started during Covid-19, followed by the Russia-Ukraine conflict, which created foreign currency pressures,” he said.

“There was a strong expectation that after the political transition, investment would pick up and economic activity would accelerate,” Bijoy said. “However, fresh external disruptions have continued to weigh on the outlook.”

He stressed that limited fiscal capacity remains a core constraint.

“Our tax-to-GDP ratio is weak, and revenue collection has been consistently low,” he said, warning that this leaves the country with less room to respond to shocks.

Government decisions to adjust administered prices, particularly in energy, are also adding to cost pressures.

“The government initially deferred price adjustments due to political sensitivities, but ultimately had little choice but to implement them,” he said, adding that such measures would inevitably affect both inflation and the cost of doing business.

At the same time, he emphasised that ensuring an uninterrupted energy supply is more critical than keeping prices low.

Bijoy also pointed to setbacks in external financing discussions. “The IMF negotiations did not progress as expected, which is another hurdle,” he said, adding that the issue would require high-level policy attention.

On the external sector, Bijoy said export performance has weakened in recent months, particularly in Europe.

“The decline in exports began around August,” he said, attributing it to softer demand, higher costs and intensifying competition from countries such as China and India.

Buyers are also changing sourcing strategies.

“They are increasingly diversifying and consolidating orders with larger suppliers who are better equipped to meet sustainability standards and manage risks,” he said.

Despite the slowdown, Bijoy does not foresee a sharp downturn. “We are seeing a modest dip in exports, around 4.5 percent, which may reach 5 to 5.5 percent. It is not a catastrophic situation,” he said.

Banglalink and Elon Musk’s SpaceX have jointly applied to the telecom regulator in Bangladesh to launch trials of telecom services through satellite, allowing users’ smartphones to connect directly to satellites through a mobile operator’s network.

In a recent letter seen by The Daily Star, the companies sought approval from the Bangladesh Telecommunication Regulatory Commission (BTRC) for an initial 60-day test and trial period to integrate satellite connectivity into Banglalink’s network.

“This system will provide supplemental mobile connectivity using over 650 Starlink Low-Earth-Orbit (LEO) satellites, which initially will deliver SMS and, at a later stage, light-data capabilities to Banglalink subscribers, particularly during periods when terrestrial networks are damaged or unavailable,” the letter said.

It said the commercial arrangement will integrate Starlink Direct-to-Cell satellite connectivity into Banglalink’s mobile network in Bangladesh.

The letter describes the initiative as a first-of-its-kind partnership in Bangladesh aimed at expanding connectivity, particularly in disaster-prone and remote areas where conventional terrestrial networks are unavailable.

The companies said the proposed service would help address long-standing coverage gaps.

This development comes after Kaan Terzioglu, chief executive officer of Veon, told The Daily Star last month that the company aims to replicate the technology it is already using in Ukraine and Kazakhstan.

To prepare for a commercial rollout, Banglalink and SpaceX requested regulatory support.

The testing will use mobile frequencies authorised for Banglalink’s operations, specifically the 2110–2115 MHz downlink range and 1920–1925 MHz uplink range, where Banglalink is the sole authorised spectrum user.

The companies said the service would initially be offered as a supplementary service under Banglalink’s existing licence and would comply with regulatory obligations, including Know Your Customer (KYC) requirements.

“Subject to regulatory approval, the testing is expected to commence in April 2026 and will focus on integrating Banglalink’s terrestrial mobile service with Starlink’s Direct-to-Cell satellites in Bangladesh. No commercial service will be offered to Banglalink’s customers during the testing phase.”

Alongside the trial, the companies also urged the regulator to support necessary regulatory changes to enable satellite-based mobile services.

The trial demonstrations will take place at mutually agreed locations within Banglalink’s licensed service areas in Bangladesh and will operate within Banglalink’s authorised frequency ranges.

The companies highlighted the potential of satellite-to-mobile services to bridge the digital divide and ensure connectivity during emergencies.

They added that the system would allow users to connect via widely available LTE devices. LTE (Long-Term Evolution) is a 4G mobile network technology that provides high-speed data for smartphones.

Citing global use cases, the companies said the system had already been deployed in emergency situations.

They also requested the commission to grant approval for the commercial launch immediately after the test and trial.

Md Emdad Ul Bari, chairman of the BTRC, said they are assessing the letter and that a decision will be taken after obtaining the government’s opinion on the matter.

Unlike traditional mobile networks that rely on ground-based towers, Starlink’s direct-to-cell technology uses satellites as cell towers in space. This allows ordinary mobile phones to connect directly, expanding coverage to areas with little or no ground infrastructure.

In a statement yesterday, Banglalink announced a collaboration with Starlink Mobile to introduce the satellite-to-mobile service.

Johan Buse, chief executive officer of Banglalink, said, “Connectivity is about care -- it matters most when it reaches people wherever they are. Some communities remain beyond the reach of traditional networks because of our unique geography.

“By providing satellite-enabled coverage with Starlink, we aim to bridge those gaps and ensure people can stay connected, even in the most remote parts of the country.”

Oil prices were marginally lower today (23 April) after big gains in the previous session amid the stalled peace talks between Iran and the United States, and as both nations maintained restrictions on the flow of trade through the Strait of Hormuz.

Brent crude futures fell 15 cents to $101.76 a barrel, after settling above $100 for the first time in more than two weeks yesterday (23 April).

West Texas Intermediate futures fell 14 cents to $92.82. Both benchmarks closed more than $3 higher yesterday after larger-than-expected gasoline and distillate stock draws in the US, and over the lack of progress on peace talks.

While US President Donald Trump extended a ceasefire between the countries following a request by Pakistani mediators, Iran and the US are still restricting the transit of ships through the Strait of Hormuz.

The Strait carried about 20% of daily global oil and liquefied natural gas supplies until the war began at the end of February with attacks by the US and Israel on Iran.

Iran seized two ships in the Strait of Hormuz yesterday, tightening its grip on the strategic waterway.

Trump has also maintained a US Navy blockade of Iran's trade by sea, and Iranian parliament speaker and top negotiator Mohammad Baqer Qalibaf said a full ceasefire only made sense if the blockade was lifted.

The US military has intercepted at least three Iranian-flagged tankers in Asian waters and is redirecting them away from positions near India, Malaysia and Sri Lanka, shipping and security sources said yesterday.

With his extension of the ceasefire on Tuesday (21 April), Trump again pulled back at the last moment from warnings to bomb Iran's power plants and bridges.

Trump has not set an end date for the extended ceasefire, White House press secretary Karoline Leavitt told reporters.

Us exports set a record high

Total exports of crude oil and petroleum products from the United States climbed by 137,000 barrels per day to a record 12.88 million bpd as Asian and European countries bought up supplies after disruptions tied to the Iran war.

US crude stocks rose while gasoline and distillate inventories fell, the Energy Information Administration said on Wednesday. Crude inventories rose by 1.9 million barrels, compared with expectations in a Reuters poll for a 1.2 million-barrel draw.

US gasoline stocks fell by 4.6 million barrels, while analysts had expected a 1.5 million-barrel draw. Distillate stockpiles dropped by 3.4 million barrels versus expectations for a 2.5 million-barrel drop.

Ukraine has restarted pumping Russian oil to Hungary and Slovakia after completing repairs to the Druzhba pipeline after it was damaged in a Russian attack in January, the three countries said Wednesday.

The pipeline has been at the centre of a standoff between Ukraine, the European Union, and Hungary and Slovakia — which still import Russian oil via the pipeline.

Kyiv hopes the resumption of supplies will unblock the last hurdle to securing tens of billions of euros in support from Brussels that has been held up by Hungary’s outgoing nationalist leader Viktor Orban.

Hours after Ukraine said oil had started flowing, EU officials gave preliminary approval for the long-stalled loan of 90 billion euros ($106 billion) to be disbursed.

‘Oil transit was launched and pumping began,’ an energy industry source in Ukraine told AFP.

Hungary and Slovakia confirmed transit had started and said supplies should start arriving Thursday.

Hungarian energy giant MOL said it ‘expects the first crude oil shipments following the restart of the Ukrainian section of the pipeline system to arrive in Hungary and Slovakia by tomorrow at the latest’.

Slovakia’s economy minister Denisa Sakova also said the first deliveries were expected in the early hours of Thursday, in a post on Facebook.

Hungary’s Orban had blocked the multibillion-euro loan for Ukraine as leverage to pressure Kyiv to resume oil deliveries, accusing it of stalling repairs.

His defeat in elections this month was seen as paving the way for the money to be unlocked.

Slovak prime minister Robert Fico, who has repeatedly clashed with Kyiv and Brussels, said Wednesday that he ‘would not be surprised if the 90 billion loan were unblocked and then oil supplies were cut off again’.

Ukrainian president Volodymyr Zelensky has made no secret of his opposition to the fact that some EU members still buy Russian oil and gas, a key source of revenue for Moscow to fund its invasion launched more than four years ago.

Rancon Auto Industries Ltd (RAIL) has entered a strategic partnership with Japan’s Mitsubishi Corporation to manufacture vehicles in Bangladesh for sale in domestic and regional markets.

Under the agreement, Mitsubishi will take a 25 percent equity stake in Rancon Auto, which began local production of the Mitsubishi Xpander in June last year.

Announcing the joint venture at an event at Sheraton Dhaka yesterday, Rancon Holdings Group Managing Director Romo Rouf Chowdhury said the partnership would mark a major step forward for the country’s automotive sector.

Finance Minister Amir Khosru Mahmud Chowdhury, State Minister for Civil Aviation M Rashiduzzaman Millat and Japanese Ambassador to Bangladesh Saida Shinichi were present at the event.

Rancon Holdings Group Managing Director Chowdhury said, “The landmark strategic alliance -- the first of its kind in the country’s automotive sector -- underscores the strength of Bangladesh-Japan trade relations.”

He added that the strategic investment is expected to enhance access to affordable and convenient vehicle financing, expand after-sales services, ensure spare parts availability, and strengthen distribution networks across the country.

“It will also facilitate the transfer of technology and knowledge to develop a highly skilled local workforce, while contributing to government revenue through VAT and taxes,” said Chowdhury, adding the company’s automobile arm has gradually built its manufacturing base since starting operations in 2017.

Rancon Auto, which focuses on multi-brand vehicle manufacturing and assembly, began with the local assembly of the Mitsubishi Outlander. It later expanded its portfolio to include the Fuso BM117, Mercedes OF1623, Proton X70, as well as trucks and pickups from JAC and GMC.

The company upgraded its factory in 2023 with a modern paint facility. The following year, it launched the locally painted and assembled Mitsubishi Xpander, which quickly gained traction, with monthly sales exceeding 100 units, making it the highest-selling brand-new vehicle in Bangladesh.

Despite this growth, Chowdhury said the country’s automobile market remains largely underdeveloped.

With one of the lowest per capita vehicle ownership rates in the region and a population of around 200 million, he said Bangladesh offers strong long-term demand potential as the middle class expands.

Against this backdrop, Rancon initiated discussions with Mitsubishi Corporation to leverage its manufacturing and distribution expertise. The talks culminated in the joint venture, under which Mitsubishi Corporation acquired a 25 percent stake in Rancon Auto Industries through direct foreign investment.

“This is a proud moment for us,” Chowdhury said, adding that the partnership reflects growing international confidence in Bangladesh’s industrial prospects.

He said it could be the first instance of direct foreign investment in four-wheel vehicle manufacturing in the country.

Chowdhury expressed hope that the move would encourage other global players to invest, helping build a stronger automotive manufacturing ecosystem capable of generating employment and eventually developing into an export hub.

He also pointed to regional examples such as Indonesia, Thailand, Malaysia, Vietnam, India and Pakistan, which have developed established automotive industries with export capacity.

Japanese Ambassador to Bangladesh Saida Shinichi described the joint venture between Mitsubishi and Rancon as a “significant milestone”, crediting engineers, technicians and government officials for their roles in bringing the project to fruition.

He said Mitsubishi had begun training Rancon engineers in 2024, followed by the launch of Xpander assembly in June last year, calling it evidence of strong collaboration between the two sides.

The envoy also highlighted Bangladesh’s efforts to improve the investment climate, including its first Economic Partnership Agreement (EPA) with Japan, signed in February, and initiatives such as the “Investment Gateway”.

He said the Mitsubishi Xpander is the only locally assembled Japanese-brand vehicle in Bangladesh, calling it the country’s first “made-in-Bangladesh” Japanese car.

He added that local assembly could support wider industrial development, including technology transfer, job creation and growth in upstream industries such as parts manufacturing.

Hiroyuki Egami, senior vice-president and division COO of Mitsubishi Corporation, reaffirmed the company’s commitment to bringing its global automotive expertise to the partnership.

In his speech, Finance Minister Amir Khosru Mahmud Chowdhury described the Mitsubishi-Rancon joint venture as a “refreshing change” for an automobile sector long dependent on imported vehicles.

“Bangladesh has traditionally depended on cars imported from Japan, Europe and the United States, a pattern that had become a way of life,” he said, adding that local assembly with a global brand like Mitsubishi marks a significant turning point.

He said Rancon’s experience in the automobile market makes it a suitable partner and expressed confidence that the collaboration would grow “from strength to strength”.

The minister highlighted the venture’s wider economic impact, pointing to its potential to raise value addition, create jobs and support industrial development, particularly in light engineering.

He added that the government is planning a dedicated zone for light engineering industries to support such initiatives.

At the programme, State Minister for Civil Aviation M Rashiduzzaman Millat announced that direct flights between Dhaka and Tokyo would resume next month, restoring a key air link between Bangladesh and Japan after a prolonged suspension.

He said the resumption would strengthen connectivity, facilitate trade and business, and deepen people-to-people ties between the two countries.

“You will be happy to know that we are starting flights to Tokyo from next month,” he said, adding that the move was expected to boost bilateral engagement on multiple fronts.

Inflation is likely to remain high and reach 8.6 percent in the fiscal year 2026-27 (FY27) due to higher energy prices driven by the war in the Middle East, according to BMI, a provider of insights, data and analytics.

The firm, owned by Fitch Solutions, said inflation may remain above the Bangladesh Bank’s (BB) 6.5 percent target set in its latest monetary policy.

It added in its report on Bangladesh published on Tuesday that this is partly due to base effects from low food price inflation during FY26.

Inflation averaged 10 percent in FY25, up from 9.7 percent in the previous year. It is expected to stay high at 9 percent in FY26, according to the Asian Development Bank in its April issue of the Asian Development Outlook.

The ADB projects inflation at 8.5 percent in FY27 as external shocks ease and domestic supply conditions improve.

BMI said that as inflation is expected to remain high, the BB may keep the policy rate unchanged at 10 percent in FY27 instead of cutting it, as it had previously projected.

“Our revised forecast reflects high projected inflation, a recent decline in long-term borrowing costs, and a renewed need for International Monetary Fund (IMF) financing,” said the report.

It added that the Iran conflict would add 0.13 percentage points to headline inflation in the coming fiscal year through higher energy prices.

“Elevated inflation threatens the BB’s price stability mission, making a rate cut in FY27 difficult to justify,” it said, adding that rising energy prices have made rate cuts untenable for many central banks worldwide.

The report said surging inflation in recent years has eroded real wages in Bangladesh, particularly for industry workers, who make up 21 percent of the economy’s labour force. Although salary declines have slowed in 2025, this follows five consecutive years of falling real wages, it added.

“An uncontrolled supply-side shock to inflation will worsen this problem. This will make the BB even more cautious about cutting rates, which could cause inflation to run unchecked.”

BMI also said falling long-term borrowing costs are another reason to keep the policy rate high. The 10-year treasury yield has trended down since January 2025, even though the policy rate remains elevated.

“Over the same period, credit growth has surged, driven by higher government borrowing. Apart from fuelling inflation, looser credit could also shift financial flows towards lower-quality investments. This is likely given the fragility of Bangladesh’s banking sector,” it said.

The report also noted the government’s request for $3 billion in financial support from the IMF and the World Bank.

“The government’s spending needs are real. Aside from cushioning the impact of the Iran conflict on Bangladeshi households, Dhaka will likely have to recapitalise several banks as it reforms the financial sector,” it said.

It added that IMF support is likely to depend on the government maintaining a degree of macroeconomic stability.

“Keeping monetary policy tight when economic conditions support it would help preserve confidence among international investors in Bangladesh’s medium-term prospects,” it said.

Foreign buyers are increasingly diverting garment work orders away from Bangladesh over concerns about energy reliability and an uncertain business climate, said Anwar-Ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries (BCI), yesterday.

“Buyers are telling us that within the next two to three months, Bangladesh may face electricity shortages. Because of that, their top management is discouraging them from placing new orders here,” he said, citing recent communications from international sourcing teams.

He made the remarks at a discussion with senior officials of the National Board of Revenue (NBR) at its headquarters in Dhaka. The NBR organised the meeting as part of its consultation with businesses and other stakeholders ahead of formulating tax proposals for the next fiscal year, 2026-27.

The BCI president said some orders had already been redirected to India and other competing countries, while others were being withheld amid growing uncertainty.

He added that several large buying houses had warned local suppliers of potential disruptions, triggering anxiety across the export-oriented manufacturing sector.

“Orders for July and August, which were expected by now, have either slowed significantly or stopped altogether. We are still in discussions, but in many cases we have not been able to secure the orders,” he said.

Chowdhury cautioned that a further downturn could follow if the situation does not improve.

Beyond energy concerns, he also highlighted the burden of minimum tax on loss-making businesses. Under the current rules, companies must pay a minimum turnover tax of 1 percent even if they incur losses, a provision he said is particularly challenging for small enterprises.

He urged policymakers to introduce a slab-based system for smaller firms and called for clearer safeguards regarding provisions in the Income Tax Act 2023 that allow tax officials to access business systems and financial records for withholding tax verification.

Md Abdur Rahman Khan, chairman of the NBR, along with other officials from both organisations, were present at the meeting.

An outfit of high-profile global rating-agency Fitch suggests Bangladesh should continue with its high policy rate in lending in the high-inflation regime, ostensibly nay-saying pleas for rate cut.

"We now expect the Bangladesh Bank to maintain its policy rate at 10 per cent over FY2026/27 instead of cutting the rate," says a BMI report, available Wednesday.

Business Monitor International or BMI is a Fitch Solutions company that provides macroeconomic, industry, and financial market analysis globally.Banking sector news

The subsidiary of the American-British credit-rating agency, Fitch, makes such suggestion in view of high projected inflation, recent decline in long-term-borrowing costs, and renewed need for International Monetary Fund financing.

"This is a revised outlook from our previous projection of a rate cut during the new fiscal year. The revision comes despite BB Governor Mostqaur Rahman's reported preference for lower interest rates."

The agency says their new forecast primarily reflects Bangladesh's present economic circumstances, as they expect headline inflation will remain above the central bank's 6.5-percent target over FY2026/27, "hitting a high of 8.6 per cent".

"This is partly due to base effects created by low food-price inflation during H1 FY2025/26."

The Fitch outfit also expects the Iran conflict to contribute 0.13- percentage points towards headline inflation for the coming fiscal year through higher energy prices.

"Elevated inflation threatens the BB's price-stability mission, making a rate cut in FY2026/27 difficult to justify," it opines.

The report mentions that surging inflation in recent years has also eroded real wages in Bangladesh.

"This was particularly pronounced for industry-sector workers, which comprise 21 per cent of the economy's labour force. Although the salary declines slowed in 2025, this comes atop five consecutive years of falling real wages."Global economy analysis

It predicts that an uncontrolled supply-side shock to inflation will worsen this problem.

"This factor will make the BB even more cautious about cutting rates, which could cause inflation to run unchecked."

Falling long-term borrowing costs presents another reason for keeping the policy rate high.

The 10-year treasury yield has trended down since January 2025, despite the policy rate's elevated level. Over the same period, credit growth surged, driven by greater government lending.

"Apart from fuelling inflation, looser credit could also hasten financial flows towards lower-quality investments. This effect is probable given the fragility of Bangladesh's banking sector," the agency cautions.

Finally, it mentions, Bangladesh's government is seeking US$3.0 billion in financial support from the International Monetary Fund (IMF) and the World Bank.

"The government's spending needs are real. Aside from cushioning the blow of the Iran conflict on Bangladeshi households, Dhaka will probably have to recapitalise several banks as it reforms the financial sector."

However, IMF support is likely to be contingent on the government preserving a degree of macroeconomic stability.Bangladesh market report

Keeping monetary policy tight when economic conditions support such a move would preserve confidence among international investors over Bangladesh's medium-term prospects.

Singer Bangladesh Ltd reported a loss of Tk55.86 crore in the January-March quarter of 2026, despite posting modest year-on-year revenue growth.

According to its unaudited financials, the company's sales rose by 3.46% to Tk577.20 crore, up from Tk557.86 crore in the same period last year.

However, losses widened significantly from Tk35.89 crore in Q1 2025, reflecting mounting cost pressures and weak market demand.

Commenting on the Q1 financials, the company said that despite a slight increase in turnover, actual sales fell short of expectations due to a stagnant consumer electronics market.

"Domestic sales were stifled by high inflation, geopolitical tensions, and unfavourable weather, while the national election and extended Eid holidays further dampened demand," it said.

Although gross profit margins remained stable, Singer noted that rising costs could not be fully passed on to consumers due to strong price sensitivity in the market.

As a result, operating profit declined by 8.1%, driven by higher expenses related to rent, depreciation and salaries, amid broader economic struggle to balance the operational costs with subdued consumer durables demand.

The company also reported a sharp 41.4% increase in net finance costs, mainly due to nearly 50% higher interest expenses from increased short-term borrowing to support working capital and business expansion.

Additionally, the depreciation of the Bangladeshi taka against the euro led to foreign exchange losses on inter-company loans, the company said.

Sectors across Bangladesh are adjusting rates and restructuring costs in the wake of the government’s record fuel price hike, with freight charges from Chattogram port surging and consumer goods companies shrinking pack sizes and cutting trade margins to stay afloat.

On April 18, the government raised fuel prices to record highs -- diesel by Tk 15 per litre to Tk 115, octane by Tk 20 to Tk 140, petrol by Tk 19 to Tk 135, and kerosene by Tk 18 to Tk 130, with new rates taking effect at midnight.

The hike compounded a crisis that began in early March, when the outbreak of war in Iran pushed global energy prices higher and drove up transport costs before any official revision.

Already reeling from the supply disruptions due to the war, diesel-dependent industries, including agriculture, manufacture and transport, are now facing a double whammy. And in a highly inflated economy, the burden is likely to fall on customers soon.

FREIGHT RATES UP 30%

Transport fares between Chattogram port and destinations across the country have risen 25 to 31 percent since the April 18 hike, with rates remaining volatile for the past one and a half months.

When the Iran war began in early March, covered van fares from the port to Dhaka shot up from Tk 17,000 to a maximum of Tk 32,000. The rates later eased to around Tk 22,000 after Eid-ul-Fitr, only to climb again after the fuel hike.

On Tuesday, Ashis Chakraborty, owner of Chattogram-based clearing and forwarding agency AZ Trade International, hired five covered vans to transport imported fabrics, yarn, and chemicals for Mymensingh-based garment manufacturer PM Textile. It cost him Tk 29,000 per van.

PRAN-RFL Group, which relies on hired vehicles for around 40 percent of its cargo movement between Chattogram and its factories in Ghorashal and Habiganj, is absorbing similar increases.

Kamruzzaman Kamal, the company’s marketing director, told The Daily Star that covered vans now charge Tk 15,000 to carry export goods from Ghorashal to inland container depots in Chattogram -- Tk 3,000 above the previous rate.

Prime movers transporting import containers to the factories now cost up to Tk 42,000, compared to Tk 32,000 before the hike.

MOST MANUFACTURERS HOLD PRICES -- FOR NOW

On the manufacturing side, companies are deploying a range of measures to absorb the cost shock without immediately raising retail prices, though several have signalled that adjustments are becoming harder to avoid.

Many are resorting to shrinking the pack size. This is a classic example of “shrinkflation”-- which occurs when manufacturers shrink the package size, i.e., quantity of an item, without a corresponding price drop.

Tanveer Ahmed Mostafa, director of Meghna Group of Industries, said the severe global energy shock stemming from the Middle East conflict has directly hit the company’s costs from maritime freight to raw material procurement.

In a vertically integrated conglomerate like Meghna, such volatilities inevitably exert pressure on forward consumer outputs, he said, adding that the group is currently absorbing the pressure through internal cost-containment and supply chain optimisation.

“A price adjustment remains a possibility to ensure sustainable supply,” Mostafa said. “We are first exhausting all internal efficiencies.”

“While a price adjustment remains a possibility to ensure sustainable supply,” Mostafa said, for now they are “exhausting all internal efficiencies to keep” products affordable.

PRAN-RFL, a leading food processor and exporter, is holding the same position.

Marketing Director Kamal said, “The company is currently avoiding price increases despite rising fuel costs, as consumers are already under significant financial pressure from higher living expenses.”

Instead, PRAN is reducing trade margins and consolidating deliveries – minimising vehicle numbers, ensuring full-load shipments, and using larger vehicles where possible.

Increasing the maximum retail price, he said, “remains a last resort” and would only be considered if internal cost-control measures fail.

Unilever Bangladesh is also deferring any pricing decision, and is focusing on innovation and operational improvements to absorb costs.

Shamima Akhter, director of corporate affairs, partnerships and communications, said the company is prioritising operational efficiency and cost optimisation over immediate price increases.

Because many of its products are discretionary, she noted, price hikes risk reducing sales volumes.

She noted that global volatility, including higher fuel prices and increased raw material import costs, has already put pressure on production and distribution over the past two months.

Bombay Sweets, however, has moved more decisively. Khurshid Ahmad Farhad, the company’s general manager, said export prices have already been raised by 25 percent starting last month. In the domestic market, the company is adjusting on a product-by-product basis, either raising prices or reducing weights, but not both simultaneously.

Farhad described the April 18 hike as a second shock. Cost pressures had already been building, driven by sharp increases in raw materials, including chemical and petrochemical prices. When the latest price hike came, it pushed packaging costs up by 13 percent to 69 percent.

The company’s “Potato Crackers” product, retailed at Tk 10, has been reduced from 13 grams to 10 grams since the fuel hike. The change is already in the market. Farhad emphasized that increasing maximum retail prices further is difficult due to declining consumer purchasing power, making downsizing a necessary strategy.

“The company is currently prioritising survival over profit,” Farhad said. “Margins have already declined.”

FARMERS FACE A COSTLY HARVEST

The pressure is not limited to industry. Farmers are feeling the pinch during the Boro harvesting season. The surging diesel prices have made it costlier to rent harvesters. For instance, farmers in four haor districts of Sylhet depend on nearly 1,500 combine harvesters, which run on diesel, for bringing their crops home.

In Dingapota Haor in Mohanganj upazila, Netrokona, farmer Tofayel Khan cultivated Boro rice on 80 kathas of land this season, only for floodwater to submerge most of it before harvest.

He had to spend some Tk 660 per katha to harvest the remaining crops. Last season, the rate was Tk 550 per katha. “I am concerned about how to recover my losses.”

The government has secured sufficient fuel supply to meet demand in May, with preparations underway for June and July, State Minister for Power, Energy and Mineral Resources Anindya Islam Amit said today (22 April).

He made the remarks in parliament while responding to an urgent public importance notice raised by Jamaat-e-Islami Ameer Shafiqur Rahman on addressing the "ongoing energy crisis" and reducing public suffering.

Highlighting stock, distribution and global situation, the state minister said fuel prices in the global market have increased by an average of 186.59% since the start of the Iran war.

Despite intense pressure for price adjustments, he said the government refrained from raising fuel prices during the peak boro irrigation season. "After irrigation demand eased, prices were adjusted, and even then, the increase was lower than in neighbouring countries," he added.

He also said the government remains open to constructive proposals. "If the opposition or any party has a clear plan to resolve the fuel crisis, the government is willing to consider it."

Opposition lawmakers also took part in the discussion on the proposal.

In the rolling, wind-swept grasslands of Chifeng in northern China's Inner Mongolia, towering white wind turbines line hilltops like sentinels over a hydrogen industry Beijing is trying to prise away from coal.

They are part of a $2 billion project - the biggest of its kind - that harnesses renewable energy to run banks of electrolysers that produce the molecules needed for fertiliser, marine fuel and low-emission steelmaking.

India shares China's "green hydrogen" ambitions, but its commitments are even more concrete and aggressive. Backed by subsidies worth some $2.1 billion, New Delhi is targeting 5 million metric tonnes of green hydrogen annually by 2030 - five times the current size of the global market and about double what analysts estimate Chinese output will be by then.

The massive bets by the world's two most populous nations come at the same time that the West has quietly backed away from its ambitious green hydrogen goals from the start of this decade after cost constraints proved stickier than anticipated.

What China and India have in common - despite very different motives - is the power and political will to force a market into existence, by underwriting projects, steering demand and pushing costs down through scale.

India has drawn private capital by pairing subsidies with offtake guarantees from refineries, fertiliser plants and steelmakers, making projects bankable from the outset.

The motivation is energy security. Hydrogen in India is overwhelmingly derived from imported natural gas, whose supply has suffered a sequence of shocks from the Middle East, Ukraine and the pandemic.

For China - able to deploy state-owned giants or attract private firms with large-scale, planning-led industrial projects - the aim is to preserve its dominance in hydrogen as the industry shifts towards cleaner energy.

In its five-year plan announced in March, Beijing listed green hydrogen alongside quantum computing, brain-computer interfaces and AI-enabled robotics as a frontier industry - an elevation in status that signals more capital will flow its way.

China: speed and scale

China invested $3.7 billion in green hydrogen production last year, more than double US levels, said Rystad Energy's head of hydrogen, Minh Khoi Le.

By 2031, China will have some 2.6 million tonnes per year online, representing $26 billion in investment, according to Rystad projections.

Much of 2025's outlay went into the Chifeng project, operated by Chinese wind turbine maker Envision Energy. It aims to sell green hydrogen and ammonia to markets in Asia, Europe, Latin America and the Middle East, and delivered its first green ammonia cargoes to South Korea's Lotte Fine Chemical in February.

"If we go back a year or two ago, China was not very visible on this situation of green hydrogen, and then two years later they have almost all the biggest projects in the world," said the International Energy Agency's hydrogen lead, Jose Bermudez.

China last year likely doubled its renewables-based hydrogen production capacity to 250,000 tonnes - more than half of the global total, and surpassing a 2022 target to produce 100,000 to 200,000 tonnes annually by 2025 - said Agora Energy China managing director Kevin Tu.

In Inner Mongolia and other places with high winds and strong sunlight, costs can fall to around $2 per kilogram for green hydrogen, close to parity with coal-based hydrogen, Tu said. On average, producing green hydrogen in China costs around $4 per kilogram, he said.

India: aggregating domestic demand

India has brought the price of producing green hydrogen as low as 279 rupees (around $3) per kilogram, from around $5 in 2023, when the government launched the National Green Hydrogen Mission under the clean energy ministry.

Abhay Bakre, who heads the mission, told Reuters that the cost should drop to near $2 by 2032 as technology improves, processes become more efficient and more components are made domestically.

Projects will begin delivering "large quantities" of green hydrogen as soon as next year, he said, and "scale up very fast" to hit the target of 5 million tonnes by 2030.

Under the initiative, industrial heavyweights including Larsen & Toubro, Bharat Petroleum Corp, GAIL and JSW Steel produce about 8,000 tonnes of green hydrogen and its derivatives annually.

New Delhi is kick-starting demand through state-run reverse auctions, where sellers try to undercut each other to win long-term contracts, effectively revealing the lowest price producers can bear.

The government said last month that suppliers and fertiliser companies had signed offtake agreements for 724,000 tonnes of green ammonia, which could cover one third of the country's hydrogen requirements.

Maintaining momentum will require "bold, sector-specific domestic initiatives, coupled with strategic international partnerships to unlock export potential", analysts at the Institute of Energy Economics and Financial Analysis wrote in a report.

"With one of the lowest costs of renewable power generation in the world, India is well placed to capture a significant portion of the export market."

Bangladesh’s garment industry does not have overproduction capacity that could harm the American manufacturing sector and is free from forced labour, as exporters comply with internationally recognised labour laws, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

The association made the remarks in a position paper submitted to the commerce ministry as the government prepares to attend a hearing of an investigation launched by the United States Trade Representative (USTR) on April 29.

The probe covers alleged overproduction capacity and forced labour in 60 countries, including Bangladesh.

Responding to the USTR’s “structural excess capacity” or “overproduction” concerns, the BGMEA said the terms do not have a universally accepted definition or measurable benchmark.

It argued that in a market-driven economy, production levels constantly adjust to shifts in demand, input costs and supply chain conditions. Determining “excess capacity” without clear parameters or methodology is a major challenge.

The association added that Bangladesh’s apparel sector has not expanded suddenly or in a way that would indicate structural excess capacity. The industry’s growth should be viewed over the long-term.

Over the past decade, the sector has followed a steady growth path, it said, driven by global demand and changing sourcing strategies rather than policy-induced expansion.

After more than four decades of development, Bangladesh exported garment products worth $39.3 billion in fiscal year 2024-25, accounting for nearly 7 percent of the global apparel market. It is now the world’s second-largest garment exporter after China.

In 2025, Bangladesh accounted for 10.73 percent of US apparel imports by volume and 10.53 percent by value, according to the American Apparel and Footwear Association (AAFA).

The BGMEA said the dominance of the sector in national exports shows structural constraints in economic diversification and reliance on a single industry, rather than excessive industrial capacity.

It added that the concentration of resources in apparel should be seen as part of a development pathway, not as evidence of overcapacity.

From a US perspective, the association said Bangladesh primarily exports labour-intensive, low to mid-priced apparel that is not produced in the US in significant volumes. In domestic production, the US focuses on advanced manufacturing and heavy industries rather than basic clothing items such as T-shirts and casual wear.

As a result, such imports do not adversely impact US manufacturing, but instead support consumers by providing affordable clothing, particularly for low and middle-income households, it added.

The BGMEA said Bangladesh’s role in the global apparel value chain complements the US economy.

It also said the government provides policy support, including cash incentives, to offset structural disadvantages such as inadequate infrastructure, longer lead times and limited backward linkage industries.

These factors add an additional seven to ten days of transit time and increase logistics costs, conditions that are not faced by competitors such as China, India and Vietnam.

On allegations of forced labour, the BGMEA said Bangladesh maintains a firm and unequivocal position that there is no forced labour in its export-oriented garment sector.

It said the industry operates under a strong legal and institutional framework that ensures compliance with national labour laws and internationally recognised standards.

Citing the official US Customs and Border Protection (CBP) dashboard, the BGMEA said 55 Withhold Release Orders (WROs) are currently active across all industries.

A WRO is a command by US Customs to stop, and hold imported goods at the border if they are suspected of being made with forced labour. A thorough review of the database confirms that there is no instance of any WRO issued against Bangladesh.

In an interview with Daily Sun, Bangladesh’s commercial counsellor in Germany highlights opportunities in high-value, eco-compliant goods but warns of risks from LDC graduation, compliance pressures and overreliance on garments

A structural shift in German consumer and regulatory preferences toward sustainability is opening a significant export window for Bangladesh, with strong potential in high value-added and environmentally compliant products, according to Ch Md Golam Rabbi, commercial counsellor (deputy secretary) at the Bangladesh Embassy in Berlin.
“Germany, as Europe’s largest economy, is increasingly prioritising environmentally friendly, ethically produced and fully traceable goods. This shift is not temporary, it represents a long-term transformation of the market,” Rabbi said in an exclusive interview with the Daily Sun.
He noted that Bangladesh is well positioned to capitalise on this trend, supported by its growing portfolio of green factories, improved compliance standards and competitive manufacturing base.
The participation of three Bangladeshi companies at Techtextil & Texprocess 2026 at Messe Frankfurt signals a gradual but important shift toward higher-value market engagement.
Rabbi described Germany’s trade fairs as “high-impact commercial ecosystems” that go beyond exhibitions. “These platforms enable exporters to generate qualified leads, engage directly with decision-makers, analyse competitors and position their brands in a highly competitive environment,” he said.
He emphasised that trade fairs serve a dual purpose, as immediate business development tools and long-term strategic investments. Companies can test market responses, launch new products, gather direct buyer feedback and build partnerships across the value chain.
To maximise outcomes, Rabbi advised exporters to adopt a structured approach, including setting clear and measurable targets, scheduling meetings in advance and leveraging digital platforms such as LinkedIn to enhance real-time engagement and visibility.

Germany anchors Bangladesh’s EU exports
The European Union continues to dominate Bangladesh’s export landscape, accounting for nearly half of total exports, which reached $48.28 billion in the 2024-25 fiscal year.
Within the EU, Germany remains the single largest destination. Bangladesh exported approximately US$8.8-9 billion worth of goods to Germany in 2024, with momentum continuing into 2025. Overall exports to the EU stood at around $23.9 billion in 2025, reflecting steady growth.
However, Rabbi cautioned that the export structure remains highly concentrated. “More than 80%-90% of exports to the EU are still readymade garments. While this has been a strength, it also exposes Bangladesh to structural risks,” he said.
With Germany’s demand evolving rapidly, he underscored the need to move beyond volume-driven apparel exports toward diversified, value-added products.
He identified emerging opportunities in light engineering, footwear, leather goods, technical textiles, pharmaceuticals, ICT services and jute-based eco-friendly products.
“European buyers are increasingly shifting toward man-made fibre (MMF), functional textiles and technical applications. Capturing this segment will be critical for future growth,” he added.

LDC graduation: Opportunity with risks
Bangladesh’s graduation from Least Developed Country (LDC) status in 2026 marks a turning point for its export competitiveness in the EU market. Unless the government’s request for deferment is approved, the country is set to graduate in November this year, bringing major changes to market access and tariff benefits.
Rabbi warned that the loss of duty-free, quota-free access under the Everything But Arms (EBA) scheme could lead to “preference erosion,” increasing tariff burdens on Bangladeshi goods.
“To sustain growth, securing GSP Plus status or negotiating free trade agreements will be essential,” he said, noting that competing countries such as Vietnam and India are already advancing through bilateral and regional trade deals.
Beyond tariffs, compliance will become a decisive factor. Exporters will need to align with stringent frameworks such as the EU’s Carbon Border Adjustment Mechanism (CBAM) and Germany’s Supply Chain Due Diligence Act, which require robust environmental, labour and governance standards.
He also pointed to the loss of special treatment under WTO provisions, which could limit policy flexibility and increase pressure on domestic industries.

Compliance, cost and logistics challenges
Rabbi identified compliance as the most immediate and complex challenge.
“EU regulations are evolving rapidly, particularly around sustainability, due diligence and traceability. This requires continuous investment and institutional readiness,” he said.
Other constraints include limited product diversification, slower adaptation to MMF-based production, and inefficiencies in logistics and supply chains. Lead times, port handling capacity and freight costs continue to affect Bangladesh’s competitiveness compared to regional peers.
Additionally, global economic uncertainty and inflationary pressures in Europe are influencing buyer behaviour, leading to cautious sourcing strategies. Rising energy and raw material costs are further compressing exporters’ margins.
He also warned against overdependence on a narrow export base, noting that excessive reliance on a single sector could create long-term systemic vulnerabilities.

Embassy steps up engagement
To address these challenges and leverage emerging opportunities, the Commercial Wing of the Bangladesh Embassy in Berlin has intensified its engagement with the German market.
“Our focus is on building direct linkages between Bangladeshi exporters and European buyers through trade fairs, buyer-seller meetings and continuous engagement with industry associations and retail groups,” Rabbi said.
The embassy is also actively involved in policy advocacy, particularly in areas related to market access, sustainability standards and upcoming EU regulations.
Rabbi concluded that Bangladesh’s future export success in Germany will depend on its ability to align with evolving market dynamics.
“The opportunity is clear. But capturing it will require a strategic shift, toward sustainability, diversification, compliance and value addition. Those who adapt early will be the biggest beneficiaries in the German and broader EU market,” he said.

Bangladesh and Ethiopia have agreed to elevate their bilateral relations to a higher level through enhanced economic cooperation.Economy news updates

Foreign Minister Dr Khalilur Rahman, now visiting Ethiopia, held a meeting with Minister of Foreign Affairs Gedion Timothewos and discussed issues of mutual interest.

The two Ministers exchanged views on areas of cooperation in both bilateral and multilateral relations, said the Ministry of Foreign Affairs of Ethiopia.

Gedion noted that Ethiopia continues to register sustained economic growth and invited Bangladeshi companies to engage in priority investment sectors identified by the Government, including renewable energy generation, agro-processing, the pharmaceutical and medical equipment manufacturing industries, as well as the broader manufacturing sector.

Minister Dr Khalilur underscored his country’s commitment to further strengthening bilateral relations with Ethiopia, particularly in the areas of trade and investment cooperation.