Although most measures proposed in this year's budget have been welcomed as business- and taxpayer-friendly, economists and business leaders say some provisions could increase compliance burdens for businesses and ultimately place additional pressure on consumers.

Among the proposals is a new advance tax collection mechanism under which dealers would collect Tk2 in advance tax for every Tk1,000 worth of goods purchased by retailers.

The government's objective is to bring more small businesses under the tax net. Under the proposed system, a portion of a retailer's annual earnings would effectively be collected in advance.

At the end of the financial year, retailers would be able to adjust the amount against their income tax liability when filing tax returns or seek a refund if they have no taxable income.

However, experts argue that the policy may not work as intended.

They point out that, with a few exceptions, most small retailers do not have Taxpayer Identification Numbers (TINs). As a result, many are unlikely to file tax returns or go through the process of claiming adjustments or refunds for the advance tax deducted from them.

Instead, they may simply add the extra cost to the prices of goods sold to consumers.

For example, if a retailer purchases goods worth Tk5,000 from a dealer, the dealer would collect Tk10 in advance tax under the proposed rate. Although the value of the goods remains Tk5,000, the retailer may effectively treat the purchase cost as Tk5,010 and incorporate that additional expense into the final selling price.

If a business pays Tk1,000 in advance tax over the course of a year, experts believe that amount could ultimately be recovered through higher prices charged to consumers.

The government is also planning to broaden the VAT net by introducing a specific tax regime for relatively small businesses, similar to the previous package VAT system. Details of the collection mechanism will be outlined in a separate regulation after the budget is announced.

According to officials at the National Board of Revenue, businesses under each VAT zone would initially be divided into five categories based on their size and estimated profitability. Monthly VAT payments ranging from Tk1,000 to Tk10,000 would then be imposed.

Business leaders fear that this measure could also lead to higher prices for goods and services.

For example, a business required to pay Tk10,000 in VAT each month would face an annual VAT bill of Tk120,000. To maintain profit margins, businesses may seek to recover at least part of that cost through higher prices, they argue.

A business leader, speaking to The Business Standard on condition of anonymity, said, "If tax is collected from retailers at the dealer level, they may simply add that amount to their purchase costs and pass it on through higher prices. Although the government intends to impose the tax on business income, in reality the burden will fall on consumers."

The same concern applies to the proposed VAT collection system, he said, arguing that it could add both costs and compliance burdens for businesses.

Abdul Wahed, president of the Chapai Nawabganj Chamber of Commerce and Industry, told TBS, "If VAT is collected in this way, it could increase both complications for businesses and opportunities for corruption. Instead of reaching the government treasury, some of the money could end up in the pockets of officials.

"However, we will be able to comment in more detail after seeing the final budget proposals."

Consumer advocates have also expressed concern about the potential impact on households.

AHM Shafiquzzaman, chairman of the Consumer Association of Bangladesh, said any tax or VAT collected from businesses would eventually be passed on to consumers.

"The amount recovered from consumers could be many times higher than the amount collected by the government," he said.

He noted that some traders earn substantial daily incomes and therefore should be brought into the tax net.

"A trader selling eggs at Karwan Bazar can earn Tk10,000 in a single day. So it is reasonable that such businesses pay tax, and that may be why the government is trying to expand the tax base," he said. "But businesses will ultimately pass those costs on to consumers."

Bangladesh Bank (BB) has formed a new Tk 100 billion (Tk 10,000 crore) refinancing scheme from its own funds to boost agricultural production, ensure food security, and create employment opportunities in rural areas.
Under the five-year scheme, farmers will be able to access low-interest loans capped at an 8 percent interest rate.The Agricultural Credit Department of the central bank issued a circular in this regard last night (Monday night), sending it to the chief executives of all scheduled banks.The initiative aims to financially empower genuine farmers and rural entrepreneurs. Small, marginal, sharecroppers (Borga chashi), and women farmers will receive top priority under this fund.To identify genuine beneficiaries, banks will utilise information from the local departments of agriculture, fisheries, and livestock, or the government-issued Farmer Cards.In an effort to ease access, small and marginal farmers will be eligible to secure collateral-free loans of up to Tk 5 lakh solely against the liability of their crops and produce.

Furthermore, instead of immovable property, personal or group social guarantees will be considered as acceptable collateral for women and marginal farmers.

According to the central bank circular, any farmer or client who is a loan defaulter with any bank or financial institution will be disqualified from receiving loans under this scheme.

Additionally, the central bank strictly specified that these loans cannot be used to repay or adjust any existing or past debts.

An individual beneficiary will be permitted to avail themselves of the facilities under this refinancing scheme a maximum of three times.

The Directorate General of Drug Administration (DGDA) has revised the prices of cardiac stents, a critical medical device used in the treatment of heart disease, reducing the cost of several commonly used products.

The revised prices were announced in a notification signed by DGDA Director General (Additional Secretary) Md Alamgir Hossain today (9 June).

A cardiac stent is a tube-shaped device inserted into the coronary arteries to keep them open and maintain blood flow to the heart in patients suffering from coronary artery disease.

According to the notification, the prices were re-fixed based on recommendations from a committee formed under the Health Services Division of the Ministry of Health and Family Welfare.

The revised list shows price reductions ranging from around Tk3,000 to Tk5,000 for several widely used stents. For example, some stents previously priced at Tk60,000 will now cost Tk57,000, while stents priced at Tk55,000 and Tk53,500 have been reduced to Tk52,000 and Tk50,000 respectively.

The largest price cut was applied to the Silene Covered Stent manufactured by InSitu Technologies Inc of the United States. Its maximum retail price has been reduced from Tk109,800 to Tk62,000.

The updated price list covers stents imported by companies including Advanced Meditech, Asia Pacific Medics Ltd, Alliance Medicare and others, with products manufactured in countries such as Poland, Germany, France, Italy, Switzerland, Japan and the United States.

The DGDA has directed all hospitals to display the updated stent price list prominently on their notice boards for public awareness. Hospitals and healthcare providers have also been instructed to ensure that stents are sold strictly according to the approved maximum retail price (MRP) and are not bundled into treatment packages.

The notification further states that separate cash memos must be issued for stent purchases, clearly mentioning the stent's name, MRP and manufacturer's name. Hospitals must also provide patients with the packaging of the stent used during their treatment.

The DGDA urged all hospitals providing cardiac care to comply with the approved pricing structure and related directives.

Bangladesh’s securities regulator has withdrawn floor prices on Bangladesh Export Import Company Limited (Beximco) and Islami Bank Bangladesh PLC, ending more than three years of administered price floors across the country’s stock market.

The Bangladesh Securities and Exchange Commission (BSEC) issued the order on Monday, signed by chairman Masud Khan, lifting the restrictions last imposed on the two companies in August 2024. With the withdrawal, normal circuit breaker rules will apply, set under a BSEC order from June 17, 2021.

Under those rules, daily price movement limits range from 10 percent for shares priced up to BDT 200, falling in steps to 3.75 percent for shares above BDT 5,000. The slab-based circuit breakers also cover newly listed securities.

The Dhaka Stock Exchange Brokers Association of Bangladesh (DBA) had recently urged the commission to lift the floor prices, arguing that Beximco had been effectively untradeable for an extended period. It said the floor on Islami Bank and other shares since May 3 had blocked normal selling activity. Prolonged trading restrictions were raising the risk of negative equity for margin borrowers, threatening overall market stability, the DBA said in a letter to the commission.

After taking office, Khan told a press briefing that the commission would not impose floor prices again. The order followed days later.

Bangladesh’s stock market first entered the floor price era in March 2020, when BSEC imposed the mechanism to stem heavy selling triggered by the COVID-19 pandemic. The restriction was lifted in June 2021, only to be reinstated in July 2022 as economic instability deepened following Russia’s invasion of Ukraine. The commission removed the floor for 169 companies that December, but reimposed it in March 2023 after share prices fell sharply.

The floor was largely dismantled in January 2024, leaving 35 companies covered. Successive waves of withdrawals followed, with the final four companies released in August 2024 under the interim government. Until Monday, Islami Bank and Beximco remained the sole exceptions.

Finance Minister Amir Khosru Mahmud Chowdhury says the government is preparing the budget for the next fiscal year with interests of people from all sections of society in mind.
"We are preparing the budget taking all relevant issues into consideration," he told reporters when asked about the persistently high rate of inflation that has been putting pressure on people for a prolonged period.The minister was responding to questions at his office at the Bangladesh Secretariat in the capital, preceding an elaborate statement in parliament on economic and revenue situation, and banking-sector reforms later in the day.Mr Chowdhury, who is scheduled to place a Tk 9.38-trillion budget in parliament tomorrow (Thursday), says that despite limited resources, the budget seeks to cover all citizens of the country."No one has been left out. The circumstances of all people, their advantages and disadvantages, and their living standards have been taken into account," he told the reporters.

Responding to another question, he added: "Had we had more resources, we could have undertaken even more welfare- oriented measures for the people."

While addressing parliament on Tuesday, the finance minister said political uncertainty, weak investment, sluggish trade and industrial activity, and supply-chain disruptions were among major factors behind government's failure to meet revenue targets over the past two fiscal years.Politics

He apprised the parliament of the deficient revenue situation and also banking-sector woes and remedies being applied now.

He notes that a gamut of 11 economic deceleration factors, including declining purchasing power, business losses, lower industrial output and falling corporate profits, had weighed on revenue collection in fiscal years 2024-25 and 2025-26.

Replying to a question from reserved-seat lawmaker Nilofar Chowdhury Moni during a question-answer session in the Jatiya Sangsad, the minister said revenue collection up to April in FY2025-26 had come to Tk 3.27 trillion (326,928.16 crore) against a target of over Tk 4.31 trillion (Tk 431,461.27 crore), which accounts for 75.77 per cent of the target.

The National Board of Revenue (NBR) was assigned a revenue target of Tk 5.03 trillion (Tk 503,000 crore) for the fiscal year.

In FY2024-25, revenue collection stood at over Tk 3.71 trillion (Tk 370,875.04 crore) against a target of Tk 4.63 trillion (Tk 463,500 crore).

Mr Chowdhury, who is also in-charge of the planning ministry, says economic activity remained subdued following the political transitions, while supply-chain bottlenecks, high production costs and weak business confidence further constrained revenue growth.

He says prolonged high inflation, which hovered near double digits for an extended period, eroded consumers' purchasing power and reduced the taxable surplus income of middle-income earners and salaried employees.

Disruptions in industrial production, weakened supply chains and sluggish wholesale and retail trade also reduced business earnings, hurting corporate-tax collection.

The minister says shortages of gas and electricity prevented many industries, including the ready-made garment sector, from operating at full capacity, leading to lower production and profitability.

Higher lending rates and the depreciation of the taka against the US dollar further increased operating costs, squeezing profits of large corporate taxpayers, one of the government's major sources of income-tax revenue.

On the trade front, imports of goods subject to 25-percent and 10-percent customs duties fell by 18 per cent and 37 per cent respectively in FY2025-26 compared with the previous year, reducing customs revenue.

Mr Chowdhury also says government measures aimed at keeping fuel prices stable -- including cuts in duties and taxes on petroleum products and the withdrawal of VAT on imported liquefied natural gas (LNG) -- had affected revenue collection.

Tax incentives for capital-machinery imports and a decline in luxury-vehicle imports also contributed to the shortfall.

The finance minister further states that the economic disruption caused by the July-August 2024 student-led mass uprising and the subsequent change in government led to prolonged stagnation in economic activities, disrupted supply chains and weakened business operations, resulting in lower corporate earnings and tax payments.

However, he says, ongoing automation of tax administration and stronger anti-evasion measures by the NBR were helping improve revenue collection and narrow the gap in recent months.

Meanwhile, the finance minister said, the government has intensified banking-sector reforms, strengthened deposit protection and tightened measures against loan defaulters in an effort to restore public confidence and improve financial stability.

Responding to a question from Cox's Bazar-3 lawmaker Lutfur Rahman in the Jatiya Sangsad, the minister says the reforms are being implemented under a comprehensive bank-resolution framework established through the Bank Resolution Act 2026.

He says the framework was first introduced through the Bank Resolution Ordinance 2025 and operationalised under the Bank Resolution Scheme 2025 before being enacted into law this year.

As part of the resolution process, five troubled Islamic banks have been merged to form Sommilito Islami Bank PLC, "a key step aimed at strengthening the banking system and addressing longstanding weaknesses in the sector".

The minister says depositor protection has also been expanded under the Deposit Protection Act 2026, with the maximum protected deposit amount doubled to Tk 200,000 from Tk 100,000.

In a significant policy shift, depositors of non-bank financial institutions (NBFIs), who were previously outside the safety net, have also been brought under the protection framework.

"A clear legal framework, transparent resolution mechanisms and stronger depositor safeguards will play an effective role in rebuilding confidence among depositors and stakeholders," Mr Chowdhury told the House.

The finance minister says the government and Bangladesh Bank have simultaneously stepped up efforts to recover defaulted loans and curb the accumulation of non-performing loans (NPLs).

The measures include policy support for recovering overdue loans, special resolution strategies for banks burdened with high levels of classified loans and stricter action against willful defaulters.

Banks have been instructed to strengthen their legal divisions and recover at least one per cent of outstanding default loans in cash through alternative dispute- resolution mechanisms by June 30, he says.

Bangladesh Bank has also updated credit-risk management guidelines, while the recovery progress from top 20 defaulters is being reviewed regularly at bankers' meetings.

Banks with classified loans exceeding 10 per cent of their portfolios have been directed to form dedicated recovery-monitoring teams.

To strengthen credit discipline, the central bank is implementing Expected Credit Loss (ECL)-based loan classification and provisioning under IFRS 9, a move aimed at improving governance and reducing lending risks.

The minister says licensed collateral valuation firms have also been authorised to independently assess pledged assets alongside banks' own valuations.

Mr Chowdhury says the government's broader reform agenda includes updating agricultural loan-rescheduling policies, publishing lists of defaulters and willful defaulters, revising incentives for regular borrowers and setting sector-wide borrowing limits for individual clients.

"Legal reforms are also being pursued to impose tougher penalties on habitual defaulters."

The government is considering including experienced bankers on the jury board of the Artha Rin Adalat and introducing measures to prevent defaulters from delaying recovery proceedings through writ petitions.

The minister says large companies seeking financing above Tk 10 billion would be encouraged to raise funds through bond issuance instead of relying heavily on bank borrowing, helping ease pressure on the banking system.

He also discloses that legislation is being prepared to facilitate the establishment of private-sector asset-management companies (AMCs) to help resolve distressed assets and strengthen long-term financial-sector stability.

Commercial solar power generation is likely to receive a zero percent income tax benefit in the upcoming budget, while the government is considering a five percent rebate on electricity bills for retail consumers who use solar power.

Besides, the proposed budget for the 2026-27 fiscal year may exempt imports of raw materials used to manufacture lithium-ion batteries, sodium-ion batteries and lithium-ion battery packs from duties and taxes until 2030.

These batteries are widely used in solar power systems. Imports currently face a total tax incidence of about 60 percent.

Finance ministry officials familiar with the matter said a significant share of customs tax incentives in FY27 could be directed towards the solar sector as the government seeks to reduce dependence on conventional energy sources amid volatility in global fuel markets.

As part of its broader green energy agenda, the BNP government is also considering lowering advance income tax on electric vehicles (EVs) during registration and renewal.

The current levy of Tk 2 lakh would be reduced to Tk 25,000, Tk 50,000, Tk 75,000 and Tk 1 lakh, depending on vehicle capacity.

The proposed rates would apply to EVs with capacities of up to 200kW, 300kW, 400kW and above 400kW, respectively.

The government is also considering extending concessional import benefits to local EV parts makers, alongside manufacturers and assemblers.

“Duties on charging stations for e-bikes and EVs may also be reduced in the budget,” said one of the officials.

Finance Minister Amir Khosru Mahmud Chowdhury is expected to announce the measures when he presents the national budget in parliament on June 11.

Officials said the proposals have already received in-principle approval from Prime Minister Tarique Rahman at a high-level meeting last month.

Feroz Kabir, senior general manager of Runner Motors, which sells imported electric scooters, welcomed the proposals, saying they were in line with the global shift towards cleaner transport.

However, he said charging infrastructure remains a major concern.

“Government action will largely shape how EV demand grows,” said Kabir, adding that while most users still rely on home charging, a structured charging network will be crucial for wider adoption.

He said consumer acceptance is rising as vehicle range, comfort and practicality have improved. Although EVs cost more upfront, buyers focus on savings in day-to-day use.

Zakir Hossain Khan, chief executive officer of the Change Initiative, said the government’s green transition efforts should be accompanied by a broader overhaul of renewable energy and EV policies.

He argued that the current tax regime creates distortions and inefficiencies, noting that even low tariffs can lead to complex customs assessments and the risk of misclassification.

“We should move towards zero duty. This already exists in the garment sector.”

Khan also criticised the wide disparity between the taxation of fossil fuels and clean energy.

“For fossil fuel, when the government is giving zero or 1 percent duty, but here they are charging up to 65 percent. That is tax injustice,” he said.

He argued that energy taxation should be based on consumption rather than supply chains.

Last week, the Centre for Policy Dialogue (CPD) proposed a package of fiscal reforms to accelerate Bangladesh’s green energy transition.

The think tank called for the removal of advance tax on solar and wind equipment, lower customs duties on lithium-ion batteries, the elimination of supplementary duty on energy storage systems and reduced taxes on electric vehicles.

CPD recommended scrapping the existing 7.5 percent advance tax on solar and wind equipment, which raises total tax incidence to between 28 and 31 percent and increases project costs.

It also proposed reducing customs duty on lithium-ion batteries from 25 percent to 5 percent and eliminating the 20 percent supplementary duty on energy storage systems. According to the think tank, these measures would significantly lower tax burdens and support renewable energy integration.

On electric vehicles, CPD called for the removal of the 20 percent supplementary duty and the three percent regulatory duty, while reducing customs duty from 25 percent to 10 percent.

CPD said EVs currently face the highest tax burden among all energy-transition technologies.

Finance Minister Amir Khosru Mahmud Chowdhury today (9 June) said the government may lead to nearly Tk42,600 crore in additional subsidies for the oil, gas, power and fertiliser sectors this fiscal year due to recent tensions involving Iran and instability in the global energy market.

Replying to a question in parliament today, the finance minister said the situation has created additional pressure on the government's subsidy expenditure.

He said the estimated additional subsidy requirement includes around Tk10,258 crore for fuel oil, Tk11,170 crore for gas, Tk19,821 crore for electricity and nearly Tk1,350 crore for fertiliser.

Despite the growing fiscal burden, the government has continued its policy and financial support to protect the general public, agriculture and the production sector, he added.

Amir Khosru said the recent instability in the Middle East, including in Iran, has created both immediate and potential risks for Bangladesh's economy.

"So far, the impact has been most visible in the areas of energy, fertiliser, import costs, transport expenses, inflation, foreign currency management, remittance inflows and overseas employment," he said.

However, he noted that a reliable assessment of sector-wise losses would require coordination of data from the relevant ministries and agencies.

The finance minister said rising international prices of fuel oil, LNG and fertiliser have increased pressure on import and production costs.

Higher energy prices could also raise costs in the electricity, transport, agriculture and industrial sectors, which may indirectly affect market prices and inflation, he said.

He further warned that prolonged instability in the Middle East could pose risks to overseas employment and remittance inflows, as the region remains a major destination for Bangladeshi migrant workers.

The government is closely monitoring the situation, Amir Khosru said, adding that several measures are being taken, including diversifying energy import sources, expanding domestic gas exploration, ensuring the supply of essential commodities, maintaining caution in foreign exchange management and exploring alternative labour markets.

He said the government would take necessary policy and administrative measures once reliable sector-wise damage assessments become available.

The Bangladesh Bank's Board of Directors has decided to appoint administrators at five non-bank financial institutions (NBFIs) as a step towards closing or winding them down following years of widespread irregularities and scandals during the tenure of the previous government.

The decision was made at a board meeting held at the Bangladesh Bank head office yesterday (9 June), chaired by Governor Mostakur Rahman.

According to meeting sources, discussions covered nine financially distressed institutions. For the five earmarked for closure or liquidation, boards will be dissolved and administrators appointed, similar to the process followed for merged banks. The remaining four have been given three months to recover.

The five institutions marked for closure are FAS Finance, Far East Finance, Aviva Finance, Peoples Leasing and Financial Services, and International Leasing and Financial Services, according to Bangladesh Bank sources.

The four NBFIs given three months to recover are Bangladesh Industrial Finance Company (BIFC), Premier Leasing and Finance, GSP Finance, and Prime Finance.

A Bangladesh Bank official said the five institutions earmarked for closure hold deposits of approximately Tk2,700 crore from 27,000 individual depositors.

"Our first task is to dissolve the boards of these institutions. After that, administrators will be appointed in a similar process followed for the merged banks. Once administrators are in place, the process of returning depositors' funds will begin. Each individual depositor will receive up to Tk10 lakh."

He said only individual depositors at the five institutions will receive up to Tk10 lakh each, while corporate depositors will receive nothing for now but they will get back their funds only when non-performing loans of the institutions are recovered.

"Institutions are given a three-month timeframe to demonstrate the ability to repay individual depositors' principal within that period, or face the same resolution or liquidation process," he further added.

As of last December, non-performing loan rates stood at 99.99% for FAS Finance, 98.50% for Far East Finance, 93.93% for Aviva Finance, around 95% for Peoples Leasing, and 99.44% for International Leasing, according to a Bangladesh Bank report.

In May last year, Bangladesh Bank issued notices to 20 NBFIs asking why they should not be shut down due to high non-performing loans and failure to return deposits. Of these, nine institutions submitted recovery plans deemed unsatisfactory, prompting moves to close or wind them down. However, in January this year, three institutions were removed from the list, narrowing it to six. At that stage, GSP Finance, Prime Finance, and BIFC were excluded. More recently, the Bangladesh Bank board made a preliminary decision to close or wind up five institutions, dropping Premier Leasing from the list.

Sector insiders say the surge in non-performing loans at these institutions was largely driven by widespread irregularities and scandals during the tenure of the ousted Awami League government. As a case in point, PK Halder, former managing director of NRB Global Bank (later renamed Global Islami Bank), is accused of embezzling at least Tk3,500 crore from four NBFIs: Peoples Leasing, International Leasing, FAS Finance, and BIFC.

The broader NBFI sector has been grappling with severe liquidity shortages, high default loans, and weak governance for several years, prompting Bangladesh Bank to act under its resolution framework.

Bangladesh is considering the possibility of joining alternative international payment systems beyond dollar-dominated networks as discussions take place on China's Cross-Border Interbank Payment System (CIPS) alongside potential Panda Bond financing.

A delegation from China's state-owned Export-Import Bank held discussions with Bangladesh Bank officials today (9 June) regarding CIPS integration and Panda Bond issuance. Central bank officials said there is no policy objection if any commercial bank shows interest in joining the CIPS platform independently.

The CIPS is a China-backed cross-border payment and settlement system launched in 2015 to facilitate renminbi (RMB) transactions and expand the global use of the Chinese currency.

Bangladesh Bank officials described it as an additional international payment channel alongside existing systems such as SWIFT, saying it could broaden options for trade and business payments.

A senior Bangladesh Bank official said, "The more channels available for international payments, the more opportunities it creates for trade and business."

He added that banks interested in joining would need to express their intent and proceed independently, with no immediate regulatory barriers or separate approval requirements at this stage. "Once a bank begins the actual process, the necessary issues will become clearer. But for now, our stance is positive," he said.

Central bank officials said China had earlier proposed linking Bangladesh to its payment network, and the idea gained traction after Western sanctions on Russian banks highlighted the need for alternative global financial infrastructure.

In March 2024, China's Ambassador to Bangladesh, Yao Wen, met the then Bangladesh Bank governor to discuss CIPS, with officials suggesting it could serve as a parallel global payment channel alongside SWIFT.

However, officials stressed that the effectiveness of CIPS would depend heavily on the internationalisation of the renminbi. One official said, "If the use of RMB in international trade increases, the usage of this platform will also expand."

They added that Bangladesh's trade with China remains heavily import-oriented, limiting immediate benefits unless Chinese investment, loans, and project financing increase substantially to generate RMB-based financial flows.

Panda bond financing

Panda Bonds also featured in the discussions as a potential tool for diversifying financing sources. These are yuan-denominated debt instruments issued in China's domestic bond market by foreign governments, international financial institutions, or multinational corporations, allowing them to raise funds directly from Chinese investors in RMB.

While participation is primarily led by Chinese institutional investors, foreign investors may also take part in certain cases. Sovereign-level decisions on issuance would be led by the Ministry of Finance, according to the central bank officials.

Bida meeting with Chinese delegation tomorrow

A separate meeting between the Bangladesh Investment Development Authority (Bida) and a delegation from China Exim Bank is scheduled for tomorrow (10 June), where investment-related issues are expected to be discussed, according to officials.

Bida Executive Member and Head of Business Development Nahian Rahman Rochi said the meeting would focus on broader investment cooperation with the Chinese delegation.

Experts said CIPS could emerge as a long-term strategic option for Bangladesh but cautioned that its benefits would depend on deeper economic integration.

Chairman of Research and Policy Integration for Development (RAPID) Mohammad Abdur Razzaque said, "If Chinese investment, loans, and project financing increase, cross-border settlements will become easier using those financial flows. Otherwise, Bangladesh may again have to rely on the US dollar for transactions."

He added, "This could open up a window of opportunity. However, the extent of real benefits will depend on how deeply Bangladesh-China economic relations and transaction flows develop in the future."

Global digital operator Veon has expressed interest in exploring a strategic combination with Bangladesh’s state-owned mobile operator Teletalk as part of a broader plan to expand its digital footprint and investments in Bangladesh.
In a letter sent to Prime Minister Tarique Rahman recently, Veon said it was prepared to significantly increase its investment in Bangladesh and sought discussions on potential collaborations involving strategic public assets.
The proposal includes a possible strategic combination with Teletalk Bangladesh Limited and the acquisition of Nagad from the Bangladesh Post Office.“Veon and Banglalink believe Bangladesh has the potential to become one of Asia’s most dynamic digital economies and are committed to supporting that vision,” said Johan Buse, CEO of Banglalink, a wholly owned subsidiary of Veon.
Veon said it was prepared to significantly increase its investment in Bangladesh and sought discussions on potential collaborations involving strategic public assets
“Building on more than $2.5 billion invested in Bangladesh over the past 21 years, we are keen to make significant investments in the near term, supported by a conducive and predictable regulatory environment,” he said.

“As a digital operator, we are focused on making lives better and simpler by expanding access to connectivity, digital services, affordable devices, and innovative solutions in areas such as healthcare, education, and agriculture, helping accelerate digital transformation and sustainable economic growth,” said the CEO of the Banglalink, which currently has 3.74 crore customers as of April.
Veon’s proposal comes as several other foreign companies -- including Malaysia’s Axiata, as well as Japanese and South Korean firms -- have also expressed interest in investing in or acquiring a stake in Nagad, according to sources.

Several local companies have also explored potential acquisition opportunities.
The mobile financial service provider’s large customer base and significant transaction volume have made it a lucrative target for both domestic and international investors.However, no company has submitted a formal financial offer so far. Sources said uncertainties surrounding Nagad’s ownership structure, allegations of illegal e-money creation, and its substantial liabilities have discouraged both local and foreign investors from making concrete proposals.

Veon said it has already applied for a digital bank licence and received a no-objection certificate from Bangladesh Bank to operate as a payment service provider.

Building on its digital banking and mobile financial services experience in multiple markets, the company said it was ready to deploy more than $100 million in immediate investment in Bangladesh.

“Veon stands ready to significantly expand its investment in the country and partnership with the government,” the company said in the letter.

The Dubai-headquartered company argued that a partnership involving strategic public assets could help strengthen national digital infrastructure and accelerate innovation.

“We believe Veon’s digital-first operating model, execution capability and capital strength can deliver measurable improvements in service quality, financial inclusion and long-term sector sustainability,” it said.

Veon operates in Bangladesh through Banglalink and says it has invested more than $2.5 billion in the country over the past two decades.

According to the letter, the company has also contributed over $4 billion to the national exchequer during the period.

The company said a stable and investment-friendly policy environment would be essential for unlocking the next phase of digital investment, innovation and job creation in Bangladesh.

Bangladesh’s air conditioner market is experiencing a subdued summer season this year. Frequent rainfall in April and May, coupled with fewer heatwaves than in previous years, has weakened demand for cooling appliances, according to industry stakeholders.

Sales remained below expectations during what is traditionally the peak period for AC purchases.

While demand persists, lower-priced brands have outperformed premium models as inflation continues to squeeze household budgets, market insiders said.

Nearly half of all annual sales are typically generated during the April-May period. Among household buyers, 1.5-tonne inverter AC units remain the most sought-after models
Demand rose modestly ahead of Eid-ul-Azha at the end of May, but the increase was insufficient to significantly lift overall market activity. Rising prices of essential goods have prompted consumers to curb discretionary spending on products such as air conditioners, they added.

According to Md Bazlur Rashid, a meteorologist at the Bangladesh Meteorological Department (BMD), temperatures during April and May remained below seasonal norms, while rainfall in April was more than 76 percent above the historical average.

However, he noted that elevated humidity levels made conditions feel considerably hotter.

Average temperatures this season ranged between 34°C and 35°C, the meteorologist said, which is not unusually high except in the Rajshahi region.

Frequent rainfall helped prevent widespread heatwave conditions, although temperatures have risen slightly over the past week. BMD officials also forecast 8 to 10 heatwaves over the next three months through August.

Industry estimates put annual AC demand at 550,000 to 600,000 units, with nearly half of total sales typically generated between April and May. Among household buyers, 1.5-ton inverter ACs remain the most popular choice, followed by 2-ton units.

“AC sales have fallen by around 30 percent this season compared with the same period last year due to unfavourable weather conditions and persistently high inflation,” said Md Nurul Afser, deputy managing director of Electromart.

Traditionally, AC sales surge between March and June, accounting for nearly half of annual demand, he said. However, frequent rainfall in April and May significantly dampened sales, particularly among first-time buyers.

Afser added that rising prices of essential goods have eroded the purchasing power of middle-income households, affecting discretionary spending.

Despite keeping prices unchanged from last year and offering discounts, sales have yet to meet expectations.

“If the monsoon is delayed, the market could still recover some lost sales this year. Otherwise, prospects for the industry will remain weak,” he said.

Mahmudul Islam Raz, brand manager at Rangs eMart, said sales increased slightly ahead of Eid-ul-Azha, but overall demand remained largely unchanged throughout April and May.

“Consumers are prioritising essential spending over discretionary purchases. If people struggle to meet daily expenses, they are unlikely to spend on products such as ACs,” said Salim Ullah Salim, director (marketing) of Jamuna Electronics & Automobiles Ltd.

Md Rashedul Islam, head of business at Transcom Digital, said AC sales during April and May exceeded 2025 levels but remained below those recorded in 2024.

Transcom sold around 4,500 units during the period, compared with 4,000 units a year earlier and 7,000 units in 2024. He attributed the improvement primarily to operational efficiencies rather than stronger underlying demand.

Inflation continues to weigh on consumer spending, while demand for lower-priced Chinese brands has outpaced that for premium Japanese brands as buyers become increasingly price-sensitive, he said.

According to him, many consumers who would normally consider premium brands are now opting for more affordable alternatives to manage household expenses.

Walton, however, reported a different trend.

“Demand for air conditioners has increased in recent weeks as temperatures have risen across the country,” said Md Tanvir Rahman, chief business officer of Walton Air Conditioner.

He said showroom footfall, online enquiries and orders have increased compared with the same period last year. Growth has been particularly noticeable among middle-income households, while instalment facilities have encouraged more consumers to make purchases despite broader economic pressures.

Rahman said flexible financing options have become an increasingly important factor in purchasing decisions, allowing customers to spread payments over several months.

As temperatures continue to rise, he expects demand to remain strong in the weeks ahead.

ChatGPT maker OpenAI confidentially filed for a US initial public offering recently, the company said on Monday, joining rival Anthropic in a push towards the stock market as investors seek exposure to the artificial intelligence boom.

OpenAI did not disclose the size or terms of the offering, and said a timeline has not yet been determined. "It may be a while because there are things we want to do that are likely easier as a private company," it said in a statement.

Reuters had reported that the AI giant is targeting a valuation of up to $1 trillion in a stock market debut that could come as early as September.

At that valuation, OpenAI would set the stage for a trio of trillion-dollar-valuation companies debuting rapidly, which together are seen as the most consequential test of investor appetite for high-growth technology stocks in the last 10 years.

Elon Musk's SpaceX was the first off the block, filing for an IPO that would rank as the largest in history if completed, with the company pursuing a $75 billion offering at a $1.75 trillion valuation.

Anthropic, the company behind the viral coding assistant Claude Code, said on 1 June it had confidentially filed for a US initial public offering, weeks after raising $65 billion in a funding round that valued it at $965 billion.

"OpenAI is keeping options open as Anthropic edged ahead with its filing after a monster funding round," said Michael Ashley Schulman, a partner at Cerity Partners.

On prediction markets, where traders wager on the outcome of future events, most participants had expected OpenAI to file for an IPO before Anthropic.

The AI era

The IPOs of Anthropic and OpenAI would crystallise a transformative period for the technology industry and global markets, with artificial intelligence rapidly emerging as the defining investment theme of the decade.

OpenAI said earlier this year that it was raising $110 billion at an $840 billion valuation from a roster of heavyweight backers including SoftBank, Amazon and Nvidia.

At the time, it also disclosed that ChatGPT had more than 900 million weekly active users and over 50 million consumer subscribers.

The IPO filing follows OpenAI renegotiating its partnership with Microsoft, one of its earliest investors, which allowed the AI pioneer to forge new partnerships with firms such as Amazon.com and Alphabet's Google.

The Windows maker's early investment, totalling $13 billion since 2019, helped pave the way for OpenAI's rapid rise and powered growth at Microsoft's Azure cloud-computing business.

In March, OpenAI said it was generating $2 billion in monthly revenue and growing roughly four times faster than companies that defined the internet and mobile eras, including Alphabet and Meta.

That compares with about $1 billion in quarterly revenue at the end of 2024.

OpenAI told investors during its most recent fundraising round that it did not expect to be profitable until 2030, according to a source familiar with the matter.

Challengers gain momentum

Yet the industry OpenAI launched has quickly become crowded and investors are scrutinising whether the AI sector's meteoric rise can be sustained.

Anthropic has emerged as one of the biggest rivals, with soaring demand for its Claude AI from software developers to handle their computer programming, and some firms deploying its top-shelf model Mythos to unearth vulnerabilities in their code.

While the blockbuster offerings could inject fresh momentum into the US IPO market, some bankers warn they might also soak up capital that could otherwise flow to smaller deals.

"What OpenAI does not want is for the public market capital to exhaust itself," said Gil Luria, managing director of D.A. Davidson. "Not only are SpaceX and Anthropic ahead of it in line to IPO, large public competitors could also raise tens of billions of dollars each in public market secondary issuances, as Google just completed last week."

Musk-led SpaceX goes public this week.

Nonprofit roots spark legal dispute

OpenAI was founded in 2015 as a research-focused nonprofit, but created a for-profit arm four years later to help fund the soaring costs of developing artificial intelligence systems.

Its unusual structure, which gave the nonprofit control over the for-profit entity, came under intense scrutiny in late 2023 when CEO Sam Altman was briefly ousted before returning days later after employees revolted.

In December 2024, OpenAI unveiled plans to overhaul its structure by creating a public benefit corporation, saying the move would help it raise far more capital while easing restrictions imposed by its nonprofit parent.

OpenAI's overhaul quickly became controversial after sharp criticism from its early backer, Musk, who later sued OpenAI and accused Altman and other executives of turning the nonprofit into a vehicle for private enrichment.

A US jury in May ruled against Musk in his lawsuit, finding the AI company not liable to the world's richest person for having allegedly strayed from its original mission to benefit humanity.

The unanimous verdict removed a key overhang on the IPO, with analysts saying it cleared a major legal hurdle.

Japan will provide Bangladesh a concessional loan of around $312 million to help bolster energy security and economic resilience as the conflict in the Middle East places growing strain on the country’s finances.

To that end, officials from both sides signed the “Emergency Support Loan for Enhancing Economic Resilience and Stable Energy Supply” agreement in Dhaka yesterday, according to a press statement.

Md Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), and Takahashi Junko, chief representative of the Japan International Cooperation Agency (Jica) Bangladesh Office, signed the documents on behalf of their respective sides at the ERD in Sher-e-Bangla Nagar.

The loan -- equivalent to 50 billion yen and to be co-financed by the Asian Development Bank (ADB) -- is intended to help Bangladesh address socio-economic pressures stemming from higher energy prices and supply uncertainties linked to the Middle East conflict involving the US, Israel and Iran.

The signing comes as Bangladesh faces mounting fiscal pressure from the conflict. Finance Minister Amir Khosru Mahmud Chowdhury told parliament yesterday that preliminary estimates suggest the country will require an additional Tk 42,600 crore in subsidies for the oil, gas, electricity and fertiliser sectors by June of FY2025-26.

Preliminary estimates suggest the country will require an additional Tk 42,600 crore in subsidies for oil, gas, electricity and fertiliser sectors by June, finance minister said in parliament yesterday
He said the conflict has already affected fuel and fertiliser prices, import and transport costs, inflation, foreign exchange management, remittances and overseas employment. The Middle East also remains a key destination for Bangladeshi migrant workers, the minister noted, warning that prolonged instability could threaten remittance inflows and job opportunities abroad.

The Japanese loan is part of a broader push for external budget support.

The Daily Star reported on May 3 that Bangladesh expects around $3 billion from five multilateral and bilateral lenders by mid-June, including $500 million from Jica. The effort followed a government assessment estimating that an additional $4 billion in emergency budget support would be needed between May and June to offset higher fuel and fertiliser import costs resulting from the conflict.

The loan also marks the first Japanese official development assistance (ODA) project under POWERR Asia, a regional initiative launched by Japanese Prime Minister Takaichi Sanae in April. The initiative aims to strengthen energy and resource resilience across the region through emergency support and longer-term cooperation in energy procurement, supply-chain stability, diversification and industrial resilience.

According to the Japanese Embassy, the financing will also support the government’s efforts to strengthen fiscal management, improve the investment climate and maintain a stable energy supply -- areas considered critical to sustaining economic stability and long-term growth.

Speaking at yesterday’s signing ceremony, Japanese Ambassador Saida Shinichi, who exchanged notes for the loan with Siddiky, described the agreement as a reflection of Japan’s enduring commitment to Bangladesh at a critical juncture.

He called Bangladesh an important strategic partner and reaffirmed Japan’s support for the country’s stability, prosperity and sustainable development.

The amount of money Bangladesh collects in government revenue each year relative to the size of its economy is among the lowest in the world, ranking just above war-torn Yemen and Sudan, according to data from the International Monetary Fund (IMF).

The shortfall leaves the government with less money to invest in health, education, infrastructure and other public services, while limiting its ability to respond to economic shocks.

This measure, known as the revenue-to-GDP ratio, stood at 8.34 percent in 2024, the lowest among Asian countries and many of Bangladesh’s peer economies.

There are at least half a dozen reasons why the government’s revenue compared with the size of the economy has remained low for such a long time.

According to the London-based International Growth Centre (IGC), Bangladeshis have weak trust in government spending because of high levels of corruption, which reduces willingness to pay taxes. Tax compliance also depends on the quality of public services people receive.

Meanwhile, economists say the low revenue-to-GDP ratio is also the result of a narrow tax base, the dominance of the hard-to-tax informal sector, generous tax exemptions and holidays, weak compliance and enforcement, and heavy reliance on indirect taxes instead of broad-based income and property taxes.

“Due to the country’s low revenue-to-GDP ratio, the government’s fiscal space remained limited over the years. It had negative consequences for development,” said Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID).

As an example, the economist pointed to long-standing underinvestment in the health and education sectors.

He said Bangladesh’s spending on health and education is among the lowest in the world. As a result, the country has not achieved the expected growth in human capital. Other infrastructure projects that should have been developed also failed to materialise.

The RAPID chairman said the low revenue-to-GDP ratio supported economic growth up to a certain point because it benefited the private sector.

“With lower tax collection, people paid less tax and retained greater purchasing power, helping private sector growth,” he added.

HOW BANGLADESH COMPARES WITH ITS PEERS

In neighbouring India, the revenue-to-GDP ratio stands at 20.48 percent. It is at 12.67 percent in Pakistan and 13.68 percent in Sri Lanka. In Bhutan, government revenue amounts to 26.97 percent of GDP.

Among countries graduating from the least developed country (LDC) club, data for Lao PDR and Nepal were unavailable. Even so, Bangladesh ranked lowest within the group.

The IMF data showed that the Solomon Islands recorded a revenue-to-GDP ratio of 32.7 percent, while the figure stood at 14.58 percent in Cambodia and 20.13 percent in Senegal.

Internationally, a tax-to-GDP ratio of 15 percent is often regarded as a minimum benchmark. Falling below that level can hamper economic growth and development.

Below this threshold, government effectiveness, financial development and economic growth tend to stagnate. Yet more than 70 developing economies still collect less than 15 percent of GDP in taxes, constraining development and leaving governments vulnerable to economic shocks.

War-torn Sudan and Yemen recorded tax-to-GDP ratios of 2.93 percent and 6.44 percent, respectively. The figure was 7.55 percent in Ethiopia, which has faced prolonged political instability.

While these countries collect less than 10 percent of GDP in revenue, several countries, such as Austria, Belgium, Denmark, Dominica, Finland, France, Kiribati, Kuwait, Lesotho, Norway and Ukraine, collect more than 50 percent, according to IMF data.

HIGH TAX RATES, WEAK RETURNS

Razzaque said that despite weak tax collection, Bangladesh’s corporate tax rate is among the highest in the world. However, corporate tax is only one component of total government revenue.

He added that not only is revenue collection low, but part of the revenue that is collected is also wasted through inefficient spending, reducing the quality of public goods and services.

In a report, the International Growth Centre said corruption has significant negative effects on revenue collection. “Corruption, especially extreme levels of corruption, can significantly erode people’s trust in the system leading to tax evasion,” it said.

“The push to raise taxes in Bangladesh is contemporaneous with these excesses in government spending. Unsurprisingly, people are reluctant to forgo their earnings only to see them squandered, pushing taxpayers to seek out ways to evade taxes,” it added.

Jean Pesme, the World Bank’s division director for Bangladesh and Bhutan, wrote in a blog that although Bangladesh collects relatively little tax, some of its tax rates are higher than those of peer countries.

He said the real problem lies in a complex and distortionary tax system marked by multiple tax rates and large, regressive exemptions on value-added tax (VAT) and income taxes.

Pesme said, “Worryingly, tax exemptions are estimated to be nearly as large as the actual tax collection. Such distortions result in significant leakage of revenues, opportunities for corruption, and a relatively low share of individuals and businesses paying taxes.”

“Also, Bangladesh’s heavy reliance on trade-related taxes discourages trade, a key driver of economic growth, through high tariffs and supplementary duties that create an anti-exports bias.”

Bangladesh urgently needs bold and comprehensive tax reforms, combining policy changes with institutional restructuring and capacity building, he said.

An immediate priority is to rationalise tax exemptions and incentives and reform the VAT system. Expanding digital automation is also central to transforming tax administration, Pesme added.

BROADENING TAX NET THE KEY

Razzaque said the level of tax rates was not the main issue. Instead, expanding the tax net should be the priority.

He said many growth centres, such as rural bazaars and peri-urban industrial hubs, remain outside the tax system. These should be brought under tax coverage.

“As the tax net has not expanded, a large portion of our economy has still not been formalised,” said the economist.

According to Razzaque, Bangladesh also has significant gaps in income taxation. For example, land values are often underreported, reducing tax payments and depriving the government of revenue.

He said wealth has accumulated rapidly in Bangladesh. Citing a RAPID research, he noted that more than 50 percent of the country’s wealth is concentrated in the hands of just 1 percent of the population.

This has widened inequality, he said. “Policymakers should consider taxing wealth transfers between generations rather than focusing solely on a wealth tax.”

Tax collection must be digitalised to minimise evasion, he said. Greater emphasis should also be placed on direct taxes rather than indirect taxation.

The exodus of foreign capital from the country's stock market reached a new peak in May as international investors aggressively trimmed their positions in blue-chip and fundamentally strong companies.

Amid escalating geopolitical tensions in the Middle East and persistent domestic economic headwinds, foreign sales surged to Tk161 crore during the month, while fresh purchases dwindled to a negligible Tk6 crore.

This staggering imbalance highlights a deepening risk aversion among global fund managers, who appear to be prioritising liquidity and safe-haven assets over frontier-market exposure.

Data from the Dhaka Stock Exchange shows that the selling pressure was heavily concentrated in the market's most liquid and prestigious scrips.

Square Pharmaceuticals, long a staple of foreign portfolios, witnessed the highest sell-off, with overseas investors offloading shares worth Tk56 crore. This reduced their stake in the pharmaceutical giant from 15.11% in April to 14.81% by the end of May.

BRAC Bank followed closely, experiencing a Tk50 crore pull-out that saw foreign shareholding slide to 35.89% from 36.22%.

Other major financial and consumer staples were not spared either; Prime Bank saw Tk18 crore in foreign sales, while telecommunications leader Grameenphone and healthcare heavyweight Renata recorded outflows of Tk16 crore and Tk9.7 crore, respectively.

The sell-off was widespread, with foreign investors reducing their stakes in 25 different companies. Notable exits were also seen in Marico Bangladesh and City Bank, where investors withdrew Tk4.3 crore and Tk1.5 crore, respectively.

In a complete withdrawal, foreign investors liquidated their entire remaining position in Bangladesh National Insurance.

Overall, foreign turnover for the month stood at Tk167 crore, slightly higher than the previous month, but the composition of that turnover was almost entirely dominated by sales, leaving the net investment position deeply in the negative.

In contrast to the heavy selling, the appetite for fresh investment remained remarkably thin.

Foreign buyers increased their holdings in only 15 firms, with total purchase value amounting to just Tk6 crore – a sharp decline from the Tk12.06 crore invested in April and the Tk50 crore seen in March.

Beximco Pharmaceuticals emerged as the primary beneficiary of what little interest remained, attracting Tk4.40 crore in new foreign capital. Minor increases were also noted in Bangladesh Submarine Cable, Dutch-Bangla Bank, and Meghna Petroleum, though these inflows were far too small to offset the wider sell-off.

Market experts and researchers attribute this persistent retreat to a "perfect storm" of global and domestic factors.

A senior researcher at a leading brokerage firm said the optimism that emerged after the national election had largely dissipated amid escalating tensions in the Middle East involving the United States, Israel and Iran.

This geopolitical volatility has sent shockwaves through global energy markets, creating a climate of economic uncertainty that is particularly punishing for energy-import-dependent nations like Bangladesh.

For global investors, the looming threats of heightened inflation and energy insecurity have made the domestic equity market appear increasingly high-risk.

These external pressures have compounded long-standing domestic structural issues, including currency depreciation and difficulties in fund repatriation, which continue to weigh on the market's attractiveness.

However, in a bid to stem the tide and woo back international capital, the Bangladesh Bank recently introduced a landmark policy shift.

On 20 May, the central bank issued a circular eliminating the long-standing requirement for an auditor's certificate for every single transaction made by non-resident investors.

Previously, foreign investors were forced to obtain a certificate from a chartered accountant for every trade to determine capital gains tax before funds could be reinvested or moved abroad – a process that caused significant delays and increased compliance costs.

Under the new directive, authorised dealer banks will now handle the tax withholding directly from the sale proceeds, ensuring immediate credit to Non-Resident Investor Taka Accounts (NITA).

Analysts have hailed this as a fundamental change that removes a major administrative hurdle. While the May data reflect the panic that preceded this reform, market participants expect the streamlined process to stabilise foreign participation in the coming months as the operational ease of trading in Bangladesh improves.

The biggest oil supply shock in decades has entered its fourth month – with no resolution in sight as neither the US nor Iran appears willing to budge - yet the market remains surprisingly calm. This disconnect reflects an uncomfortable reality: the biggest drivers of today’s energy market are a host of unknowns.

The renewed strikes between Iran and Israel over the weekend have sent oil prices up over 4 percent to $98 a barrel on Monday, but Brent ​crude remains well below levels seen only a few weeks ago and comfortably within the range of the past two decades.

This has happened even though the Strait of Hormuz – the world’s most critical oil chokepoint – has remained largely ‌shut for more than three months, disrupting flows equivalent to roughly 13 percent of global supply.

A large part of the market’s sanguine mood reflects expectations that conditions in the Gulf could change overnight. US President Donald Trump’s repeated assertions in recent weeks that a deal with Iran is imminent have helped cool prices.

Yet there is little evidence that Washington and Tehran are moving closer to a durable agreement, with both sides continuing to strike targets across the region.

Even if a formal reopening of Hormuz occurs in the next few weeks – a scenario that is hardly the base case – this would not instantly translate into a full recovery of ​flows. Shipping is governed as much by risk assessments as by geopolitics. Tanker operators, insurers and traders are likely to remain cautious about re-entering the Gulf, fearing vessels could once again become stranded in the event of renewed hostilities.

While there are ​increasing indications that more cargoes have been leaving the Gulf in recent weeks using stealth channels, these are short-term solutions being employed by desperate operators, not a long-term strategy for the world’s largest energy companies.

What’s more, this opacity speaks to the larger problem. Oil traders are mostly operating in the dark, regarding both supply and demand, raising the risk of a nasty surprise if their assumptions prove faulty.

HOW LONG CAN STOCKS GO?

The first major unknown is exactly how ​long global inventories can last. Governments and companies have tapped commercial stocks and strategic reserves at an unprecedented pace since the conflict broke out on February 28.

Global crude and fuel stocks fell at a pace of 5.27 million barrels per day in March, accelerating to 8.62 million ​bpd in April and likely approaching 9 million bpd in May, according to the US Energy Information Administration. Draws could rise further to around 11 million bpd in June as seasonal demand increases ahead of the Northern Hemisphere summer.

These are extraordinary numbers – equivalent to running down Saudi Arabia’s pre-war production every single day.

The United States offers a stark illustration. Total US crude inventories, including the Strategic Petroleum Reserve, have fallen by roughly 10 percent this year to 1.5 billion barrels – the lowest since 2004.

At Cushing, Oklahoma – the delivery point for West Texas Intermediate futures – stocks have dropped to 22.4 million barrels, the lowest since January. If ​draws continue at the recent average pace, inventories could soon fall below 20 million barrels, a level widely seen as the minimum operational threshold needed to keep the hub functioning smoothly.

The market has proven remarkably adaptable in recent months and could continue to find workarounds, ​but storage systems are not infinitely flexible. Once those “tank bottoms” are approached, prices would typically be expected to shoot up to reflect scarcity.

THE CHINESE ENIGMA

Another key unknown is China.

The world’s second-largest oil consumer has sharply reduced its seaborne crude imports in response to higher prices, with imports falling in ‌May to 6.36 million bpd, the lowest level in nearly a decade.

That decline has provided significant relief to other importers by easing competition for scarce cargoes. But it has also introduced a new layer of uncertainty.

First, China could decide to go back into the market at any moment.

China does not publish timely or comprehensive consumption data, leaving the market largely in the dark about how much demand has actually been affected.

Chinese refiners may have drawn on commercial inventories to offset lower imports, or Beijing may have begun to tap its vast – but opaque – strategic reserves.

If the latter is true, global supply could be tightening more than traders currently estimate. If not, the drop in imports may signal a sharper-than-expected slowdown in demand.

Either way, this lack of clarity regarding a fundamental driver of the global supply-demand balance at such a precarious moment ​is troubling – and could leave some suddenly finding themselves on the ​wrong side of a trade.

THE INVISIBLE BALANCING FORCE

The difficulty of gauging China points to a broader problem: demand is inherently harder to measure than supply.

While the industry has developed increasingly sophisticated tools to track crude production, refining activity and tanker movements – often in near real time – consumption remains fragmented across billions of users and is often only reported with significant delays. In some cases, such as China, it is not reported at all.

As a result, estimating the level ​of demand destruction caused by the current supply shock has become an exercise in inference. In theory, the mechanism is straightforward: tightening supply depletes inventories, higher prices follow, and demand is gradually destroyed. ​In practice, that process is messy, uneven and difficult to observe in real time.

The International Energy Agency last month revised its global demand outlook dramatically, forecasting it to contract by 420,000 bpd in 2026, compared with a pre-war expectation of 1.3 million bpd in growth. Consumption is expected to fall by 2.45 million bpd in the second quarter alone.

Some analysts and trading houses are more bearish, estimating that demand could have declined by as much as 5 million bpd in May.

Whichever figure is correct, the longer the Hormuz disruption persists, the greater the drag on economic activity and fuel demand.

The oil market today appears remarkably relaxed in ​the face of a prolonged and unprecedented disruption.

Part of that may be fatigue after months of volatility, but it also may reflect how little anyone currently ​knows about the true state of the oil market – including the experts – and how much pricing is based on sentiment and expectations.

That is a precarious foundation.

As part of broader efforts to support domestic industries and ease the tax burden on consumers, the government may reduce VAT rates, extend tax concessions and adjust import duties across several sectors in the upcoming budget, according to National Board of Revenue (NBR) sources.

Under the proposals, VAT at the production stage for air conditioners and refrigerators may be reduced from 15% to 7.5%, with the concession potentially extended until 2030.

Import duty exemptions may also be granted on raw materials used in the production of 68 types of medicines. In addition, reduced import tax benefits for raw materials used in the emerging semiconductor industry may be extended until 2031.

On the revenue side, VAT on mobile SIM card sales may be shifted from a fixed Tk300 to 15% of the sale price.

The import duty on raw materials used in infant food preparation may be reduced from 15% to 10%, which could lower the price of infant formula in the local market. The government may also withdraw the existing 5% regulatory duty on date imports, potentially easing consumer prices.

VAT at the import stage may be removed on more than 30 raw materials used in pesticide and crop protection chemical manufacturing. The duty on zinc ash, the main raw material for zinc sulphate fertiliser, may also be fully withdrawn.

A senior NBR official involved in budget preparation told TBS that the government is seeking to ease the tax burden on marginal taxpayers while also extending tax, VAT and duty concessions up to 2030, and in some cases up to 2035, to encourage investment and employment.

The official added that livestock, poultry and fish products may be included in the list of goods under a reduced source tax of 0.5%, expanding the coverage beyond the current 27 agricultural and food items. These additional 33 products currently face source taxes ranging from 1% to 5%, and the change could help reduce consumer prices.

Locally manufactured AC, refrigerator prices may decline

In last year's budget, the reduced VAT regime for refrigerator and air-conditioner manufacturing was withdrawn and replaced with a 15% VAT rate.

Industry stakeholders say the sectors had long benefited from tax incentives aimed at reducing import dependence, which helped build local manufacturing capacity.

Although the VAT was doubled to 15% in the FY26 budget as part of a gradual withdrawal of incentives, manufacturers are allowed to claim input tax rebates under the higher rate — a facility not available under the 7.5% regime, making the effective burden lower than the nominal rate.

However, NBR officials said imports of refrigerators and air conditioners have risen compared to domestic sales following the VAT increase. One official said imports grew by more than 10% in a year and could rise further if current conditions persist.

He added that the government is considering extending the incentive for another four years, with an announcement likely in the budget scheduled for 11 June.

If approved, prices of locally manufactured refrigerators and air conditioners may decline.

Gold, mobile phones, healthcare items may get cheaper

Gold and gold jewellery are also among products that may see price reductions.

Currently, a 5% VAT on gold sales translates to about Tk12,500 per bhori. The government may replace this with a specific VAT of Tk2,500 per bhori. Source tax on gold jewellery sales may also be reduced from 5% to 0.5%.

If global gold prices remain stable, retail prices in Bangladesh could fall.

Advance income tax on imports of 22 categories of raw materials used in local mobile phone manufacturing may be reduced from 5% to 2% or 1%, potentially lowering handset prices.

Tax benefits for appliances such as washing machines, dishwashers, geysers, blenders and juicers may be extended, helping stabilise prices. Duties on laptop and computer components may also be reduced.

Healthcare-related imports, including cardiac stents, eye lenses and kidney dialysis equipment, may see lower VAT and taxes, potentially reducing treatment costs.

Other products likely to benefit from tax reductions include float glass, lipstick, locally produced edible oil, solar equipment, electric vehicles, EV charging systems, packaging materials, imported fabrics for domestic use, live fish and animals, and key raw materials for pharmaceuticals and semiconductor industries.

Items that may become more expensive

Some products may see higher taxes.

Prices of tobacco products, including bidis and cigarettes, may increase by around 15%, with cigarette prices possibly rising by Tk1 to Tk3 per stick.

Supplementary duty on nicotine pouches may increase by 40%, while domestically produced alcoholic beverages may face a VAT of Tk500 per litre.

VAT on steel products, including rods, may rise from Tk150 to Tk350.

Import duty on cashew nuts may rise from 5% to 25% to encourage local production.

Bangladesh could face a potential loss of $17.5 billion in exports after graduating from the least developed country category due to the loss of preferential market access in developed economies, Commerce Minister Khandakar Abdul Muktadir told parliament today (8 June).

Replying to a question from Chattogram-11 lawmaker Jasim Uddin Ahmed during the second day of the second session and first budget session of the 13th Jatiya Sangsad, the minister said the government had already launched a series of trade and market diversification initiatives to address the challenges arising from the country's transition to developing nation status.

"Bangladesh will soon graduate from the LDC category. As a result, the country will lose preferential market facilities currently available under various trading schemes offered by developed countries, which may adversely affect exports worth around $17.5 billion," he said.

To mitigate the impact, Bangladesh has already concluded an Economic Partnership Agreement with Japan, while negotiations for a Comprehensive Economic Partnership Agreement with South Korea are underway, the minister said.

He said that the government has also initiated efforts to sign EPA, CEPA or Free Trade Agreements with the European Union, the Regional Comprehensive Economic Partnership, the United Arab Emirates, Singapore, Indonesia, China and other potential export destinations.

The minister attributed the country's widening trade deficit partly to policy failures of the previous government and partly to global economic factors, including the energy crisis, the Russia-Ukraine war, rising commodity prices, dollar shortages and adverse international market conditions.

He said that higher import costs for fuel, food and industrial raw materials, coupled with slower export growth, had contributed significantly to the trade imbalance.

According to data presented in the JS, Bangladesh's trade deficit widened to $24.16 billion in the financial year 2024-25 from $21.50 billion in FY2023-24.

Exports stood at $55.19 billion against imports worth $79.35 billion during the period.

The minister said that despite exporting goods to 202 countries and territories in FY2024-25, the readymade garment sector still accounted for 84 per cent of the country's export earnings.

He said that to reduce dependence on a single sector, the government has undertaken initiatives to extend facilities similar to those enjoyed by the garment industry to other promising export sectors.

Partial exporters in eight sectors, leather and leather goods, jute and jute products, agricultural products, pharmaceuticals, ICT and software services, light engineering products, frozen foods and fish, and plastic products, have already been granted bonded warehouse facilities against bank guarantees, the minister said.

Muktadir said that the government was also supporting entrepreneurs in eight priority sectors through the Business Promotion Council and had formulated the Export Policy 2024-2027 to strengthen Bangladesh's position in global trade through sustainable export growth.

To expand market access and remove trade barriers, Bangladesh is continuing engagement through various bilateral platforms, including trade and investment arrangements with Australia, the United Kingdom, Vietnam, Thailand, Uzbekistan, Belarus and Canada, he said.

The minister said that efforts were also underway to explore new export markets in Latin America, Africa and the Commonwealth of Independent States through trade missions comprising government and private sector representatives.

Other measures include strengthening economic diplomacy through Bangladesh missions abroad, providing foreign currency loans from the Export Development Fund for raw material imports, and creating a Tk5,000 crore low-interest pre-shipment loan fund for export-oriented industries through Bangladesh Bank.

commerce minister said that the government had declared paper and packaging products as the Product of the Year 2026 in a bid to diversify exports, create employment and promote women's economic empowerment, he added.

Replying to a separate question from Bagerhat-4 lawmaker Abdul Alim, the minister outlined Bangladesh's ongoing efforts to strengthen trade ties within South Asia.

He said Bangladesh and Bhutan signed a PTA in December 2020, under which 100 Bangladeshi products and 34 Bhutanese products enjoy duty-free market access.

Negotiations on PTAs with Nepal and Sri Lanka are progressing, while Bangladesh is also preparing for further negotiations with India on a proposed Comprehensive Economic Partnership Agreement.

Muktadir said Bangladesh was prioritising bilateral, regional and multilateral trade agreements with key economic blocs and countries in Asia, Europe, Africa and the Middle East to strengthen export competitiveness and attract investment after LDC graduation.

In response to another question from reserved-seat lawmaker Selina Sultana, the minister said that Bangladesh continued to face trade deficits with several SAARC countries, particularly India.

In the FY2024-25, Bangladesh recorded a trade deficit of $7.86 billion with India, the largest among SAARC member states.

The country also posted trade deficits with Afghanistan, Bhutan and Sri Lanka.

Japan is looking to increase imports of garment products from Bangladesh, with Japanese companies seeking local business partners to strengthen sourcing under the Economic Partnership Agreement (EPA) signed between the two countries.

The interest was expressed at a meeting held yesterday between leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and representatives of Japanese businesses, including officials from the Japanese Commerce and Industry Association in Dhaka (JCIAD), the Japan External Trade Organization (Jetro) Dhaka office, and the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI).

The chairman and chairman-elect of the Apparels and Textiles Committee of JCIAD also attended the meeting to discuss potential sourcing opportunities from Bangladesh.

Both BGMEA and Japanese entrepreneurs are keen to deepen engagement between businesses in the two countries and strengthen partnerships to source more apparel products from Bangladesh, said Kazuiki Kataoka, country representative of Jetro Dhaka, over the phone after the meeting.

This was the first meeting between Japanese apparel entrepreneurs and BGMEA leaders. It is expected to pave the way for expanded business ties between Bangladesh and Japan, particularly through the proposed committee, Kataoka said.

“We would like to collaborate in identifying factories capable of meeting requirements to export to Japan,” the Jetro country representative said.

Suitable manufacturing facilities are needed to supply the right products and expand Bangladesh’s apparel exports to Japan, he said, adding that the country currently exports more than $1.4 billion worth of garment products to Japan annually.

Of Bangladesh’s total exports to Japan, around 80 percent comprise garment products, while the remaining 20 percent consists of other goods, he said.

Entrepreneurs from both countries are eager to see the EPA, signed on February 6 this year, implemented to elevate bilateral trade and investment, Kataoka added.

The membership of JCIAD has been growing steadily, reaching 163, reflecting Japanese businesses’ confidence in expanding operations in Bangladesh, he said.

Meanwhile, the Special Economic Zone (SEZ), dedicated to Japanese entrepreneurs in Araihazar, Narayanganj, has already become operational and is expected to accommodate more Japanese companies in the future. Japanese investors are seeking to expand or relocate operations to Bangladesh under Japan’s China Plus One strategy, adopted in 2008.

JBCCI President Tareq Rafi Bhuiyan Jun said a committee named Market Strategy for Development of Japan Markets has been formed to help expand trade and business relations between the two countries.

Japan could serve as an important market for Bangladesh as the country seeks to offset the slowdown in garment exports in recent months. Bangladesh is also looking to expand exports to Asian markets amid volatility in global supply chains. The newly formed committee and BGMEA discussed preparing a model list of BGMEA-affiliated supplier companies, he said.

Under the EPA, Bangladeshi garment products will continue to enjoy duty-free access to the Japanese market from the date of implementation. At present, Bangladeshi apparel exports benefit from preferential market access under the least developed country (LDC) category, and Japan has already extended these facilities until 2029 following Bangladesh’s graduation from LDC status.

BGMEA President Mahmud Hasan Khan said the association aims to increase garment exports to Japan to $3.0 billion from the current $1.4 billion within the next one to two years, with Asian markets such as Japan, South Korea and Turkey now receiving greater focus as part of export market diversification efforts.

During the first 10 months (July-April) of FY26, the current account recorded a deficit of $1.07 billion, compared with a deficit of $1.64 billion during the same period of the previous fiscal year. As a result, the deficit narrowed by $563 million.

The Bangladesh Bank released the latest balance of payments data today (8 June).

Experts say remittances were the main factor behind the improvement in the current account. Despite the trade deficit widening by more than $4 billion, robust remittance inflows helped offset the impact and reduce the overall deficit.

Economists note that the current account is one of the most important indicators within the balance of payments. An economy generally performs better when the current account is in surplus. However, despite strong remittance growth, the current account remains in deficit because of the country's large trade gap.

Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), said, "Although the trade deficit has increased, higher remittance inflows have prevented a deterioration in the current account. Remittances have risen by more than $5 billion. Achieving a current account surplus would strengthen the economy."

He added, "Even with robust remittance inflows, we are unable to turn the current account positive. This reflects a structural weakness. The economy needs to improve through stronger current account balances, but we have not been able to reach that stage. The persistent trade deficit is preventing us from breaking out of this trend."

The current account is a key component of a country's balance of payments, covering net trade in goods and services, income from abroad, and current transfers such as remittances.

According to Bangladesh Bank data, remittance inflows during the first 10 months of the current fiscal year increased by 19.5% compared with the same period a year earlier. Expatriate Bangladeshis sent $29.33 billion during July-April of FY2025-26, up from $24.54 billion during the corresponding period of FY2024-25.

Trade deficit widens as exports decline
Bangladesh Bank data show that the trade deficit widened to $22.21 billion during the first 10 months of FY2025-26, compared with $18.23 billion during the same period of the previous fiscal year.

Economists identify weak export performance as the main reason behind the widening trade gap.

Exports during the first 10 months of the current fiscal year totalled $36.02 billion, down from $36.57 billion a year earlier. This represents a decline of about 1.5%.

Meanwhile, imports increased by nearly $4 billion. Imports reached $58.23 billion during the period, compared with $54.80 billion during the same period of the previous fiscal year.

Mustafizur Rahman said, "The trade deficit has widened because imports have increased by nearly $4 billion, while exports have not grown and have instead declined."

He added, "Exports are not increasing at the same pace as imports. The slowdown in export growth is contributing to the widening trade deficit. Imports are likely to increase further in the future, which will add pressure. Unless exports rise, the trade deficit will continue to expand."

He noted that higher imports are generally positive for the broader economy, but stressed that greater efforts are needed to boost exports.

Financial account records surplus
According to Bangladesh Bank data, the financial account posted a surplus of $4.47 billion during the first 10 months of FY2025-26, compared with $1.13 billion during the same period of the previous fiscal year.

Economists said the improvement was mainly driven by a positive trade credit position.

Trade credit stood at a positive $3.57 billion during July-April of the current fiscal year, compared with a deficit of $1.47 billion a year earlier.

Trade credit refers to goods or services received with payment deferred to a later date. In balance of payments accounting, it is treated as a short-term capital flow under the financial account because it finances imports.

Overall balance of payments position improves
During the first 10 months of FY2025-26, the overall balance of payments recorded a surplus of $3.74 billion, compared with a deficit of $655 million during the same period of the previous fiscal year.

The improvement was primarily driven by the stronger performance of the financial account, which helped significantly improve the country's overall balance of payments position.

Zahid Hussain, former lead economist, World Bank Dhaka office said, "We are beginning to see the impact of the global price increases due to the [Iran] war on our trade balance.

"The trade deficit increased as import payments rose significantly, largely due to hefty increase in payments for the import of crude oil, refined oil and fertiliser. Despite strong remittances, the current account deficit almost doubled in April relative to March largely due to increased trade deficit."

Thanks to surplus in the financial account, surplus in the overall balance of payments has increased, he said.

"This is primarily due to increased trade credit which predominantly reflects the growth of import payments. Since trade credit is very short term, the rise we are seeing now cannot be sustained. This means the financial account will face pressure going forward unless other items, especially MLT disbursements pick up," the economist explained.

Overall the BOP shows some resilience to heightened external pressure, thanks largely to remittances, but this cannot be taken for granted, Zahid Hussain added.