Despite steady economic growth, Bangladesh’s tax system continues to underperform, with average annual revenue shortfalls reaching nearly Tk 59,000 crore over the past five years, according to the Policy Research Institute (PRI) of Bangladesh.

“Persistent shortfalls reached approximately 20 percent of the revised budget target, while tax revenue growth collapsed from 21 percent to just 2.2 percent,” the thinktank said, pointing to what it described as a “structural weakness in tax effort.”

PRI Research Director Bazlul Haque Khondker made the remarks during a presentation on the need to rationalise the supplementary duty (SD) and value-added tax (VAT) structure at the organisation’s office in Dhaka today.

He said low VAT productivity, despite relatively higher buoyancy, reflects deeper structural issues, including a narrow tax base and policy distortions.

The current system, he added, indicates significant untapped tax capacity.

He suggested that comprehensive base expansion and reforms could substantially improve revenue mobilisation.

Bangladesh has set an ambitious target to raise its tax-to-GDP ratio to around 15 percent by fiscal year 2034-35 (FY35), up from the current 6.7 percent.

To reach an interim target of 10.9 percent by FY30, the country will need to sustain an average annual revenue growth of about 17 percent over the five years from FY25.

According to PRI, achieving these targets will require a fundamental shift in tax policy rather than incremental adjustments.

“Reaching a 15 percent tax-to-GDP ratio will demand structural reform, not just base expansion or rate hikes,” the presentation noted.

According to the thinktank, Bangladesh’s tax structure is also expected to evolve, with direct taxes projected to grow faster than indirect taxes. It projects that direct tax revenue will expand at an average rate of 22 percent, compared to 12.9 percent for indirect taxes between FY25 and FY35.

Even so, indirect taxes, particularly VAT and SD, will continue to play a significant role, accounting for around 45 percent of total tax revenue by FY35.

PRI stressed that reforms must prioritise building a broader-based and properly structured VAT system, while gradually reducing reliance on supplementary duties.

“Simply raising SD rates on existing products will not close the revenue gap,” said Khondker, warning that excessively high rates risk triggering adverse behavioural responses, in line with the Laffer Curve effect, where higher taxes can ultimately lead to lower revenue collection.

Speaking as the chief guest at the event, Zakir Ahmed Khan, chairman of Palli Karma-Sahayak Foundation (PKSF), said Bangladesh’s tax potential could rise significantly with stronger enforcement and reduced leakages.

The proper implementation of existing laws could boost revenue by 30-40 percent, he estimated.

He further estimated that improving compliance alone could help the country reach a 15 percent tax-to-GDP ratio without raising rates, but cautioned against turning enforcement into “tax terrorism,” stressing the need for trust and voluntary compliance.

Khan also called for separating tax policy from administration within the National Board of Revenue (NBR) to improve efficiency and accountability, adding that stronger reforms and better analysis are key to unlocking revenue potential.

Separating tax policy from administration and establishing a credible macro-fiscal framework are "mission-critical" reforms for Bangladesh, according to development partners and economists speaking at a high-level policy dialogue in Dhaka yesterday (26 April).

Jean Pesme, division director of the World Bank for Bangladesh and Bhutan, said strengthening the tax system requires urgent institutional clarity and consistent implementation.

"Let me begin by echoing two key points that have already been raised. First, the separation between tax policy and tax administration is absolutely mission-critical. While there may have been reasons for not advancing this reform earlier, it is something that now needs to happen. This separation is essential for improving governance within the tax system, as well as for advancing digitalisation," he said.

He stressed that Bangladesh must move forward with a clear tax reform roadmap and avoid policy reversals.

"The second major challenge is to establish a clear tax reform plan and begin implementation without policy reversals. What matters most at this stage is that the overall direction is crystal clear, and that implementation supports this direction to demonstrate credibility," he added.

Pesme also warned that investors judge policies based on execution rather than announcements. "From an investor's perspective, the key question is whether policy announcements will actually be implemented. It may be more effective to start with less ambitious reforms, but ensure they are properly executed."

He further said Bangladesh's investment climate requires stronger foundations, noting that revenue mobilisation, financial sector stability, and business environment reforms must move together. "Countries that attract investment do so not just through incentives, but through macroeconomic stability, strong institutions, rule of law and efficient administration," he added.

He also highlighted concerns over low tax-to-GDP ratio, high tax expenditures, and over-reliance on exemptions, stressing the need to broaden the tax base and improve transparency.

Echoing similar concerns, Chandan Sapkota, country economist at the Bangladesh Resident Mission of the Asian Development Bank, said revenue reform and macro-fiscal discipline are central to improving economic stability.

"I think the point on revenue is very important, particularly the institutional reforms around how the National Board of Revenue is structured," he said.

He noted that weak fiscal discipline creates mid-year policy adjustments and discretionary space within tax administration.

"Bangladesh is the only country in South Asia without a clear fiscal anchor. As a result, there is no strong discipline on the expenditure side, and when that discipline is missing, it also affects revenue discipline," he said.

He added that improving the macro-fiscal framework is urgent in the context of rising debt pressures and long-term fiscal sustainability.

The remarks came at a high-level luncheon organised by the Foreign Investors' Chamber of Commerce and Industry (FICCI) at a hotel in Dhaka today, focusing on "Conducive Fiscal Policy for a Better Investment Climate".

The event brought together policymakers, economists, development partners, business leaders, and members of the diplomatic community to discuss Bangladesh's fiscal outlook. The session featured M Masrur Reaz, chairman of Policy Exchange Bangladesh, as the keynote speaker. He noted that tax policy and administration remain key concerns for investors, citing high corporate tax rates, complex compliance processes, fragmented administration, and policy unpredictability as major challenges.

The panel discussion was moderated by Shams Zaman, board member of FICCI and country managing partner at PwC. Panelists included Jean Pesme of the World Bank, Chandan Sapkota of the Asian Development Bank, Fahmida Khatun, executive director of Centre for Policy Dialogue, and Abul Kasem Khan, chairperson of Business Initiative Leading Development (BUILD).

Panelists broadly agreed that ensuring policy stability, simplifying the tax system, strengthening institutions, and improving coordination among regulatory bodies will be critical to attracting and sustaining foreign investment in the coming years.

Fahmida Khatun called for tariff rationalisation to be the most urgent reform priority this year, stressing that Bangladesh must prepare for a post-LDC graduation reality by strengthening domestic revenue mobilisation without over-reliance on import duties.

Rupali Haque Chowdhury, FICCI president and managing director of Berger Paints Bangladesh, said that to improve the business environment, attract investment, and increase the tax-to-GDP ratio, it is essential to ensure transparency, digitalisation, and policy continuity.

Abul Kasem Khan said, "M Masrur Reaz showed a corporate tax rate of around 27.5%, but in reality we are paying close to 40%. One of my companies is even paying about 45% because of the Advance Income Tax. So, this requires a radical reform.

"I would suggest doing away with AIT if possible. I understand it is a difficult policy choice, but if additional taxes are collected on income or profits, that amount should either be refunded or adjusted against next year's liabilities."

He added, "If such a reform is introduced and linked with employment generation, it could create a strong incentive structure. Companies that generate more employment could receive refunds, encouraging them to reinvest profits into capital machinery, expansion, or new business ventures instead of distributing everything as dividends. This kind of reform would help promote reinvestment, productivity, and job creation."

Tax deduction at source (TDS) has long served as an efficient mechanism for revenue collection within Bangladesh’s income tax framework. However, its growing overlap with the turnover-based minimum tax, and the treatment of tax deducted at source as minimum tax in many cases under the Income Tax Act 2023, is creating unintended structural distortions in the business environment. While these measures may ensure a predictable revenue stream for the government, their combined effect is becoming increasingly burdensome for businesses, particularly in terms of cash flow, tax equity, and overall economic efficiency.

The main objective of the minimum tax is to ensure that no taxpayer is left out of the tax net. That is, even if a person or organization shows a loss or very little profit, they must pay a minimum tax on a certain basis. It is a way to prevent tax evasion and protect revenue. In Bangladesh, this minimum tax is mainly implemented in two ways.

First, the turnover-based minimum tax imposes a levy on gross receipts, irrespective of profitability. Currently, companies and institutions exceeding Tk 50 lakh in turnover and individuals exceeding Tk 4 crore are subject to this tax, with rates ranging from 0.1% to as high as 3% depending on the sector. For instance, tobacco and soft drink manufacturers face a 3% rate, mobile operators 1.5%, and most other sectors around 1%.

Second, Tax Deducted at Source (TDS), although legally designed as an advance tax, often functions in practice as a de facto minimum or even final tax. In theory, TDS should be adjustable against final tax liabilities. However, in reality, such adjustments are frequently limited or unavailable, particularly for businesses operating at a loss or with slim profit margins. As a result, taxes deducted at source effectively become non-refundable, locking in a tax burden regardless of actual income.

In many cases, TDS effectively serves as a minimum tax, ensuring that the government secures a certain level of revenue even when the taxpayer’s financial condition is unfavorable. A significant portion of taxes deducted or collected at source under various provisions, spanning Sections 88 to 139 of the Income Tax Act 2023, functions in this way.

Even if the final tax calculation suggests a lower liability, the amount already deducted or collected often remains unchanged, creating a structural mismatch and undermining fairness in the tax system.

This dual application creates a significant imbalance. A substantial portion of tax collected under multiple provisions of the Income Tax Act now carries the characteristics of minimum taxation. Consequently, businesses often face effective tax rates far exceeding statutory rates, sometimes by five to ten times. This is particularly damaging for credit-dependent enterprises, which may struggle to maintain liquidity, meet loan obligations, and sustain operations. The implications extend beyond individual firms, posing risks to the broader financial system, including banking sector stability.

Fundamentally, this structure deviates from the core principle of income taxation—that tax should be levied on net income, not gross receipts. By ignoring costs, losses, and the taxpayer’s ability to pay, the current system imposes what can only be described as economically punitive measures.

Moreover, the absence of a mechanism to carry forward excess minimum tax paid during loss-making periods further compounds the problem, effectively leading to elements of double taxation.

In contrast, most developed tax systems treat TDS strictly as an advance payment, fully adjustable against final liabilities. Even in neighboring economies like India, such adjustments are standard practice. Bangladesh’s partial and inconsistent integration of these systems has resulted in unnecessary complexity and diminished business confidence.

As the government prepares the national budget for 2026–27, there is a timely opportunity to recalibrate the tax framework. Several policy measures merit serious consideration:

Repealing the provision of minimum tax under Section 163, which conflicts with fundamental income tax principles and imposes disproportionate burdens.
Clearly redefining TDS as an adjustable advance tax, ensuring full reconciliation at the time of final assessment.
Rationalizing TDS rates, setting them at 2% for industrial and trading sectors, and 1% for service, advertising, and media sectors.
Reducing the turnover-based minimum tax rate to a uniform 0.5% to ease pressure on businesses.
Introducing a carry-forward mechanism to allow adjustment of minimum tax paid during loss-making periods against future profits.
Simplifying the overall tax structure to eliminate instances of multiple taxation on the same income stream.
Providing targeted relief or conditional exemptions for small and medium enterprises (SMEs), which are particularly vulnerable to cash flow constraints.
Revenue mobilization is undeniably critical for national development. However, it must not come at the expense of economic vitality. A tax system that is perceived as punitive or inequitable risks discouraging investment, stifling industrial growth, and undermining long-term competitiveness.

A balanced, transparent, and business-friendly tax regime is not merely desirable—it is essential. The upcoming budget presents a crucial opportunity to address systemic issues and lay the foundation for a more sustainable, growth-oriented fiscal framework. While ensuring revenue generation remains important, it is equally critical to foster a competitive and sustainable business environment.

The current structure of minimum tax and tax at source, combining features of advance, minimum, and partial final taxes, can act as a deterrent to investment, industrialization, and long-term economic growth. Therefore, the need of the hour is to revisit these mechanisms in the next budget and introduce a more balanced, fair, and investment-friendly tax system.

The National Board of Revenue (NBR) plans to introduce a QR code system on packaged products sold in the market to curb value-added tax (VAT) evasion and improve tax compliance.

NBR Chairman Abdur Rahman Khan announced the plan during a pre-budget meeting at the organisation's headquarters in Agargaon today (26 April).

"At the initial stage, we plan to start with tobacco products. Later, it will be implemented for all packaged goods such as soap, shampoo, bottled water, and sugary items," he said.

He said the new system was intended to strengthen monitoring and reduce tax evasion in the retail market.

The NBR chairman also said individuals who provide information on tax evasion or misconduct would be rewarded.

"Those found evading taxes will face fines," he said.

Representatives of several business bodies, including BGMEA and BTMA, attended the meeting.

The Barapukuria coal mine yard in Dinajpur is now storing more than twice its designed capacity, with stocks continuing to rise and raising concerns over fire hazards, possible heap collapse and declining coal quality.

The situation has developed as the nearby Barapukuria Thermal Power Plant, operated by the Bangladesh Power Development Board (PDB) and the mine’s only coal buyer, has reduced consumption after two of its three units were shut down due to technical faults.

The yard, which has a storage capacity of 2.2 lakh tonnes, was holding about 5.7 lakh tonnes as of Tuesday. An additional 1 lakh tonnes is stored in the PDB’s own yard, which has a capacity of 60,000 tonnes.

The surplus is increasing daily, as the mine is producing around 3,000 tonnes of coal against a demand of only 700-750 tonnes.

Md Shah Alam, managing director of Barapukuria Coal Mining Company Limited, a subsidiary of state-owned Petrobangla, told The Daily Star over the phone that frequent fires are now occurring due to the excessive stockpile.

“A dedicated team is working around the clock to keep the fires under control,” he said.

POWER PLANT OUTPUT REDUCED

Abu Bakar Siddique, chief engineer of the Barapukuria Thermal Power Plant, said the facility has a total generation capacity of 525MW (megawatt), with Unit-1 and Unit-2 producing 125MW each, and Unit-3 producing 275MW.

He said only Unit-1 is currently in operation, supplying about 55-65MW to the national grid. Unit-3 has been shut since October 19, 2025, while Unit-2 has remained out of service since 2020 due to a mechanical fault.

“Unit-3, with a capacity of 275MW, is expected to resume operations by May this year. The process to overhaul Unit-2 is also underway,” he said.

Siddique added that when Units 1 and 3 operate together, the plant will require around 3,200 tonnes of coal per day.

“At that rate, about one lakh tonnes of coal will be used each month, and the current stockpile could be cleared in seven to eight months,” he said. “We are also working to expand the PDB’s coal yard capacity by an additional 50,000 tonnes.”

TRADING BLAMES

Officials from both the mine and the power plant have blamed each other for the growing coal stockpile.

Plant authorities say they requested a temporary suspension of coal production, while mine officials argue that output cannot be stopped due to technical limitations, safety risks and contractual obligations.

“We had asked the coal mine authorities to reduce coal extraction to help control spontaneous combustion and reduce other risks, but we received no response,” Siddique said.

Md Shah Alam rejected the suggestion of halting production. “There is no scope to stop mining once it begins, as it could increase risks, including a higher chance of spontaneous combustion,” he said.

“We are now extracting coal in two shifts instead of three,” he added.

He also said the crisis has worsened following a 2019 policy change that made the power plant the mine’s sole buyer, removing the option to sell surplus coal in the open market through tenders.

Monir Hossain Chowdhury, spokesperson for the Energy and Mineral Resources Division, said once coal is extracted, it becomes the property of the power plant.

“We do not have any mechanism to send that coal elsewhere,” he said.

He added, “It depends entirely on the plant authorities. Due to reduced power plant operations, the mine is facing difficulties as it lacks storage capacity. We are concerned about the issue, and the Power Division is working to resume production at the plant.”

Based on March global prices and the current exchange rate, the import cost of octane is Tk105.73 per litre. After the latest price hike – driven by supply constraints and rising global prices – it is being sold at Tk140 per litre at pumps.

This means consumers are paying Tk34.27 more than the import cost per litre. Of this, Tk27.57 goes to the government as import duty, VAT, development surcharge, transport costs, and margins for state-owned distributors.

When local transport costs and dealers' commissions are included, the total cost reaches Tk151.61 per litre – Tk11.61 higher than the retail price. The government counts this difference as a subsidy.

This creates a paradox: the government collects Tk27.57 per litre in taxes and charges, while also providing a subsidy of Tk11.61 per litre.

"This raises a valid question as to whether the government is truly subsidising octane," economist Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem), told The Business Standard.

The same is true for petrol, which is usually priced Tk4 lower than octane.

However, the situation differs markedly for diesel, the most widely used fuel in public and goods transport, irrigation, inland water transport, and fishing.

Rising global prices have pushed the import cost of diesel to Tk148.06 per litre, which increases to Tk203.84 after adding duties, taxes, and operational and marketing costs. However, the government has fixed the retail price at Tk115 per litre – even after a Tk15 increase – effectively subsidising more than Tk88.84 per litre. This figure still includes over Tk55.78 (or 37%) in taxes and other costs.

Speaking to this newspaper, analysts and consumer rights groups say this "subsidy" exists only because of the fuel oil tax burden, as fuel oil remains among the major revenue sources for the government. They argue that if taxes were reduced or waived temporarily, and only distribution costs were added to the import price, octane could be sold at a much lower price than it is now, requiring no subsidy.

Major economies in the region, including India and Pakistan, slashed fuel oil taxes to lower price shocks on the people. India marginally increased the price of premium-grade oil, but kept the prices of the most-consumed diesel and petrol unchanged.

Though Pakistan raised oil prices, it exempted or slashed taxes for diesel and petrol. The country also introduced free bus services in cities, cash subsidies for bikers and farmers.

The EU is planning to cut electricity taxes and provide consumers with targeted and temporary support. The USA offers tax breaks to lessen the impact of gasoline price hikes and politicians there are calling for the federal tax to be exempted – 18.4 cents per gallon.

Price hikes in Bangladesh, effective from 19 April, were not backed by any such measures.

Maintaining existing VAT and tax rates while raising retail prices in line with international trends amounts to an "extortionist approach," where revenue generation appears to take precedence over public welfare, said Shamsul Alam, energy adviser at the Consumers Association of Bangladesh (Cab).

'No hike' means Tk2,764cr in monthly subsidy

If the government had followed the automatic pricing formula to set fuel prices in April, following the rise in international market rates after the Iran war, the price of diesel would have been Tk155.46 per litre, octane Tk148.93, and petrol Tk144.93.

Following the conditions of a loan taken from the International Monetary Fund in 2023, the government began adjusting prices monthly through an automatic system from the following year. However, the government did not increase fuel prices on 31 March.

Under the method, the current month's price is determined by the average "Platts-based" market price from the 21st of the month before last to the 20th of the following month. This formula is used to set the prices for diesel and octane, while the price of petrol is always fixed at Tk4 less than that of octane.

According to a briefing by the energy ministry prepared ahead of the latest price hike on 18 April, the government had been providing subsidies of nearly Tk45 per litre for diesel and Tk29 per litre for octane prior to the adjustment.

Energy Division estimates suggest that following the rise in international market prices after the Iran war, the government would have had to provide Tk2,764 crore in subsidies every month based on average demand if domestic prices remained unchanged. Of this amount, Tk2,452 crore would have been allocated to diesel and Tk145 crore to octane, with the remainder subsidising petrol and kerosene.

However, as a result of the government's decision to increase fuel prices on 18 April, the monthly subsidy burden will be reduced by approximately Tk800 crore. This means that even after the price hike, the government will still provide nearly Tk2,000 crore in fuel subsidies each month.

Despite the subsidy for octane being significantly lower than the vast amount spent on diesel, the Energy Division justified the steeper price increase for octane as a means of ensuring social and economic balance.

The ministry noted that diesel is directly linked to agricultural activities, the transport sector, freight movement, manufacturing, and the livelihoods of the general public. In contrast, octane consumption is relatively limited and primarily concentrated among higher-income groups.

Therefore, when adjusting prices, the Energy Division considered it a logical and policy-acceptable approach to place a comparatively lower burden on diesel while implementing a higher adjustment for octane, given the potential impact on public life and overall economic activity.

There are options

In the wake of the Iran war and the subsequent rise in fuel prices, several countries across Europe and Asia have attempted to keep prices manageable by reducing fuel duties. Pakistan, a fellow South Asian nation, has also slashed taxes on fuel. However, as Bangladesh has opted not to follow suit, consumers are forced to purchase fuel at much higher prices.

Selim Raihan said that the immediate hike in transport fares and commodity prices following the adjustment of fuel prices has had a direct impact on the general public.

He continued, "A portion of the revenue from fuel sales is transferred by the Bangladesh Petroleum Corporation (BPC) into their development fund, money essentially collected from the consumers. Temporarily suspending these transfers could have mitigated some of the pressure from the price hike.

"Similarly, while the commission rate for petrol pump owners remains unchanged, their total commission has increased significantly due to the higher sales value; a cap or adjustment could have been introduced here. Furthermore, a temporary waiver in the tax structure, similar to measures taken by neighbouring countries, could have been considered.

"In my view, by considering these three steps together – reducing taxes, pausing transfers to the BPC development fund, and implementing effective controls on commissions – the government could have achieved a more tolerable price adjustment.

"While this might have placed some pressure on revenue management, it would have lessened the direct impact on ordinary citizens. In the current situation, a transparent and balanced pricing policy is essential, prioritising consumer interests while moving towards long-term sustainable solutions."

Shamsul Alam, Cab's energy adviser, said reducing VAT and taxes on fuel is an accepted global practice to stabilise markets, cushion the impact of price spirals, and provide relief to consumers.

"Despite rising global oil price, our actual import costs remain significantly lower than what is being presented by the government," he pointed out.

At a time when the government is struggling to ensure adequate fuel supply to meet demand, such pricing policies effectively deprive citizens of their right to fair pricing, he believed.

Treating the fuel sector primarily as a profit-making entity reflects a disregard for the hardships faced by consumers, Shamsul said.

Bangladesh is not unique to global shocks, but it lags behind regional countries in managing the crisis judiciously, analysts say.

Cab Vice-President SM Nazer Hossain said the government, instead of raising fuel prices amid consumers' hardship, could have temporarily exempted duties.

"Though Bangladesh's recent fuel price change is a response to global pressures, the policy choices have raised some valid concerns," said Fahmida Khatun, executive director, Centre for Policy Dialogue.

The economist referred to the immediate effects of oil price hikes translated into increased transportation costs, hitting low- and middle-income households hardest.

Instead, she said, the government could have taken some practical steps to reduce the impact of rising fuel prices. "For example, the government could have temporarily reduced fuel taxes, restrained dealer commissions for now, and avoided tapping into the Bangladesh Petroleum Corporation development fund unless absolutely essential."

While these actions would not eliminate the price hike completely, they could have relieved the burden on ordinary people, Fahmida added.

Understandably, she said, the government's limited fiscal capacity means it cannot afford large subsidies for long. "But the adjustment could have been managed more carefully, with the burden shared more fairly across stakeholders, which would also improve public confidence."

There should be a balanced approach in light of high inflation and the hardships faced by common people, Fahmida said, suggesting that targeted support for the poor should be provided through fiscal adjustments and improved energy-sector efficiency.

How countries are responding to oil shocks

Regional economies such as India and Pakistan opted to lower fuel taxes to keep pressure on people lower. Excepting marginal increase in premium-grade fuel – Rs2 per litre, India remains among a few countries like Madagascar that have not hiked fuel prices since the Middle East war began. Pump prices of petrol and diesel in India remain at levels seen four years ago.

Rather, in March, ahead of elections in some states, India's finance ministry reduced the excise duty on petrol from Rs13 to Rs3 per litre. Similarly, the duty on diesel was slashed from Rs10 to zero.

It is unofficially estimated that this decision could result in an annual revenue loss of approximately Rs1.55 trillion.

Indian Oil Minister Hardeep Singh Puri wrote on X that oil companies were facing losses of around Rs24 per litre on petrol and Rs30 on diesel due to high prices in the international market. To mitigate those losses, the government has provided a significant waiver in revenue income, he said.

Reducing the duty at current prices will help decrease the annual losses of oil marketing companies by 30% to 40%, Puri said.

On the other hand, to limit exports and support the exporting companies, which include the private firms, the Indian finance ministry earlier this month increased the tax on diesel exports to Rs55.5 per ⁠litre from Rs21.5 per litre.

Though the world's third-largest fuel oil importer, India also exports refined oil to a number of countries, including Bangladesh. The export tax hike will affect Bangladesh's diesel import from India through the pipeline.

Pakistan raised domestic fuel oil prices much earlier than Bangladesh, but drastically slashed the petroleum levy to zero for diesel. The tax cut brought down the petrol price by Rs80 per litre.

Apart from adjusting fuel prices, Pakistan introduced free bus services in major cities and targeted subsidies for bikers, farmers and transport operators to cushion the public from the 55% hike in oil prices.

Registered motorcyclists in Sindh will get Rs2,000 each a month – the equivalent of a Rs100 subsidy per litre for 20 litres of fuel.

Farmers will receive Rs1,500 per acre to cover diesel costs, while heavy transport operators will receive fixed subsidies on the condition that bus and truck fares are not increased.

Registered bus and truck owners in Punjab will receive up to Rs1,00,000 in subsidies to prevent them from passing the increased fuel costs on to passengers and consumers.

Bangladesh will not be able to realise its ambition of becoming a trillion-dollar economy by 2034 unless it revives investment, foreign investors and development partners said yesterday.

Without a turnaround in the investment climate, the country also risks falling short on other goals, such as sustained economic growth and job creation, said Jean Pesme, division director of the World Bank for Bangladesh and Bhutan.

At a meeting of the Foreign Investors’ Chamber of Commerce and Industry (FICCI) in Dhaka, he said attracting investment requires coordinated reforms in revenue policy, the financial sector and the wider business environment.

He said implementing only one reform in isolation would deliver limited results.

Foreign direct investment stood at just $1.6 billion in the fiscal year 2024-25, or around 0.33 percent of GDP, well below regional peers. Private investment was projected at 22 percent of GDP in FY25, the lowest level in 11 years, according to official data.

Pesme said global experience shows that tax incentives alone cannot offset a weak investment climate.

“Even where governments reduce the marginal effective tax rate and see an increase in foreign direct investment (FDI), the inflow is eight times higher when strong institutions, macroeconomic stability and rule of law are already in place,” he added.

He commented that Bangladesh’s revenue challenge lies less in tax rates and more in weak administration, governance shortcomings and extensive tax expenditures, which are almost as large as total collections.

According to the World Bank’s regional division director, the country depends heavily on tax holidays and sector-specific exemptions, especially for the ready-made garment sector. This creates distortions, opens the door to rent-seeking and increases resistance to reform, as changes inevitably produce winners and losers.

He highlighted the need to work on the investment climate and fiscal reform simultaneously so that they combine and reinforce each other.

“And when you look at the experience globally, the countries that really try to attract FDI through incentives are the ones that already have strong macro stability, rule of law, efficient administration and strong infrastructure.”

He also emphasised broadening the tax base and introducing greater uniformity by eliminating rent-seeking behaviour, reducing distortions, improving compliance and limiting incentives to game the system.

Predictability and credibility, he said, are essential.

“Improving tax administration can really bring results. We think revenue collection, as well as managing tax expenditure and services, is very important as it is about the quality of public spending.”

The results are not coming immediately, but the earlier you start, signal where you want to go, and then implement, in a systematic way, the better, he added.

Chandan Sapkota, country economist at the Asian Development Bank (ADB) resident mission in Bangladesh, said investors consistently raise concerns about taxes, especially the role of the National Board of Revenue (NBR).

“When we meet investors, everybody talks about taxes because their investment decisions are being impacted by NBR,” said Sapkota.

He said NBR often overrides investment promotion agencies. For instance, they introduce an investment facilitation programme, but in the middle of the year, NBR can issue a regulation that effectively nullifies it.

“Basically, there is no predictability of what is going to happen. So, I can see a reason why everybody says NBR,” said Sapkota.

Drawing on his experience in five countries, he said, “I think no other country has this kind of system, where you have agency that supersedes pretty much everything.”

To raise tax collection, he emphasised digitisation and stronger compliance.

The ADB economist said, “Even if you increase taxes, if the compliance regime is not tackled, your tax will not actually increase that much, but then people who are already paying taxes will be burdened more.”

He said the tax administration system must make it very difficult to avoid paying taxes. For example, it’s impossible to evade taxes in India, because everybody has a Aadhaar Card without which none can do anything.

In Bangladesh, he said, the national ID card should be linked with TIN and bank accounts to close that loop. He also suggested reducing multiple VAT rates to two or three to reduce leakages.

“The incentive mechanism, when they rationalise the taxes, should be designed in such a way that this is growth enhancing, productivity enhancing, rather than helping some sort of zombie firms to sustain operation for the sake of employment,” said Sapkota.

Fahmida Khatun, executive director of local think tank Centre for Policy Dialogue (CPD), said tax exemptions in Bangladesh continue indefinitely despite limited fiscal space. “If you really want to incentivize, there should be a sunset clause. But, once an exemption is in place, that goes forever,” she said.

AK Khan, chairperson of Business Initiative Leading Development (BUILD), said local investors face similar frustrations.

As a local investor, we also feel that there are a lot of constraints when we do or think of investments, which shows a huge gap between policy and practice, said Khan.

He pointed to weak coordination among ministries. NBR, the commerce ministry and other ministries often adopt separate policies on the same subject, leading to conflict and uncertainty.

And there is a serious conflict in policies that frustrate investors. He suggested running institutional reform, institutional coordination, and policy consistent and predictable.

M Masrur Reaz, chairman and chief executive of Policy Exchange Bangladesh, presented a paper at the event. He said higher corporate taxes raise the effective cost of investment and cited the Organisation for Economic Co-operation and Development (OECD) data showing that FDI falls 3.7 percent for every 1 percent rise in the tax rate.

Bangladesh ranks 105th out of 141 countries in the Global Competitiveness Index due to weak business dynamism, poor product market conditions, low skills performance and infrastructure deficits, he said.

To build an investment-enabling fiscal framework, Reaz called for tax reform, greater efficiency in the annual development programme, institutional reform, improved budget credibility and fiscal consolidation.

Rupali Huque Chowdhury, president of FICCI, and Shams Zaman, a FICCI director, also spoke at the event.

Garment exporters yesterday urged the government to cut the source tax from 1 percent to between 0.5 and 0.65 percent, citing ongoing difficulties caused by domestic challenges and external pressures.

They also proposed keeping the reduced rate in place for the next five years.

In addition, they called for exemption from the 10 percent income tax on export incentive receipts, saying that export incentives have already been reduced as part of preparations for Bangladesh’s graduation from the least developed countries (LDC) group.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) made these proposals in their budget recommendations for fiscal year 2026-27 (FY27), which were submitted to the National Board of Revenue (NBR) yesterday.

Both associations proposed setting the corporate tax rate for subcontracting factories at 12 percent instead of the current 25 to 30 percent, arguing that it should be aligned with existing policies where green factories pay 10 percent and non-green factories pay 12 percent.

They also said subcontracting factories, which place work orders with other factories, currently pay a 5 percent source tax on contract payments and demanded that it be reduced to 1 percent in the upcoming budget.

In addition, they proposed fixing the bond licence fee at Tk10,000 for three years, along with relaxed rules for sub-contracting and bond licence locking.

They also recommended exempting VAT and import duties on the import of man-made fibre and non-cotton yarn, saying this is necessary to expand production using man-made fibres and increase global market share.

Globally, around 75 percent of garments are made from man-made fibres, while in Bangladesh, over 70 percent of exports are cotton-based and only around 30 percent come from man-made fibres, meaning the country is missing significant opportunities.

They added that while cotton imports are already duty-free, similar tariff-free access should be extended to man-made fibre and yarn to stay competitive.

RMG UNDER PRESSURE AS EXPORTS FALL, COSTS RISE

The BGMEA, in its proposal, said the garment sector is facing an unprecedented set of challenges both at home and abroad, including global recession, geopolitical instability and tariff wars that have slowed export growth.

Internal issues such as rising costs of doing business, weak ease of doing business, and structural weaknesses are also affecting competitiveness.

Recent export data shows garment exports fell by 3.73 percent in July-February of FY26 compared to the same period of the previous fiscal year, with earnings continuously declining since August 2025.

As a result, factories are operating below full capacity, increasing fixed costs and overall production expenses.

New work orders have also slowed, with Bangladesh Bank data showing that back-to-back letters of credit (LC) openings for raw material imports fell by 6.79 percent in dollar terms during July-January of FY26.

Lower export orders, combined with reciprocal US tariffs and higher Chinese exports to Europe at competitive prices, have reduced export prices, with the average unit price of garments falling by 1.76 percent in July-February of FY26.

In the first seven months of FY26, imports of capital machinery dropped by 37.87 percent in the textile sector and 12.44 percent in the garment sector, continuing a negative trend from the previous fiscal year.

This reflects declining capacity and a weak investment climate, raising concerns about the sector’s future.

The data shows that the country’s main export-earning sector, the RMG industry, is going through a critical period, with around 400 garment factories closing over the past three years while many others remain financially weak.

At present, lending interest rates have risen to 12 to 15 percent, while energy costs have increased sharply amid ongoing shortages. Gas prices rose by 286 percent between 2017 and 2023, and electricity tariffs increased by 33 percent over the past five years.

Like most finance professionals, I have always taken a keen interest in the stock market since we have a fair understanding of how capital markets function and the intrinsic value of shares.

I have been a retail investor in Bangladesh's stock market for almost four decades and have witnessed both the rise and fall of the market over the years. I was also an active investor during the painful debacles of 1996 and 2010, two defining episodes when excessive speculation was followed by steep corrections that wiped out the savings of many ordinary investors. Having observed those cycles closely, I was fortunate to act prudently and exit at the proper time on both occasions.

My understanding of the capital market also comes from professional experience. I handled the largest initial public offering of Lafarge Surma Cement in 2003, when Bangladesh's capital market was still at an early stage of development. During my tenure there, I worked closely with many market intermediaries including merchant banks, investment banks, mutual funds and stockbrokers' associations. These experiences gave me insight into the workings of the market and the challenges faced by retail investors, institutional investors and listed companies, as well as firms planning to go public.

The stock market can play a vital role in Bangladesh's economic development by mobilising savings, financing productive enterprises, and creating long-term wealth for citizens. Yet for many ordinary investors, the experience has too often been marked by disappointment, volatility and loss.

Bangladesh has witnessed painful market episodes in 1996 and again in 2010, when excessive speculation drove prices far beyond fundamentals before sharp corrections erased the savings of countless retail investors. These events were not merely market cycles. They exposed structural weaknesses that still deserve serious attention.

A retail-dominated market

Bangladesh's capital market remains heavily driven by retail participation. Individual investors are an important part of any healthy market, but when a market lacks sufficient participation from pension funds, insurance companies, mutual funds and other long-term institutions, prices can become more vulnerable to rumours, manipulation and short-term trading behaviour.

In many cases, retail investors enter after prices have already risen sharply, driven by fear of missing out. More informed participants often exit during these rallies and re-enter during downturns when valuations become attractive. This mismatch repeatedly transfers wealth from less-informed participants to better-prepared ones.

Why retail investors often lose money

A recurring feature of the market is herding behaviour. Buying because others are buying and selling because others are selling. Instead of analysing company earnings, cash flows, governance standards or industry prospects, many investors rely on informal tips, social circles or online speculation.

This is understandable. Fundamental analysis requires time, knowledge and discipline. Most people have professions and responsibilities outside finance. Expecting every small investor to become a securities analyst is unrealistic.

That is why well-functioning markets around the world rely on professional intermediaries such as mutual funds, pension managers, research firms and licensed advisers. These institutions help channel household savings into diversified and professionally managed investments.

The problem of low-quality listings

Another longstanding concern is the presence of weak or inactive listed companies. Firms that remain on the exchange despite poor disclosures, irregular annual general meetings, prolonged dividend suspension, weak operations or little commercial activity.

When such companies remain listed for years, they can become fertile ground for speculative trading, especially low-capitalisation shares with limited free float. These stocks are easier to corner, easier to move sharply and easier to use in pump-and-dump schemes that trap unsuspecting investors.

A stock exchange should reward productive enterprise, not preserve shells that no longer serve investors or the economy.

Rebuilding confidence in collective investment

Bangladesh's mutual fund sector has had a mixed history. Past governance failures damaged public trust. However, newer and better-managed asset managers have begun to demonstrate stronger professionalism, improved compliance and better disclosure standards.

This is encouraging. A vibrant mutual fund industry can reduce reckless direct speculation by giving ordinary savers access to diversified portfolios managed by professionals. In neighbouring India, systematic investment plans and mutual funds have helped broaden disciplined retail participation over time.

Bangladesh can move in a similar direction but only if transparency and governance are non-negotiable.

What should be done

1. Clean up the listed universe

There should be a comprehensive review of companies that remain listed despite prolonged non-compliance, weak operations, poor disclosures, failure to hold annual general meetings or repeated inability to provide reasonable returns to shareholders. Firms that no longer meet the spirit of public listing should be required to restructure, merge, move to a separate category or eventually exit the market after a fair transition period. A credible stock exchange must reflect productive enterprises and investor confidence, not inactive or persistently weak entities. There is an urgent need to address this issue if confidence in the market is to be restored.

2. Strengthen surveillance, enforcement and brokerage transparency

Unusual trading activity in illiquid low-fundamental stocks should be detected quickly using modern surveillance systems. Manipulation must lead to visible penalties, disgorgement, trading bans and prosecution where appropriate. Enforcement must be swift enough to deter repeat offenders.

At the same time, brokerage houses must maintain far higher standards of transparency and client protection. There have been recurring complaints of unauthorised trades, margin accounts opened or activated without clear consent, and inadequate disclosure of risks and charges. In some cases, clients are also given informal recommendations on which shares to buy without adequate research, professional competence or proper suitability assessment.

Such practices can severely harm retail investors and further weaken trust in the market. Stronger oversight, mandatory digital confirmations, clearer documentation, professional standards for advisory services and swift action against violations are urgently needed.

3. Make mutual funds fully transparent

Every mutual fund should publish standardised monthly performance data, portfolio allocations, fees, historical returns, benchmark comparisons and net asset value (NAV) on fund websites and a central exchange portal. Investors should be able to compare products easily before investing.

4. Expand institutional participation

Policies that encourage pension funds, insurance companies and long-term domestic institutions to participate responsibly can help stabilise markets and improve price discovery.

5. Invest in investor education

Retail investors need simple practical education: diversification, valuation basics, risk management, avoiding leverage, recognising manipulation and distinguishing investing from speculation. They also need constant reminders through public awareness campaigns, brokerage communications and market institutions to be cautious about investing without adequate knowledge or relying solely on rumours and tips. A more informed investor base is essential for a healthier and more stable market.

6. Develop a reliable stock analysis platform

A central digital platform should be developed to provide investors with easy access to company fundamentals, financial ratios, dividend history, earnings trends, governance disclosures and comparative sector data. Such a platform could also include independent research tools and model-based recommendations such as buy, hold or sell, based on transparent methodologies and regular updates. This would help retail investors make more informed decisions, reduce dependence on rumours and tips, and promote a more research-driven investment culture in the market.

Investing is not gambling

Markets involve risk, but risk is not the same as gambling. Investing means allocating capital based on analysis, discipline and long-term expectations. Speculation based purely on hearsay, rumours or blind momentum is closer to chance than informed decision-making.

For many families, market losses are not numbers on a screen. They are years of hard-earned savings. Bangladesh owes these citizens a market built on fairness, transparency and trust.

The country does not need another speculative boom. It needs a credible capital market where sound companies raise funds, disciplined investors earn reasonable returns and confidence is built through rules that are enforced consistently.

That transformation is still possible but only if reform is pursued with urgency.

Bangladesh is facing a deepening structural revenue strain, with the National Board of Revenue (NBR) recording an average annual shortfall of nearly Tk59,000 crore over the past five fiscal years, according to the Policy Research Institute (PRI).

The observation was made by PRI Research Director Bazlul Haque Khondker while presenting findings on the need to rationalise the country's supplementary duty (SD) and value-added tax (VAT) structure at a discussion held at PRI's office in Dhaka on Saturday.

He said Bangladesh's growing dependence on high and complex indirect taxation is increasingly unsustainable for a transitioning economy.

Khondker noted that the country already imposes some of the highest indirect tax rates in the region, particularly on beverages, where the rate stands at 43.75%, compared to 40% in India and 30% in the Maldives.

He pointed to significant distortions within the tax structure, citing the wide gap between 250% tax on alcoholic beer and 55% on energy drinks. According to him, such disparities distort consumer behaviour, pushing demand toward lower-taxed products and ultimately weakening overall revenue efficiency.

The PRI also cautioned that frequent and unpredictable changes in tax policy are contributing to investor uncertainty. It said multinational companies are increasingly factoring Bangladesh's SD and VAT regime into their decisions on whether to remain in or exit the market.

To achieve the government's target of raising foreign direct investment (FDI) to 2.5% of GDP by 2030, the think tank stressed the need for what it described as "investor-grade tax certainty."

Against the backdrop of widening revenue gaps and a long-term goal of achieving a 15% tax-to-GDP ratio by 2035, PRI proposed a set of structural reforms.

These include, first, fixing the order of tax imposition by separating supplementary duty from the VAT base and applying it at a single point to prevent cascading effects.

Second, it recommended introducing specific health-based taxes, shifting away from price-based taxation toward levies determined by sugar or alcohol content, a move it said could significantly improve revenue from food and beverage products.

Third, PRI called for stronger data systems to support tax administration, including detailed, category-wise reporting of SD and VAT to enhance monitoring, enforcement, and policy design.

Most listed manufacturers faced pressure last year from high borrowing costs and weak demand, with many sectors reporting falling profits or losses.

Despite that, a small number of large companies maintained strong earnings.

Data compiled by Lion City Advisory show only four listed firms posted profits above Tk1,000 crore in 2025.

The four that cross Tk1,000cr profit mark

According to the analysis, multinational telecom operator Grameenphone recorded the highest profit among listed companies at Tk2,908 crore in 2025.

Square Pharmaceuticals ranked second with Tk2,594 crore in profit.

Power producer United Power Generation posted Tk1,097 crore in profit, while electronics and appliance maker Walton earned Tk1,095 crore.

Robi came close to the threshold, reporting a profit of Tk937 crore.

On the loss side, Bashundhara Paper Mills topped the list with a loss of Tk477 crore. Titas Gas followed with Tk450 crore, while Energypac posted a loss of Tk213 crore.

In 2024, four firms also crossed the Tk1,000 crore profit mark, again led by Grameenphone at Tk3,630 crore, followed by Square, Walton and United Power Generation.

Titas Gas was the biggest loss-maker in 2024 with Tk1,502 crore in losses. Power Grid and Desco ranked next with losses of Tk449 crore and Tk316 crore, respectively.

Citing three major economic challenges, the government has prepared its position paper ahead of a United Nations hearing on Bangladesh’s request to defer its graduation from the least developed country (LDC) category.

In a virtual meeting of the United Nations Committee for Development Policy (UNCDP) on April 29, Bangladesh will seek a three-year deferral of its scheduled graduation in November this year.

Dhaka plans to highlight a serious gap in preparedness, incomplete core reforms and the economic fallout from the US-Israel war on Iran as key reasons for postponement.

In addition, Bangladesh will raise concerns over vulnerabilities in the financial sector, weaknesses in the banking system, an export slowdown due to volatile global supply chains, high interest rates and an uncertain business and investment climate, said Md Abdur Rahim Khan, additional secretary to the commerce ministry.

Khan, who is also in charge of the commerce secretary, told The Daily Star over the phone that Bangladesh’s case for deferment has strengthened after Nepal, another South Asian LDC set to graduate, also applied to the UN for a three-year extension.

Bangladesh, Nepal and Lao PDR are scheduled to graduate from LDC status on November 24 this year. However, Bangladesh and Nepal have now sought to delay the transition until 2029, citing domestic and external economic pressures.

Earlier on February 19, the newly elected government sent a letter to Jose Antonio Ocampo, chair of the UNCDP, requesting that the preparatory period be extended until November 24, 2029, mentioning that more time is needed to ensure readiness.

Following Bangladesh’s request, the UNCDP discussed the issue at its annual meeting in February and agreed on a process to assess the proposal.

The UNCDP has now called a public hearing on Bangladesh’s request on April 29. After the hearing, the committee will submit its recommendations to the United Nations Economic and Social Council (ECOSOC) in June.

ECOSOC will then forward its assessment to the United Nations General Assembly (UNGA), which is scheduled to meet in September. The final decision on the deferment will be taken through a vote at the UNGA.

A UN assessment report last month said Bangladesh still faces serious gaps in its readiness for graduation, as its economy continues to be affected by both domestic and international shocks, including the US-Israel war on Iran.

The report highlighted a series of disruptions between 2017 and 2026, including climate vulnerability, the Rohingya crisis, a prolonged macroeconomic slowdown that predated the regime change, the Covid-19 pandemic, the Russia-Ukraine war, inflation, and pressure on the balance of payments.

It also noted that while Bangladesh meets all three criteria for graduation, significant risks persist, including the loss of trade preferences, fiscal and financial vulnerabilities and weak institutional coordination.

The report stressed the need for urgent reforms, stronger implementation capacity, adequate policy space and a whole-of-society approach to ensure a smooth and sustainable transition.

It added that a difficult political changeover and prolonged macroeconomic stress have eroded socio-economic gains, increasing risks linked to graduation.

Rising import costs for fossil fuels have created operational constraints, with gas shortages worsening due to the Middle East conflict, the report said. Economic growth slowed from 7.1 percent in FY22 to 3.5 percent in FY25, weakening momentum ahead of graduation.

Inflation has outpaced wages, pushing millions into hardship and vulnerability.

Private investment has also weakened, with capital machinery imports falling from $5.1 billion to $2.8 billion during the 2019-2024 period. The labour market has also come under pressure, with nearly 1.9 million jobs lost between 2023 and 2024, disproportionately affecting women.

The Bank Resolution Act-2026, passed with new provisions added overnight, is effectively rehabilitating bank looters and putting the entire banking sector at risk, economic experts, academics, and activists said yesterday.

Clause 18(a) of the law could allow those who previously looted the sector in a planned manner to regain ownership, the speakers warned at a roundtable organised by Voice for Reform at the BDBL building in Karwan Bazar, Dhaka.

Badiul Alam Majumdar, secretary of Shushashoner Jonno Nagorik (Shujan), noted that many of those who looted the sector are yet to be brought to justice.

He said all masterminds behind the takeover of Islami Bank Bangladesh, including S Alam, should be held accountable.

He outlined three steps needed to put the banking sector on a firm footing. First, identifying and ensuring exemplary punishment for perpetrators of banking fraud. Second, implementing systemic reforms such as cashless transactions to prevent recurrence. Lastly, completing institutional reforms, including making Bangladesh Bank an independent constitutional body.

AKM Waresul Karim, dean of the School of Business and Economics at North South University, said the government had resorted to “very low-grade tactics” over the proposed ordinance.

He criticised the Bank Resolution Act as one of its provisions allows shareholders who held ownership immediately before a bank was placed under resolution to apply for reinstatement.

He said the provision blocks the return of long-standing institutional owners like Kuwait Finance House while opening the door for those who acquired ownership by creating “pressure through the DGFI” or through other unethical means.

Toufic Ahmad Choudhury, former director general of the Bangladesh Institute of Bank Management (BIBM), called for bringing willful defaulters to book, saying that no resolution measures would yield results unless those responsible for the current crisis are punished.

He also cautioned that rescheduled loans should not have their default status changed until fully repaid – a rule routinely flouted as elections approach, when defaulters reschedule debts.

“Through this process, they remove themselves from the list of defaulters and become ‘regular’ borrowers. Subsequently, they take the opportunity to secure hundreds of crores of taka in additional loans from the same banks,” he said.

Shawkat Hossain Masum, head of online at Prothom Alo, said it was inevitable that some banks in the country would reach the point of insolvency.

He stated that in November 2022, the central bank claimed that there were no problems in the banking sector, even though the real situation was more or less known to everyone. “It was not that Bangladesh Bank was unaware; rather, it was either helpless in the face of politicisation, complicit in it, or both.”

He claimed that the interim government opted for merging troubled banks as “no government wants to bear the stigma” of closing banks.

Considering various realities, he said merging two weak banks and making the initiative successful is already very difficult. “Expecting five weak banks to merge and succeed together is a very remote aspiration.”

Meanwhile, Professor Mushtaq Khan of SOAS University of London said the interim government should have nationalised or confiscated assets of individuals involved in bank looting.

“Failing to do so was a major mistake,” he said, noting that the manner of the looting makes recovery through collateral seizure difficult.

Sarwar Tusher, a joint convener of the National Citizen Party (NCP), accused the current BNP-led government of setting “extreme examples of politicisation” in the economy within two months of taking office.

Criticising BB Governor Md Mostaqur Rahman, the NCP leader said the governor was a “politically affiliated individual” who reportedly has “past links with S Alam”.

He went on to allege that several ministers of the new government have connections with the controversial business group, warning that a major crisis in the banking sector, similar to that in the energy sector, may be imminent.

Shams Mahmud, former president of the Dhaka Chamber of Commerce & Industry, said Islami Bank was captured through the stock market.

Instead of direct acquisition as entrepreneurs, the bank’s shares were quietly purchased through various anonymous groups and later transferred to a specific group, he added.

“Even if the front door is closed through banking laws, such looting cannot be stopped if the back door, like the stock market, remains open,” said Mahmud.

Asif Khan, president of CFA Society Bangladesh, suggested issuing long-term bonds to depositors as an immediate measure to heal the deep wounds in the banking sector.

He said that while small depositors could be fully repaid, larger depositors might need to accept some “haircut,” or partial losses.

Bangladesh’s mobile and broadband internet services rank among the worst in the world despite a large subscriber base, and a connectivity-led reform plan is being prepared to address the challenge, Rehan Asad, the prime minister’s adviser on telecom and ICT, said yesterday.

Speaking at a seminar titled “New Telecom Policy: Expectations of Entrepreneurs”, organised by the Telecom and Technology Reporters Network Bangladesh, he said the government sees better connectivity as the key to solving long-standing structural problems in the sector.

“Nothing is more important than connectivity for this government. And that connectivity means both mobile and broadband services. It is not either-or -- it is both,” he said.

Asad said Bangladesh is among the top 10 countries by mobile subscriptions, but service quality remains very poor.

“Even in South Asia, Nepal and Bhutan are ahead of us,” he said.

He added that broadband services are also weak. “In broadband, we are in an equally bad or worse position -- 141st out of 153 countries in terms of service quality,” he said.

“These are not my findings. They come from global reports by GSMA and the International Telecommunication Union,” he added.

He said the government plans to fix these problems by rapidly expanding mobile and broadband infrastructure.

“We want to connect 90 percent of the population with 5G and provide 100 Mbps internet to 90 percent of users,” he said.

He said the goal is to ensure consistent internet service across both urban and rural areas, so users no longer face uncertainty in accessing basic connectivity.

The second priority is to build a unified digital ecosystem through a nationwide digital identity system.

He explained that each citizen will receive a digital ID linked to a digital wallet that can connect with banking and mobile financial services.

The government is studying global models such as Singapore’s Singpass and Estonia’s digital system, with plans to begin rollout within the next 12 to 18 months.

The third priority is to turn Bangladesh into an AI-enabled economy, he said, adding that artificial intelligence will be introduced in education and industry.

The fourth priority is reforming the telecom tax system.

“When someone recharges Tk 100, they receive only Tk 62 worth of service. The remaining Tk 38 goes to the government,” he said.

“We want to examine the whole value chain so that a person can receive Tk 80 to Tk 90 worth of service.”

He added that Bangladesh is the third-largest collector of telecom taxes globally, which also affects affordability, including access to smartphones.

Asad said the reforms will require coordination between industry players and government agencies, and that discussions with stakeholders are already underway.

Not all problems will be solved immediately, he said, adding that the current work marks the start of a longer reform process.

Sumon Ahmed Sabir, deputy managing director of Fiber@Home, said at the event that policies and guidelines enacted by the interim government unfairly allowed foreign entities to obtain licences across multiple layers.

“The cross-layer empowerment of foreign entities could ultimately lead to ‘super-dominance’ in mobile infrastructure by one or two companies,” he said.

He also warned of risks to national security and data governance.

Some representatives of local companies at the event also alleged that the Bangladesh Telecommunication Regulatory Commission (BTRC) formulated policies and guidelines without adequate consultation with industry stakeholders.

Md Emdad Ul Bari, chairman of the BTRC, stated that their claims were unfounded.

BTRC had conducted extensive consultations with industry players, academia, and government bodies during the policy formulation process, he said.

Bari added that the primary objective of the regulator was to ensure that the policies serve the industry as a whole.

He also noted that the guidelines and policies are currently being reviewed again, in consultation with the newly elected government.

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.

Prime Bank PLC has signed a $30 million term-loan agreement with the Opec Fund for International Development (Opec Fund), an international development finance institution.

The strategic collaboration is expected to significantly enhance Prime Bank’s capacity to support critical trade finance requirements across the country’s small and medium enterprise (SME), agriculture, and corporate sectors.

Faisal Rahman, chief executive officer (current charge) of the bank, and Abdulhamid Alkhalifa, president of the Opec Fund, signed the agreement in Dhaka recently, according to a press release.

Commenting on the partnership, Alkhalifa said, “MSMEs and agribusinesses play a vital role in jobs, food security, and economic resilience in Bangladesh, yet many still struggle to access trade finance.”

“Our partnership with Prime Bank will help unlock new opportunities, diversify exports, and strengthen the country’s private sector. This loan builds on our long-standing collaboration and reflects our commitment to inclusive, sustainable growth,” he added.

Rahman said, “We are delighted to enter into this strategic partnership with the Opec Fund. The three-year expandable term-loan facility will meaningfully enhance our capacity to support the trade financing needs of our valued clients.”

“This collaboration comes at a critical time when businesses are navigating uncertainties in the global economic landscape,” he added.

The Opec Fund’s support reinforces our relationship and reflects its strong confidence in Prime Bank’s governance, operational resilience, and future ambitions in supporting the national economy, the release added.

The facility, structured as a term-loan, will be provided to Prime Bank’s offshore banking unit by the Opec Fund.

It carries an initial tenor of one year, with a provision for extension up to three years.

This financing is expected to strengthen Prime Bank’s trade finance portfolio, providing much-needed stability and support to Bangladeshi businesses navigating complex global economic headwinds.

US consumer sentiment fell to a record ​low in April as households shrugged off a ceasefire in the war with Iran, remaining focused on the inflation ‌fallout from the conflict.

The University of Michigan's Surveys of Consumers said its Consumer Sentiment Index dropped to a final reading of 49.8 this month, an all-time low. The reading was a slight improvement, however, from the 47.6 reported earlier in the month.

Economists polled by Reuters had forecast the index at 48.0. It was at 53.3 ​in March. The deterioration in sentiment was across political party affiliation, and among consumers with investments in the stock market.

The Iran war ​has disrupted shipping in the Strait of Hormuz, boosting the price of oil, and ultimately the cost of gasoline ⁠and diesel. Prices for other commodities, including fertilizers, petrochemicals and aluminum, which will soon impact consumers, have also surged.

Tehran effectively closed the strait ​after the start of the war on February 28. President Donald Trump this week indefinitely extended the ceasefire with Iran, though a US Navy blockade ​of Iranian ports remained in effect.

"The Iran conflict appears to influence consumer views primarily through shocks to gasoline and potentially other prices," said Joanne Hsu, the director of the Surveys of Consumers. "In contrast, military and diplomatic developments that do not lift supply constraints or lower energy prices are unlikely to buoy consumers."

GASOLINE AND DIESEL ​PRICES INCREASE

The national average retail gasoline price has hovered above $4 a gallon this month, with diesel well above $5 a gallon, data from the US ​Energy Information Administration showed.

A Reuters/Ipsos poll on Friday showed a clear majority of Americans blamed Trump for surging gasoline prices, which are weighing on his Republican Party ahead ‌of November's ⁠congressional midterm elections.

Expensive diesel is likely to raise prices of goods transported by road. Economists said while the correlation between consumer sentiment and spending was weak, they expected households, especially lower-income groups, to scale back on consumption.

"We expect the hit to real disposable income growth from higher gas prices will slow consumption growth," said Grace Zwemmer, a US economist at Oxford Economics. "The impact will be mostly felt by low- and middle-income households, ​since a larger share of their ​overall spending goes toward gasoline."

The ⁠survey's measure of consumer expectations for inflation over the next year jumped to 4.7 percent this month from 3.8 percent in March. April's reading exceeded levels that prevailed in 2024 and remained well above the 2.3 percent-3.0 percent range seen ​in the two years before the COVID-19 pandemic.

Consumers' expectations for inflation over the next five years climbed ​to 3.5 percent from 3.2 percent ⁠last month.

Higher inflation expectations added to a survey from S&P Global on Thursday showing a measure of prices charged by businesses for their goods and services jumped in April to the highest level in nearly four years in strengthening financial market expectations that the Federal Reserve would probably not cut ⁠interest rates ​this year.

"More pain will come as higher transportation costs are passed along for food, ​appliances, toys and every other item that travels on a ship, car or plane," said Heather Long, chief economist at Navy Federal Credit Union. "Sentiment won't improve until the Strait of ​Hormuz is open and there is a permanent end to the conflict."

When the International Monetary Fund (IMF) released its latest World Economic Outlook (WEO) database on April 14, one data point quickly made its way through financial markets and newsrooms.

Bangladesh is projected to record a higher gross domestic product per capita than India in 2026, measured in current US dollars. The forecast puts Bangladesh at $2,911 per person against India at $2,812. The difference is small in absolute terms, but its symbolism is significant.

India’s economy, valued at $3,916 billion in 2025, is roughly eight times the size of Bangladesh’s $458 billion. It is also one of the most closely watched growth stories in the world. Yet on this narrow measure, the smaller neighbour appears set to edge ahead.

The reaction in India was swift. Kaushik Basu, former chief economist of the World Bank, described the development as "shocking". Indian commentators debated whether the figure reflected a deeper structural divergence or merely a statistical quirk.

The answer, as is so often the case with economic data, is: both.

Measured in current dollars, Bangladesh led India in per capita income for seven years from 2018.

India moved ahead in 2025 after the Bangladeshi taka weakened sharply. This is not without precedent.

Bangladesh was also ahead of India in per capita GDP between 1989 and 2002.

India then pulled in front for around 15 years before slipping below Bangladesh in 2018.

The rupee's own depreciation against the dollar in the subsequent period then swung the comparison back.

According to the latest projections, Bangladesh is set to move ahead in 2026 by roughly $100 per person.

The IMF expects India to regain the lead in 2027 and to remain ahead at least until 2031.

To understand why this measure is so volatile, consider the arithmetic.

GDP per capita in current dollars is calculated by converting each country's output into US dollars at the prevailing exchange rate.

When a currency depreciates — as both the taka and the rupee have done in recent years, though at different speeds — it compresses the dollar value of output regardless of how productive the underlying economy has become.

The crossing of the two lines in 2026, seen on any given screen, tells us something real: that exchange-rate dynamics now place the two economies' dollar incomes within touching distance of each other. It does not, on its own, tell us which population is better off.

The second measure complicates the picture considerably. The IMF also publishes GDP per capita adjusted for purchasing power parity (PPP), which strips out exchange-rate movements and instead converts output into a common "international dollar" based on what each currency can actually buy domestically.

On this basis, India leads Bangladesh by a wide margin — and always has in the modern era.

In 2025, India's PPP-adjusted GDP per capita stands at $11,789 — some 15 percent above Bangladesh's $10,271.

By 2031, the IMF projects the gap will widen to nearly 24 percent, with India reaching $18,485 against Bangladesh's $14,857.