Around 2,200 small and medium-sized NGOs in Bangladesh could be particularly vulnerable as foreign funding declines, with grant-reliant organisations providing social services facing the greatest risk, according to a study by the Bangladesh Institute of Development Studies (BIDS).
Unlike NGOs with microcredit operations, these organisations have no lending income to fall back on when foreign funding declines.

The study says the growth of NGOs without a lending arm is significant because they have no lending surplus to cushion a contraction in foreign grants.
A BIDS survey found that two-thirds of grant-dependent organisations reported significant damage from funding cuts
A BIDS survey found that two-thirds of grant-dependent organisations reported significant damage from funding cuts, with their budgets falling by an average of 40 percent. Among NGOs with microcredit operations, the average decline was 12 percent.

The findings were presented at a seminar titled “Beyond Foreign Dependence: The Future of NGO Financing in Bangladesh” at BIDS yesterday.

Finance and Planning Minister Amir Khosru Mahmud Chowdhury called for stronger institutional partnerships among the government, NGOs and the private sector to create sustainable financing for the sector.

He urged time-bound measures to help NGOs secure alternative funding as development assistance declines worldwide.

“We do not just want to listen; we want to provide an effective response,” he said, stressing the need for an integrated framework covering human development, local culture and private-sector participation.

He said NGOs play an important role in taking government services to grassroots communities and that their contribution in areas such as the creative economy should receive stronger institutional and policy support.

The BIDS study says the decline in foreign aid is likely to be gradual but lasting. Development assistance from wealthy countries fell 23 percent in real terms in 2025, the biggest annual decline on record.

The full impact has not yet reached Bangladesh as funds for previously approved projects are still being released. Around Tk 10,143 crore in foreign grants was released in 2025-26.

Foreign grant releases peaked at $955 million in 2018-19, fell 31 percent to $655 million, and recovered to $838 million in 2025-26. However, new project approvals fell from 2,061 in 2021-22 to 1,654 in 2025-26, indicating a weakening pipeline.

As funding shrinks, organisations are likely to cut staff and programmes first, potentially causing essential social services to disappear.

The study also warns that grant cuts could push NGOs towards “mission drift”, as they shift towards microcredit to generate income while schools, clinics and community programmes are cut.

It argues that the solution is not simply to find new donors. Instead, the government should contract NGOs to deliver services where they can do so more effectively.

NGOs can reach remote households and understand local needs, while the government can provide financing, regulation and infrastructure. Joint delivery could therefore reduce the cost of providing services.

The Public Procurement Rules 2025 allow NGOs to participate in public service delivery, but the provision is rarely used. The study recommends clear guidelines, an open list of qualified NGOs eligible for government procurement and CSR funds, dedicated financing windows through organisations such as the Palli Karma-Sahayak Foundation, clearer CSR rules, and legal recognition and tax benefits for social businesses.

However, alternative financing is unlikely to fully replace foreign grants. Bank CSR spending fell to Tk 345 crore in 2025, while social businesses may cover only 15-25 percent of an NGO’s budget. Innovative financing such as bonds is also difficult for smaller NGOs because it generally requires loan portfolios, collateral or strong balance sheets.

At the seminar, the minister also stressed developing local products, saying traditional crafts such as shital pati need modern design, value addition and better marketing to reach international markets.

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He also said projects should meet four conditions -- value for money, return on investment, employment or entrepreneurship creation, and environmental protection.

“No project will be approved if these four conditions are not met,” he said.

Among others, Zonayed Abdur Rahim Saki, state minister for planning; SM Shakil Akhter, secretary of the Planning Division; AK Enamul Haque, director general of BIDS; and Asif Saleh, executive director of BRAC, also addressed the seminar.

Japanese motor vehicle giant Toyota Tsusho Corporation will begin developing a hybrid electric vehicle (HEV) manufacturing industry in Bangladesh next year, with full-scale production expected to start by 2029, the Prime Minister's Office said.

The announcement came after a meeting between Prime Minister Tarique Rahman and a high-level Toyota Tsusho delegation led by Vice Chairman Ichiro Kashitani today (6 October).

According to the Prime Minister's Office, Toyota Bangladesh will begin work in 2027 to establish HEV production at an economic zone in Bangladesh under a "with Bangladesh, for Bangladesh" development philosophy. Full-scale production is expected to begin by 2029.
The visiting delegation also said Toyota Bangladesh is expanding its distribution network to all divisional-level locations to make the company's services and operations more accessible across the country.

Toyota Tsusho also expressed interest in contributing to human resource development by creating technical and vocational training opportunities for young people, improving skills and developing a workforce suited to future industries.

Prime Minister Tarique Rahman welcomed Toyota's interest in expanding its investment and operations, saying the government was working to ensure a stable, competitive and investment-friendly environment for local and foreign investors.

He said the government was committed to providing foreign investors with necessary policy support, infrastructure and other facilities.

The prime minister also highlighted Bangladesh's potential in waste-to-energy generation and renewable energy, and pledged government support if Toyota Tsusho is interested in investing in these sectors.

Commerce Minister Khandaker Abdul Muktadir, Prime Minister's Economic and Planning Adviser Rashed Al Mahmud Titumir, Foreign Affairs State Minister Humayun Kobir, Science and Technology Adviser Rehan Asif Asad, and Prime Minister's Special Assistant for Foreign Employment in the Asia-Pacific region Md Shakirul Islam Khan, among others, attended the meeting.

Toyota Tsusho Mobility Division CEO Shigeru Harada, Toyota Bangladesh Ltd President Premmit Singh and other senior company officials were also present.

Bangladesh's economy has yet to deliver the rebound expected after the return of political stability, the World Bank warned in its latest "Bangladesh Development Update", sharply downgrading the country's growth forecast for the current fiscal year.

The global lender slashed Bangladesh's FY27 real GDP growth projection by 1.2 percentage points to 3.4%, down from 4.6% estimated in April. The new forecast falls below the 3.45% growth recorded during the FY20 pandemic shock and lags behind the government's 6.5% target.

The update shows Bangladesh's projected growth is the lowest in South Asia after Afghanistan. By contrast, South Asia's economy is forecasted to grow to 6.7% in 2027.

Asked for a reaction to the report yesterday, Finance Minister Amir Khosru Mahmud Chowdhury offered a brief response: "Wait and see."

Economic activity and investment slowed during the interim government's 18-month tenure due to political uncertainty and law-and-order disruptions. While businesses expected a turnaround following the return of an elected government, the World Bank noted that structural bottlenecks continue to stall recovery about eight months into the new administration.

The update said the downgrade reflects "a more protracted drag from energy shortages, banking sector weakness, subdued credit growth and tighter fiscal constraints than previously anticipated".

Zahid Hussain, former lead economist of the World Bank's Dhaka office, said Bangladesh's economic slowdown is the result of persistent weaknesses in several key drivers of growth.

He added that two priorities should guide the response: preventing existing problems from worsening and gradually addressing those that have already emerged.

Fahmida Khatun, distinguished fellow at the CPD, said weak investment, high business costs, uncertainty, and persistent banking-sector weaknesses are weighing on economic growth.

In response to the issues, she called for continued reforms in the banking sector.

Export growth to remain weak

The World Bank also warned that export growth is expected to remain weak.

"Exports of readymade garments will be slowed in the short term by weak demand in the EU, and in the longer term by increased competition for market share," the report said.

Last month, the Asian Development Bank also cut its FY27 growth forecast for Bangladesh to 4%, from 4.5% projected in July and 4.7% in April. Both the World Bank and ADB forecasts are well below the government's 6.5% GDP growth target for the current fiscal year.

In its new update, the World Bank estimated that Bangladesh's GDP growth slowed to 3.4% in the previous FY26 fiscal year, marking the third consecutive year of deceleration.

'The time to act is now'

Bangladesh's economic growth has slowed since 2023 amid persistent structural constraints and global uncertainty, the World Bank said. Longstanding financial-sector vulnerabilities, weak revenue mobilisation, energy bottlenecks and declining public investment have eroded the economy's resilience and constrained its growth potential.

Jean Pesme, World Bank division director for Bangladesh and Bhutan, said to avert economic downturn and return to an inclusive growth path, fast and bold reforms are needed in the banking sector, domestic revenue mobilisation, and energy sector.

"The country needs to respond with urgency and speed up the reforms essential for protecting the poor and creating more and better jobs. The time to act is now," he said.

Pesme identified the banking sector as a major risk, with the non-performing loan ratio rising to 32.2% in 2026 from around 20% in December 2024.

Weak bank capitalisation is another concern, he said, calling for asset quality reviews to be completed and viable banks to be restructured and recapitalised at fair value.

Private investment has also weakened significantly, with private-sector credit falling to a nearly 30-year low. The weak economic environment and uncertainty are discouraging businesses from investing and expanding, according to Pesme.

Pesme also highlighted weak revenue mobilisation, calling for modernising and digitalising the tax system, broadening the tax base and improving tax-expenditure management.

On energy, he urged stronger transmission and distribution systems, transparent pricing, better governance and greater use of renewable energy.

2.1m more poor in FY26

Poverty and inequality increased in Bangladesh in FY26 as a prolonged economic slowdown, weak labour demand and persistent inflation eroded household welfare, said the report.

Poverty at the $3-a-day international poverty line rose an estimated 1.1 percentage points to 10.1% in FY26, leaving about 2.1 million more people in poverty than in FY25.

National poverty also rose for the fourth year, reaching 22.5% in 2026, up from 18.7% in 2022. It is projected to rise further to 22.8% in FY27 before edging down to 22.4% in FY28.

The Gini index, a measure of income inequality, increased by 0.9 points to 34.9 in FY26, leaving it 4 points above its 2022 level. The deterioration is expected to continue in the near term. Inequality is projected to widen, with the Gini index expected to reach 35.6 by FY28.

The deterioration is expected to continue, with the index projected to reach 35.6 by FY28.

Targeted support could lift 2.85m out of poverty

Weak labour demand and persistent inflation have reduced household incomes and, leaving many families vulnerable to future economic shocks, the World Bank said.

Although Bangladesh spends about 3.5% of GDP annually on subsidies and social protection, nearly half of the country's poorest households receive no safety-net support, it said.

Effective deployment of the Family Card alone could protect an estimated 1.58 million people from poverty. Combining it with improved targeting tools and consolidating cash and food assistance could lift an additional 2.85 million people out of poverty, the report added.

Jean Pesme called for a gradual shift from broad-based subsidies towards targeted support to better protect vulnerable households.

Inflation to stay high, wage growth negative

Inflation in Bangladesh is projected to remain elevated at 8.6% in FY27 before gradually moderating over the medium term, according to the World Bank.

The pace of moderation is expected to remain slow in the short term, weighed down by high domestic energy prices, persistent supply-side constraints and a less restrictive monetary policy stance, the lender said.

Lower global commodity prices, a stable exchange rate and favourable base effects could support a gradual decline in inflation over the medium term.

Maintaining prudent monetary policy and avoiding inflationary financing to support the banking sector will be critical to keeping inflation under control.

Real wage growth among low-paid workers remained negative in FY26. Non-food inflation above 9% and higher energy and utility costs continued to erode workers' purchasing power.

What economists recommend

Zahid Hussain said banking, energy, trade and logistics, ports, transport and law and order are among the sectors currently holding back economic activity.

However, the energy crisis and high non-performing loans are not new problems, he said. "Therefore, the first task is to stop further deterioration. The banking system, energy supply and other basic business conditions must improve to revive investment."

The economist said weak growth is limiting job creation, which in turn is constraining wage and income growth. Prolonged high inflation is further eroding people's purchasing power.

"Growth is weak, employment is limited, incomes are not rising and inflation remains high. This combination reduces people's real purchasing power," he said.

Reducing poverty requires more than social assistance, he said. It needs addressing fundamental weaknesses in growth, investment, employment, banking and energy supply.

Fahmida Khatun said, "Private-sector investment remains weak as the cost of doing business is high and global geopolitical tensions have increased uncertainty," she said.

Slow implementation of public investment and weaker export demand are also holding back the economy, while prolonged low growth has contributed to persistent poverty, she said.

"Prolonged inflation has eroded people's purchasing power, particularly among low-income households, while wage growth has not been sufficient to offset rising prices," Fahmida said.

To address the issues, she said viable banks should have restructuring plans, professional management and clear deadlines, while non-viable banks should undergo orderly resolution to protect depositors and minimise the cost to taxpayers.

"Loan recovery must improve, and large defaulters shouldn't receive special treatment. Stronger governance, transparent reporting, and accountability for lending decisions are also essential," added the economist.

2nd lowest growth in South Asia

The World Bank, in its "South Asia Economic Update", said the region's growth has proved more resilient than expected despite elevated energy prices.

India is forecast to lead the region, with growth of more than 7% in FY27, supported by robust domestic demand and strong exports despite global headwinds.

Bhutan is projected to be the region's second-fastest-growing economy, with growth of 6.7%. Sri Lanka's GDP is projected to grow 4.2%, although its recovery remains uneven.

Maldives' economy is expected to grow 2.2% in 2026 as tourism proves more resilient than expected. Its 2027 growth forecast, however, has been cut by 3.1 percentage points to 4.1%.

Pakistan's growth is projected to remain broadly stable at 3.8% in FY27, as elevated commodity and energy prices weigh on services and industry.

Nepal's growth is projected to slow to 3.7%, as flood damage to energy infrastructure weighs on industry, while disruptions to trade, transport and tourism constrain services.

Afghanistan, the region's slowest-growing economy, is projected to grow 3.3% in FY27.

Bangladesh's social protection framework faces an unprecedented test as rising national poverty, persistent food inflation, and deteriorating real wages leave millions of vulnerable households exposed to severe economic shocks, according to the World Bank's latest Bangladesh Development Update.

The report was released at a press conference in the capital on Tuesday.

With state fiscal space narrowing sharply due to a historic drop in the tax-to-GDP ratio, the global lender has warned that nearly 62 per cent of the country's poor remain entirely excluded from primary government safety net schemes, underscoring the urgent necessity of structural targeting reforms.

The expansion of household distress comes on the back of four consecutive years of climbing national poverty rates, which reached an estimated 22.5 per cent in the last fiscal year, pushing approximately 2.1 million additional citizens below the poverty line.

The economic downturn has been compounded by stagnant job creation and severe employment contractions in industrial and service sectors, forcing a significant portion of the workforce into low-productivity agricultural labour.

Female workers have borne the brunt of this shift, with all net new female employment since 2016 absorbed by agriculture, alongside falling real earnings for low-paid workers across the country.

Furthermore, families in the bottom fifth of the population now dedicate nearly 60 per cent of their total income solely to purchasing food, leaving them without any financial buffer against external price hikes or unexpected income disruptions.

Despite allocating roughly 3.5 per cent of gross domestic product towards social protection and broad-based subsidies, public welfare spending remains heavily distorted by regressive distribution mechanisms.

The World Bank analysis reveals that only 54.4 per cent of individuals in the poorest quintile directly receive social assistance from government programmes, whereas 31 per cent of households in the wealthiest quintile continue to access safety net disbursements.

This misallocation extends to monetary value, with recipients in the poorest fifth collecting an average of Tk 7,140 annually, compared with Tk 10,472 received by individuals in the richest fifth.

Overall, roughly half of the nation's poorest citizens receive no state welfare support whatsoever, leaving them acutely exposed to inflationary pressures.

The imbalance is further exacerbated by untargeted state subsidies in energy and agriculture, which strain the public exchequer while disproportionately benefiting higher-income groups.

In the power sector, electricity price supports are linked directly to consumption volumes, allowing the richest 20 per cent of households to capture 33 per cent of total subsidy allocations, compared to just over 15 per cent reaching the poorest quintile.

Bangladesh Bank has summoned the operator of the Q-Cash network and ordered it to restore disrupted card and switching services after technical upgrades, system migration and maintenance work affected digital transactions at several banks.

The disruption began around 9pm on 4 October, according to a Bangladesh Bank press release issued today (6 October).

The central bank said services linked to cards, ATMs and the National Payment Switch Bangladesh (NPSB) had been affected, causing inconvenience to customers of banks using the Q-Cash network.

However, Q-Cash network services resumed at 10pm today.

Q-Cash is operated by IT Consultants PLC.

Bangladesh Bank said it was taking necessary measures to protect customers' interests and maintain the continuity of financial transactions.

The central bank has already summoned the management of IT Consultants PLC and instructed it to restore all card-related services, including switching, as soon as possible.

It said it was also working to restore the affected services at the earliest opportunity.

Transactions through banks directly connected to NPSB remain normal, according to Bangladesh Bank.

Services provided by mobile financial service (MFS) operators and other payment service providers are also functioning normally.

Other central bank-operated payment systems — including the Bangladesh Automated Clearing House Payment System (BACPS), Bangladesh Electronic Funds Transfer Network (BEFTN) and Real Time Gross Settlement (RTGS) — are continuing without disruption.

Bangladesh Bank has advised customers to follow instructions issued by their respective banks and use alternative payment channels where necessary.

Finance Minister Amir Khosru Mahmud Chowdhury today (Tuesday) expressed his confidence that the National Board of Revenue (NBR) would be able to meet its revenue collection target for the current fiscal year.

"We hope we will be able to meet the target that has been set, Insha Allah. The NBR officials are geared up, energized and working hard," he said, BSS reports.

The Finance Minister was responding to the questions of journalists after holding a meeting with National Board of Revenue officials at the NBR's Agargaon headquarters today.

Asked about the decline in VAT collection during the first one and a half months of the current fiscal year compared with the same period last year, Khosru said it was too early to draw conclusions as taxation is a gradual growth.

"Judgment cannot be made within one and a half months. There can be some problems at the beginning. Growth comes later, gradually," he said.

The finance minister also said the problems affecting revenue collection have existed for a long time and cannot be resolved overnight.

"Tax collection is slowly picking up. We have to encourage people to pay taxes. There have been problems on both sides for a long time. We are trying to ensure that people can pay taxes without being harassed," he said.

"It's working reasonably well and improving, although there is still room for further improvement," he added.

About the latest growth projections by the World Bank, Amir Khosru Mahmud Chowdhury has responded with a "wait and see" approach to the World Bank's forecast that Bangladesh's GDP growth will slow to 3.4% in FY27.

"Wait and see," Khosru replied.

In its latest South Asia Economic Update, released today, the World Bank revised down Bangladesh's GDP growth forecast for FY27 by 1.2 percentage points to 3.4%. Its forecast for FY26 was also revised down by 0.5 percentage points to 3.4%.

The World Bank projects South Asia's growth to rise to 6.9% in 2026 before moderating to 6.7% in 2027.

Bangladesh's trade deficit widened 29% year-on-year to $3.82 billion in the first two months of the current fiscal 2026-27 as import payments rose faster than export earnings, Bangladesh Bank data showed.

The trade deficit was $2.96 billion in July-August of the previous fiscal year.
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Imports rose 12.1% year-on-year to $12.20 billion in July-August, while exports increased 5.8% to $8.38 billion, according to the central bank data.

Despite the widening trade gap, the country's current account surplus more than tripled to $599 million during the period, from $197 million a year earlier, largely supported by strong growth in workers' remittances.
Infograph: TBS
Infograph: TBS

Remittance inflows increased nearly 19% to $5.83 billion in the first two months of FY27. Remittance growth was 16% during the corresponding period of the previous fiscal year.

BB data also shows gross official foreign exchange reserves stood at $37.35 billion at the end of August, equivalent to $32.44 billion under the IMF's BPM6 accounting standard, providing roughly 5.2 months of import cover.

Higher petroleum import costs widen trade gap

The rise in import payments was driven largely by a sharp increase in petroleum imports and higher costs of industrial raw materials.

Petroleum imports more than doubled to $2.49 billion in July-August of FY27, from $1.25 billion in the same period a year earlier.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the increase in petroleum import costs was the main reason behind the rise in overall import expenditure.

"Petroleum import expenditure increased by more than 115%. This was the main reason behind the 12% increase in import expenditure," he told TBS.

He added that capital machinery imports did not contribute to the increase in import expenditure and that some pressure was visible in the balance of payments.

Ready-made garment exports, the country's main export earner, rose 5.3% to $7.49 billion during the period.

Financial account remains under pressure

Economists said the improvement in the current account was not enough to ease pressure on the country's overall external balance, as the financial account recorded a larger outflow.

Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue, said Bangladesh Bank data showed that the trade gap was widening because imports were growing faster than exports, while strong remittance growth helped increase the current account surplus.

"But the financial account recorded a larger outflow, due to which the deficit widened," she said.

Zahid Hussain said the widening financial account deficit had contributed to a larger deficit in the overall balance of payments.

He attributed the deterioration mainly to a 61% decline in medium- and long-term loan disbursements and a negative position in trade credit.

Medium- and long-term loan disbursements fell 60.9% year-on-year to $291 million in July-August, while amortisation payments stood at $572 million.

Lower foreign project financing

Bangladesh also used less foreign financing for development projects during the period, although the available data do not establish that delays in project implementation were the main reason.

Project-related foreign fund utilisation can be affected by delays in project work, approvals, tendering and procurement, as well as unmet conditions attached to some loans.

Fahmida said the government should review delayed projects with each development partner, identify specific obstacles, resolve them promptly and publish regular updates on project progress and fund disbursement.

She also called for policies to strengthen export earnings and diversify products and markets, while urging greater efforts to bring remittances through formal channels.

Bangladesh Bank is set to hold a reverse auction tomorrow to buy back two-year government treasury bonds worth Tk 6,666.58 crore.

The central bank announced the move in a press release issued on October 5.

According to the press release, the auction involves treasury bonds issued on November 6, 2024, which carry a coupon rate of 12.30 percent and are scheduled to mature on November 6, 2026.

The buyback will be conducted following a multiple-price-based reverse auction procedure, with the settlement date fixed for October 12, 2026.
Primary dealer (PD) banks can submit bids directly, while non-PD banks and finance companies holding current accounts with Bangladesh Bank can participate through linked PDs.

Participating entities will be allowed to submit competitive bids for their own accounts, as well as competitive or non-competitive bids on behalf of their clients.

Bids specifying the desired price per Tk 100 face value and the quantity of bonds offered must be submitted electronically via the central bank’s Financial Market Infrastructure (FMI) system between 10am and 12pm on the auction day.
Manual submissions in sealed covers will be allowed under special circumstances with prior approval.

The government is buying back the bonds in order to ensure proper debt repayment management and avoid repaying a large amount at once when the bonds mature.
It will provide investors with an additional liquidity window to rebalance or exit their Treasury holdings.

Bangladesh received US$513 million in workers’ remittances during October 1-5, 2026, marking a 21.4 percent increase from US$422 million received during the corresponding period of 2025.

The country received US$109 million in remittances on October 5 alone, according to Bangladesh Bank data.

Meanwhile, cumulative remittance inflow since July 2026 stood at US$9.104 billion as of October 5, compared with US$8.008 billion during the same period of the previous year, registering a 13.7 percent year-on-year growth.

Finance Minister Amir Khosru Mahmud Chowdhury has responded with a "wait and see" approach to the World Bank's forecast that Bangladesh's GDP growth will slow to 3.4% in FY27.

Journalists asked the finance minister about the projection after a meeting with National Board of Revenue officials at the NBR's Agargaon headquarters today (6 October).
Bangladesh GDP projected to grow at 3.4%, second lowest in South Asia

"Wait and see," Khosru replied.

He left the NBR without making any further comment on the World Bank's forecast.

In its latest South Asia Economic Update, released today, the World Bank revised down Bangladesh's GDP growth forecast for FY27 by 1.2 percentage points to 3.4%. Its forecast for FY26 was also revised down by 0.5 percentage points to 3.4%.

The World Bank said Bangladesh's weaker outlook reflects a more prolonged drag from energy shortages, weakness in the banking sector, subdued credit growth and tighter fiscal constraints than previously anticipated.

World Bank says Bangladesh economic rebound falls short, cuts growth outlook

Export growth is also expected to remain weak, with ready-made garment exports facing weaker demand in the European Union in the short term and increased competition in the longer term.

The World Bank projects South Asia's growth to rise to 6.9% in 2026 before moderating to 6.7% in 2027.

The 3.4% projection is the lowest among the South Asian economies covered in the World Bank's latest regional outlook. The report no longer groups Afghanistan and Pakistan under South Asia.

'Judgment cannot be made within one and a half months'

Asked about the decline in VAT collection during the first one and a half months of the current fiscal year compared with the same period last year, Khosru said it was too early to draw conclusions.

"Judgment cannot be made within one and a half months. There can be some problems at the beginning. Growth comes later, gradually," he said.

The finance minister also said the problems affecting revenue collection have existed for a long time and cannot be resolved overnight.

"Tax collection is slowly picking up. We have to encourage people to pay taxes. There have been problems on both sides for a long time. We are trying to ensure that people can pay taxes without being harassed," he said.

"It's working reasonably well and improving, although there is still room for further improvement," he added.

Khosru expressed confidence that the NBR would be able to meet its revenue collection target for the current fiscal year.

"We hope we will be able to meet the target that has been set. The NBR officials are geared up," he said.

Bangladesh's exports to several major Asian markets recorded year-on-year growth in the first quarter of the current fiscal year, signalling scope for further market diversification beyond traditional destinations in the United States (US) and Europe.

According to the Export Promotion Bureau (EPB), exports to China increased by 9.33 per cent to US$225.41 million during July-September of fiscal year 2026-27, compared with US$206.18 million in the corresponding period of the previous fiscal year.

Exports to the Republic of Korea rose by 7.29 per cent to US$134.55 million from US$125.41 million, while shipments to India increased by 5.44 per cent to US$510 million from US$483.71 million.

Japan also remained a major Asian destination for Bangladeshi products, with exports reaching US$399.11 million during the quarter, marginally higher than US$396.11 million a year earlier.

The figures come against the backdrop of an overall increase in Bangladesh's merchandise exports. The country's total export earnings reached US$13.09 billion in July-September, up 6.34 per cent from US$12.31 billion in the same period a year earlier, according to the EPB data.

The growth in several Asian destinations highlights the potential for Bangladesh to diversify its export markets, strengthen regional trade links and expand participation in Asian supply chains.

However, sustaining the growth will require efforts to identify products with competitive advantages, meet destination-market standards, improve logistics and facilitate access to buyers and distributors.

Talking to BSS, Export Promotion Bureau (EPB) Vice Chairman Muhammad Hasan Arif said Bangladesh needs to strengthen its presence in Asian markets by assessing product-wise performance, buyer demand and opportunities to diversify exports beyond the traditional export basket.

"China offers a large market and opportunities to explore new product categories, while India provides geographical proximity and potential for stronger cross-border commercial links," he said.

Regarding China, Hasan Arif said the EPB is emphasising product diversification to take advantage of the country's huge consumer market and growing demand.

Several Bangladeshi companies participated in the 10th China-South Asia Expo and the 30th China Kunming Import-Export Fair 2026 with EPB support, he added.

He said such participation provides exporters with opportunities to showcase Bangladeshi products, meet potential buyers and understand changing market demand.

Regarding India, the EPB Vice Chairman said the neighbouring country has huge potential for Bangladesh because of its geographical proximity and large consumer market.

"India is our neighbouring country. So, there is huge scope to expand exports in the Indian market. We are trying to resolve the barriers," he said.

He said tariff and non-tariff barriers remain major challenges to increasing Bangladesh's exports to India and stressed the need to address these obstacles.

Regarding South Korea, Hasan Arif said Bangladesh has opportunities to expand exports through product diversification and stronger business links.

Besides readymade garments, he identified potential in leather goods, footwear, jute products, home textiles, pharmaceuticals and processed food.

On Japan, he said there is also significant scope to increase exports, particularly of leather goods, footwear, jute-based products, home textiles, processed food, pharmaceuticals and light engineering products.

He stressed that quality, compliance, timely delivery and understanding market requirements are essential for success in both markets.

The EPB Vice Chairman said the bureau is facilitating exporters through trade fairs, business delegations, market exploration and promotional activities to help diversify Bangladesh's export destinations and products.

Bangladesh's GDP growth may get stuck at a low 3.4 per cent in the current fiscal year as decelerators like energy and banking-sector vulnerabilities, weak investment and persistent inflationary pressure subdue economic activity, says the World Bank.

It also lists limited tax reforms, rising current expenditure, and high domestic borrowing as hikers of fiscal pressures for the country.

The Washington-based lender, in its latest Bangladesh Development Update, on Tuesday projected the real gross domestic product (GDP) growth at 3.4 per cent in FY2026-27 for the country, a sharp downgrade from its April forecast by 1.2-percentage points.

The latest projected growth is also significantly below Bangladesh's average growth of around 5.6 per cent over the past decade, according to the WB report rolled out in its Dhaka office that stresses comprehensive reforms as a remedy.

The shocks will not only dampen the higher economic growth prospect, the poverty rate might also increase in the near term, the WB forecasts.

It expects growth to recover only modestly to 3.9 per cent in the next FY2028, provided energy- supply constraints gradually ease and the government accelerates structural reforms.

The global lender has said Bangladesh's economic slowdown has become increasingly entrenched since 2023, with persistent structural constraints weighing on investment and economic activity.

About the banking sector, the WB update says financial-sector vulnerabilities have intensified and now pose growing systemic risks.

Citing the example of higher non-performing loans (NPLs), negative 2.6-percent capital- adequacy ratio against a regulatory minimum of 10 per cent, it says even this figure is overstated-about US$17 billion in loan-loss provisioning has been deferred for undercapitalized banks.

Bangladesh Bank's uncollateralized liquidity support to weak banks stood at Tk 760 billion (US$6.2 billion) which could create "quasi-fiscal losses if the claims turn bad".

Criticized also is the reinstatement of a 4.0-percent cap on banks' interest spread in June 2026, calling it a reversal of market-based rate setting. It urges the removal of the cap, completion of asset-quality reviews, time-bound bank restructuring and an end to regulatory forbearance.

The development financier cautions that continued regulatory forbearance and liquidity support could delay the recognition and resolution of losses rather than repairing banks' balance sheets.

The banking-sector stress is also affecting credit intermediation. Private-sector credit growth has fallen to around 4.5 per cent-its lowest level in decades-while banks have "increasingly financed the government".

The weak banks restrict credit to businesses, while heavy government borrowing from banks can further crowd out private investment.

The Development Update says energy shortages have emerged as a major constraint on industrial production and investment.

Declining domestic gas production, disruptions in imported liquefied natural gas (LNG) supplies and rising energy costs have affected industrial operations, resulting in factories closure and below-capacity operation.

The World Bank has said the outlook remains subject to significant downside risks, including prolonged energy constraints and elevated global commodity prices.

"Bangladesh has become increasingly dependent on imported LNG as domestic gas production declines. The energy problem therefore represents more than a temporary supply disruption. It is increasingly becoming a constraint on industrial competitiveness, investment and potential economic growth."

In WB's view, the investment activity has softened, while exports have lost momentum.

"High inflation has reduced household purchasing power and raised business costs, while financial-sector weaknesses have undermined investor confidence," it says, adding that the limited fiscal space is also constraining public investment.

It notes that revenue mobilisation remains particularly weak. Government revenue stood at only 8.3 per cent of GDP, among the lowest levels globally, limiting the government's capacity to increase productive public spending while simultaneously supporting the banking and energy sectors.

"The combination of weak private investment and constrained public investment is, therefore, creating a major obstacle to a faster recovery."

Inflation is projected to remain elevated at 8.6 per cent in FY2026-27, before easing to 7.1 per cent in FY2027-28.

As such, the WB sees Bangladesh facing a difficult near-term environment in which weak growth and high inflation coexist.

The WB development update, however, mentions some positive developments in external sector for Bangladesh as it offers some relief.

"Strong remittance inflows and an improvement in foreign-exchange reserves have provided support to the external sector. Remittances increased 17.3 per cent to a record $35.6 billion in FY2025-26, helping contain pressure on the balance of payments."

The global lender has called for urgent reforms in the banking, energy and domestic revenue sectors to restore investor confidence and create jobs.

In the banking sector, the priority should be to identify the true condition of troubled banks, recognise losses, strengthen capital and improve governance rather than rely on repeated regulatory concessions and liquidity support.

Bangladesh needs to expand domestic gas exploration, improve LNG infrastructure, upgrade transmission and distribution systems, develop renewable energy and ensure greater transparency in energy procurement.

The World Bank has also called for stronger domestic revenue mobilisation to create fiscal space for productive public investment.

"To avert economic downturn and return to an inclusive growth path, driven by private investment, fast and bold reforms are needed in the banking sector, domestic revenue mobilisation and energy sector," said Jean Pesme, World Bank Division Director for Bangladesh and Bhutan.

Unless these bottlenecks are addressed, the projected rise in growth from 3.4 per cent in FY2026-27 to 3.9 per cent in FY2027-28 could remain a modest recovery rather than a return to the country's previous growth trajectory.

In a spotlight on the revenue sector, the WB notes that though revenue mobilisation in Bangladesh improved modestly in FY26 but remained significantly below the target.

The improvement, however, was constrained by weak industrial and income growth and subdued consumption amid elevated inflation.

The WB report also has identified low tax compliance, a narrow tax base, weak and fragmented tax administration and high tax expenditures as persistent obstacles to stronger revenue mobilisation.

Tax collection by the National Board of Revenue (NBR) reached only 82.6 per cent of the FY26 target, despite registering 12.0-percent year-on-year growth.

Overall domestic revenue is estimated to have increased from 8.0 per cent of GDP in FY25 to 8.3 per cent in FY26.

It notes that reforms to strengthen tax mobilisation remained limited during FY26. A key institutional reform-the separation of tax-policy formulation from tax administration-continued to face delays.

Progress in implementing the Tax Expenditure Management Policy Framework was also limited, with no comprehensive tax-expenditure report published during FY26 as required under the policy. It recommends stronger institutional capacity, improved compliance enforcement and greater digitisation of tax administration.

Creating fiscal space for development will require a significant increase in revenue collection from its current low level, the World Bank suggests as one of the must-dos.

It has identified a clear separation between tax policymaking and tax administration as a key priority, arguing that this would enable more strategic tax-policy design and more effective implementation.

The report recommends modernising tax administration through greater digitisation, integrated taxpayer databases and better use of data to improve compliance.

It has also called for a review and gradual phase-out of poorly targeted tax exemptions and incentives that reduce government revenue without generating sufficient economic benefits.

"A simpler VAT system with a more uniform structure, broader coverage and modern digital filing and invoicing systems could improve both efficiency and compliance."

Strengthening the administration of income, corporate and property taxes would also help broaden the tax base, reduce informality and raise revenue without increasing tax rates, according to the report.

It says direct taxes and transfers reduced inequality and poverty but regressive indirect taxes offset part of those gains.

The World Bank has said a stronger and more progressive fiscal system would require better targeting of subsidies and transfers alongside reforms to revenue mobilisation.

Heavy reliance on rental and quick-rental power plants and capacity payment arrangements created significant fiscal liabilities for Bangladesh, the World Bank said yesterday.

Despite substantial gains in generation capacity, the structural foundation of the country’s energy sector has steadily eroded over the past decade due to weak governance and policy failures, the global donor said.

The energy sector sits at the heart of Bangladesh’s development ambitions and challenges.

Domestic gas production, long the backbone of Bangladesh’s energy system, has steadily declined as mature gas fields became depleted and exploration activities failed to keep pace with rising demand, the WB said in its Bangladesh Development Update.
“The resulting supply gap was increasingly filled by imported LNG, and Bangladesh, once fully self-sufficient in natural gas in 2017, now relies on imports to meet one-third of its total gas demand.”

Over the past decade, power generation capacity expanded rapidly through a growing contribution from private-sector producers, whose share of total electricity generation stood at 43 percent, the WB said.

Although installed generation capacity improved, the sector continues to face critical constraints in fuel and gas availability, as well as transmission and distribution bottlenecks that limit the effective utilisation of available capacity, the report said.
“These structural weaknesses have contributed to the current gas and power crisis. Bangladesh now relies heavily on LNG imports to offset declining domestic gas production, making the sector vulnerable not only to international price volatility and FX pressures, but also to disruptions at a small number of floating storage and regasification units (FSRUs).”

Recent technical failures and operational disruptions affecting FSRU facilities at Maheshkhali significantly reduced gas supply to the national grid, worsening an already sizable gap between demand and available supply, it said.

“The disruption exposed the systemic risk of over-reliance on a small number of domestic gas fields and critical import nodes.”

The economic consequences of the crisis have been significant.

Reduced gas supply disrupted production across major industrial zones in Bangladesh, with many factories operating below capacity or temporarily suspending operations due to inadequate gas pressure. Power generation has also been affected, leading to widespread load shedding and periodic electricity shortages that have disrupted households and business activity, forcing many to rely on expensive diesel generators. This has prompted emergency government measures such as mandatory early closures for shopping malls and retail centres to curb peak electricity demand.

Gas shortages have also affected households and transport, with many consumers facing cooking difficulties and long queues at compressed natural gas filling stations, the World Bank said.

“The cumulative effect has been lower industrial output, higher production costs, and increased uncertainty for private investors.”

Bangladesh is yet again set to register weak economic growth of 3.4 percent in the current fiscal year, according to the World Bank, marking a fourth straight year of slowing growth amid a deepening energy crisis, financial sector vulnerabilities and global uncertainties.

The Washington-based lender expects only a slight recovery to 3.9 percent in fiscal year 2027-28, meaning Bangladesh is set to record the weakest growth among its South Asian neighbours in 2027, according to the World Bank’s latest economic update on Bangladesh and South Asia released yesterday.

The forecast is a further downgrade from the multilateral lender’s April estimate. It also marks a sharp break from past years when Bangladesh was seen as one of the region’s fastest-growing economies.

In the report, the World Bank said South Asia is forecast to accelerate from 6.8 percent in 2025 to 6.9 percent in 2026, after it revised up growth projections for most countries from its previous forecast.

According to the lender, higher energy prices have not interrupted the region’s momentum in consumption growth.

“The main exception is Bangladesh, whose forecast has been continually downgraded in recent years,” said the report.

Bangladesh’s gross domestic product (GDP) growth reached 7.1 percent in fiscal 2022 but began slowing the following year. Growth fell below 4 percent in FY25, and the World Bank now expects the weakness to continue until FY28.

The lender said the return of political stability was expected to support a rebound in economic activity. But that recovery has yet to materialise, prompting it to cut the FY27 growth forecast by 1.2 percentage points to 3.4 percent.

“This deterioration reflects a more protracted drag from energy shortages, banking sector weakness, subdued credit growth, and tighter fiscal constraints than previously anticipated. Export growth is expected to remain weak,” said the global lender.

The slowdown is particularly evident in industry. Industrial output grew by just 2 percent in FY2025-26, while the industrial sector contracted in the third quarter for the first time since the pandemic.

Private investment has also been held back by uncertainty over energy supplies and vulnerabilities in the banking sector.

Private sector credit growth fell to a 33-year low of 4.5 percent in June 2026, reflecting weak business confidence, banking sector vulnerabilities and disruptions to energy supplies.

Government investment has also fallen to a historic low amid acute fiscal constraints and implementation challenges, weighing on domestic demand in the short term and the economy’s longer-term growth potential, the report said.

The World Bank said the slowdown reflected deeper structural weaknesses that were affecting investment, employment and productivity.

“Longstanding vulnerabilities in the financial sector, chronic weaknesses in domestic revenue mobilisation, persistent energy sector bottlenecks, and declining public investment have reduced the economy’s resilience and constrained its growth potential,” said the World Bank.

ENERGY CRISIS

The energy shortage has become a major constraint on factories and businesses.

Domestic gas production has declined, while imported liquefied natural gas now meets about a third of gas demand. Failures at floating LNG import terminals in Maheshkhali reduced supplies, forcing many factories to operate below capacity or suspend production.

The gas shortages also contributed to widespread load-shedding. The government ordered shopping malls to close early to reduce peak electricity demand, while petroleum import bills more than doubled in FY2025-26.

The World Bank noted that the outlook remains vulnerable to further shocks.

“The outlook is subject to significant downside risks,” it said in its latest Bangladesh Development Update.

Banking sector vulnerabilities, it said, have intensified and pose growing systemic risks.

HIGH INFLATION

Inflation has eased from its peak but remains well above the Bangladesh Bank’s target.

Average headline inflation fell from 10 percent in FY25 to 8.7 percent in FY26 and eased further to 8.3 percent in August this year, mainly because of lower food inflation.

The World Bank expects inflation to average 8.6 percent in FY27, citing higher domestic energy prices, supply constraints and continued money supply growth.

Underlying price pressures remain elevated. Despite persistent inflationary pressures, the Bangladesh Bank reduced its policy rate for the first time in six years in July 2026 and introduced targeted liquidity support for industry.

Higher public sector credit growth and stronger foreign asset inflows also supported a recovery in broad money (M2) growth.

Real wages for low-paid workers are still falling, the World Bank said.

JOBS, EXPORTS UNDER PRESSURE

The weak economy has also hit the labour market. Conditions deteriorated further in FY26 as subdued demand and energy shortages constrained hiring, especially in industry.

Factories closed, laid off workers and reduced operating hours, while weaker industrial activity spilled over into the services and agriculture sectors.

Female labour force participation fell from 42.8 percent in 2022 to 38.4 percent in 2024, as women who lost jobs in industry and services largely left the labour force.

Exports also remain a weak point.

The World Bank said ready-made garment exports would be constrained in the short term by weak demand in the European Union and, over the longer term, by greater competition for market share.

Overall exports fell 0.2 percent in FY2025-26. A survey by the United States Fashion Industry Association, cited by the World Bank, showed that US buyers’ use of Bangladesh as a sourcing base had fallen to around 78 percent from 88 percent a year earlier.

The World Bank expects the current account deficit to widen to 0.9 percent of GDP in FY27.

Remittances, however, provided some support to the external sector.

They rose 17.3 percent in FY2025-26 to a record $35.6 billion, limiting the current account deficit to 0.3 percent of GDP and helping rebuild foreign exchange reserves to more than $32 billion by August. The taka was broadly stable.

AI OFFERS OPPORTUNITY

The World Bank’s broader South Asia outlook sees the region’s growth accelerating from 6.8 percent in 2025 to 6.9 percent in 2026, with higher energy prices yet to interrupt momentum in consumption growth.

The report also examines how artificial intelligence could create new sources of growth across the region.

AI adoption in South Asia is rising but remains well behind advanced economies.

Even so, firms are increasingly using the technology to find new markets, while governments are deploying it in areas such as weather forecasting for smallholder farmers in India and AI-assisted retinal screening in Bangladesh.

“The adoption of AI has the potential to transform South Asia’s development trajectory by boosting labour productivity, expanding export opportunities, and improving public service delivery,” said Franziska Ohnsorge, World Bank Group chief economist for Asia.

“But to reap these benefits, governments need to address the foundational gaps that hold back adoption,” she added.

Johannes Zutt, World Bank vice president for South Asia, said the region needs to develop new sources of growth to maintain momentum and create jobs.

“South Asia has demonstrated remarkable resilience in a challenging global environment. But the region needs to invest in new drivers of growth to sustain momentum and create more jobs,” he said.

Johannes added, “To seize the opportunity provided by rapidly-growing AI global value chains, countries should invest in the skills, infrastructure, and enabling environment that allow workers and businesses to harness AI’s potential.”

Sharp spikes in food and energy prices will likely become more common, the International Monetary Fund said, warning such crises drive inflation expectations higher for longer, worsen poverty and threaten economic stability.

IMF research released on Tuesday examined three decades of strategies used by governments to mitigate price surges, as well as a new economic model that accounts for the higher inflation experienced by poorer households, which spend a higher share of their budgets on daily necessities.

Large surges in prices of everyday necessities have been infrequent historically, especially at the global level, but they have been a recurring source of economic and social stress over the past five years following Russia’s invasion of Ukraine in 2022 and this year’s war in West Asia.

The new model showed a gap of 0.8 percentage point to the standard inflation measure, suggesting that 23 million more people fell below the extreme poverty line from 2021 to 2024 than previously calculated.

“In a nutshell, cost-of-living crises ... impact price stability, they reduce living standards and they worsen inequality,” said Chiara Maggi, the IMF economist who co-led the research published as Chapter 2 of the forthcoming World Economic Outlook, which will be released next week.

The IMF said last month that the global economy had weathered the energy shock caused by the war in West Asia better than feared and global economic output was still expected to expand by about 3 percent in 2026, but it cautioned that risks remained high.

That would match the IMF’s July forecast for 3.0 percent global growth, but falls short of average 3.5 percent growth in 2024 and 2025. The July forecast also assumed the war would wind down in mid-July, but Iran and the United States have both escalated their attacks in recent months, and the war has spilt over into neighbouring countries.

Inflation Expectations

The IMF said its data also showed that near- and medium-term inflation expectations increased significantly during cost-of-living crises, and they remained significantly above their pre-crisis level even three years after the onset of a crisis.

Five-year-ahead inflation expectations increased modestly initially, but remained elevated even three years after a crisis, which in turn could result in interest rate increases.

Targeted transfers were the best way for countries to protect the most vulnerable while preserving price signals, the IMF said. Actions aimed at suppressing prices, including price controls and lower consumption taxes, could cost governments three to six times more money to implement, while producer subsidies could cost 22 times as much to roll out.

Broad measures could also become less effective if many countries implemented subsidies at the same time, the IMF said. Producer subsidies, often favoured by developing countries, were particularly inefficient because they could lower costs for goods that were then exported, leaving domestic taxpayers to essentially subsidise consumers abroad, Maggi said.

Shantayanan Devarajan, a Georgetown University professor and former World Bank economist, said developing countries faced a serious crisis given the combined impact of higher oil prices, high debt levels, increased borrowing costs and the expected impact of this year’s super El Niño weather pattern.

“This is coming at a time when overall growth in low-income countries was at an all-time low,” he said in a videotaped discussion with Maggi that was also released on Tuesday. “Growth has slowed down tremendously.”

Some countries, including Egypt and Indonesia, had begun to shift away from broad subsidies toward targeted cash transfers, Devarajan said, urging countries to implement reforms aimed at boosting growth and limiting damage from the West Asia war.

“You know, they say, ‘Fix your roof when the sun is shining,’” he said. “When the crisis hits, it’s almost too late to introduce any of these measures, and the resistance is going to be huge.”

A cyber-disruption triggered by a sanctioned Russian technology vendor has severely crippled Bangladesh's digital payment infrastructure, halting card management systems and interbank transactions for millions of users since Sunday night.

The crisis stems from a row over a software migration between local payment processor Information Technology Consultants Ltd (ITCL), operator of the Q-Cash network, and Russian vendor Compass Plus.

According to the ITCL, the Russian firm installed a disruptive script on ITCL's servers after learning that it was being replaced by WAY4, an enterprise payment platform developed by Brussels-based OpenWay.
The rogue script automatically restarts ITCL's servers every eight hours, wiping out routing tables and shutting down processing capacity across the network.

"When we identified the issue, we immediately alerted bKash and all our partner banks," Kazi Saifuddin Munir, Managing Director and CEO of ITCL, told The Business Standard yesterday (6 October).

He said customer data remains secure, adding, "After Bangladesh Bank's intervention, we expect services to resume by 10pm Tuesday [yesterday]."

The dispute escalated after the ITCL notified Compass Plus in August of its intention to phase out their platform over a 12-to-18-month transition period. In response, Compass Plus allegedly threatened to cut off technical support and demanded an immediate $1.5 million migration fee, alongside advance payment guarantees backed by Bangladesh Bank.

Central bank reaction

The central bank intervened on Monday, attempting to resolve the standoff through discussion involving the vendor and the ITCL. However, BB officials expressed displeasure with ITCL's decision to shut down systems without prior notice.
Cenbank summons Q-Cash operator over disrupted services

"This is clearly a technical issue, but the failure to manage it instantly is causing immense suffering to cardholders," said Arief Hossain Khan, executive director and spokesperson for Bangladesh Bank.

Arief confirmed that the central bank will issue formal show-cause notices to affected member banks for abruptly suspending services. Central bank directives strictly require institutions to notify the public well in advance through national media, television, and direct text messages prior to any planned maintenance.

According to Bangladesh Bank's Payment Systems Department, ITCL was originally scheduled to execute its system migration towards the end of October.

"On Sunday evening, ITCL suddenly informed us that they had to take the service offline immediately," a central bank official stated. "While they claimed emergency circumstances forced their hand, taking critical payment infrastructure offline without advance notice violates the regulatory framework."

Severe industry and consumer impact

ITCL provides primary payment processing and gateway infrastructure to 33 commercial banks in Bangladesh, managing core capabilities for National Payment Switch Bangladesh (NPSB), ATMs, Point of Sale (POS) terminals, Cash Recycling Machines (CRMs), and Internet Banking Fund Transfers (IBFT).

Industry estimates indicate that ITCL powers approximately 70% of the country's banking-card transactions.

According to a notice on ITCL's website, the maintenance period was logged from 9pm on Sunday (4 October) to 12pm on 10 October. The sudden outage left millions of retail consumers stranded at restaurants, merchant outlets, and ATMs nationwide, unable to execute basic transactions or check account balances via mobile apps.

Member banks have voiced strong frustration over the reputational damage caused by the abrupt shutdown.

"ITCL informed us on Sunday evening, the very day they pulled the plug. We weren't even given a single day to notify our customers," said Mahfuzur Rahman, chief financial officer of Trust Bank. "It was an utterly unprofessional move that destroyed customer trust across all member banks."

Mahfuzur noted that while Trust Bank's debit cards remain functional on international Visa and local NPSB networks, its credit cards, prepaid cards, and Q-Cash ATM network remain entirely deadlocked.

Bangladesh could unlock an import-substitution opportunity worth nearly $100 million by properly processing and recycling tannery solid waste (TSW) into value-added commercial materials, according to a recent policy paper by the Business Initiative Leading Development (BUILD).

The country currently imports around $95 million worth of products that could potentially be produced domestically from underutilised tannery waste, the paper said.

Presenting the keynote at a policy dialogue in the capital today (5 October), BUILD CEO Ferdaus Ara Begum said the Savar Tannery Industrial Estate generates approximately 84,000 tonnes of TSW annually, of which 60-70% consists of chrome-free beam house trimmings and fleshing that could be processed into gelatin, collagen, protein meal and tallow.

Referring to the study, Ferdaus Ara said recovered tannery waste should be recognised as a secondary industrial raw material. Commercial bio refineries and SME-level tallow extraction units could potentially substitute around $100 million worth of annual imports of gelatin, glue, shoe soles and poultry feed additives, she said.

Speaking as the chief guest at the "Waste into Resource: Tannery Solid Waste (TSW) Byproduct Entrepreneurship Model" dialogue, jointly organised by BUILD and The Asia Foundation at a city hotel, Ministry of Industries Additional Secretary Smriti Karmakar said tannery waste should not be viewed merely as an environmental or river-pollution concern but as an economic resource that can generate new products and businesses through technology, investment and entrepreneurship.

"We should not see tannery waste only as a problem or as a waste management issue. We can look at how, through technology, investment and entrepreneurship, it can be used as a raw material for new products and businesses," she said.

Abul Kashem Khan, chairperson of BUILD, said effective TSW management could diversify exports, attract foreign direct investment and generate revenue. Foreign investors are committing capital to byproduct projects but face severe raw-material shortages, underscoring the need for stronger coordination among government agencies, development partners and the private sector.

In the panel discussion, moderated by Sharifa Khan, former alternate executive director of the World Bank and former senior secretary of the Economic Relations Division, Mohammed Abu Eusuf, professor at Dhaka University and executive director of RAPID, called for a dedicated TSW policy covering coordination, compliance, financing and better-functioning slaughter houses.

Mizanur Rahaman, general secretary of the Bangladesh Tanners Association, proposed dedicated processing facilities and said no factory in the Savar Tannery Industrial Estate is currently Leather Working Group (LWG) certified.

Sajjad Hossain Khan of The Asia Foundation stressed modern technology, formalising informal waste aggregators and stronger governance to develop a circular value chain.

Bangladesh and other South Asian countries need stronger technological cooperation, long-term planning, investment and domestic energy exploration to ensure energy security while moving towards a cleaner energy system, experts said.

Speaking at a strategic discussion titled "Energy Security in an Age of Transition: From Ambition to Implementation" of Bay of Bengal Conversation 2026 yesterday (5 October), they said renewable energy ambitions would remain difficult to achieve without major investment in infrastructure, technology and regulatory reforms.

M Tamim, vice chancellor of Independent University, Bangladesh, said financing and capital availability remain major challenges for energy infrastructure development.

"Whenever we talk of infrastructure for energy, there is a question of finance and absence of capital," he said, calling for greater regional cooperation and for South Asian countries to take control of their own energy future.

Sanjay Kumar Bhardwaj, professor at Jawaharlal Nehru University, India, said technological cooperation was crucial for developing countries seeking to move towards green and clean energy.

"Without technological cooperation, we cannot actually move towards green and clean energy sources," he said, stressing the importance of long-term plans for sustainable energy security and economic development.

J Alexander-Brien, founder of Maritime Frontiers, Canada, said Bangladesh's energy transition would require massive infrastructure investment and greater focus on domestic energy resources.

"Renewables are not going to happen unless there is a massive investment in infrastructure in the country," he said, adding that Bangladesh should focus on offshore exploration to reduce dependence on overseas energy imports.

Nikki Singer, executive director of the Centre for Peace and Conflict Studies, Cambodia, moderated the session.

Japan wants Bangladesh to remove unnecessary regulatory hurdles, diversify its industrial base and create more room for foreign investment as the two countries prepare to deepen economic ties under their newly signed Economic Partnership Agreement (EPA).

Japanese Ambassador to Bangladesh Saida Shinichi made the call at the 21st annual general meeting (AGM) of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) at Lakeshore Hotel in Dhaka on Sunday.

Saida said Bangladesh’s growing focus on attracting foreign direct investment was encouraging, but sustained investment would depend on a more transparent and predictable business environment.

He stressed the need to reduce red tape, develop upstream industries and diversify the country’s industrial base while creating more employment opportunities for its young population.

His remarks came as JBCCI, which now has 391 members, began a new two-year leadership term. Kazuiki Kataoka was elected president, replacing Tareq Rafi Bhuiyan, who completed his term.

The ambassador also pointed to the EPA, signed in February, as an important milestone in Bangladesh-Japan economic relations. He expressed hope that Japanese investment proposals currently in the pipeline would materialise in the coming years.

Saida also highlighted the importance of continued high-level engagement between Dhaka and Tokyo in supporting business and investment ties.

Outgoing president Tareq Rafi Bhuiyan said the EPA could open significant opportunities for both countries, but businesses would need to prepare for its implementation. He also called for a predictable investment climate and stronger business connectivity.

Secretary General Maria Howlader said JBCCI had expanded its membership significantly and remained engaged in policy advocacy, government consultations, investment promotion and business networking during the past year.

The new president, Kataoka, said his priorities would include highlighting Japan’s contribution to Bangladesh through trade, investment and infrastructure, while making greater use of the expertise within JBCCI’s nearly 400 member companies.

The chamber also plans to place greater emphasis on sector-specific business matching, investor issue resolution, business delegations to Japan and the participation of women entrepreneurs and young business leaders.

The AGM was attended by nearly 240 business representatives, diplomats, officials and media professionals.

Bangladesh received US$8.979 billion in workers’ remittances during July 1 to October 4 of the current fiscal year (FY2026-27), marking a 16.2 percent increase from US$7.726 billion received during the corresponding period of FY2025-26.

According to the latest data from Bangladesh Bank, the country received US$388 million in remittances during October 1-4, 2026, compared with US$141 million during the same period last year, registering a 175 percent year-on-year growth.

On October 4 alone, expatriate Bangladeshis sent home US$181 million, according to the central bank data.

The continued rise in remittance inflows is expected to support the country’s foreign exchange reserves and ease pressure on the balance of payments.