The Asian Development Bank (ADB) has lowered Bangladesh’s economic growth forecast, projecting the country’s gross domestic product (GDP) to expand by 3.7 per cent in fiscal year (FY) 2026 and 4.5 per cent in FY2027.

The revised projections were published in ADB’s Asian Development Outlook (ADO) July 2026, released on Thursday, UNB reports.

The latest forecast reflects weaker export performance, sluggish private investment, elevated energy costs, persistent inflation, and a more challenging external environment.

“Bangladesh’s economy continues to show resilience amid a difficult global and domestic environment, supported by strong remittance inflows and steady services activity,” said Akira Matsunaga, Deputy Director (Officer-in-Charge) of ADB’s Bangladesh Resident Mission.

He said sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance, and address energy and infrastructure constraints would be critical to supporting a stronger and more inclusive recovery.

Such reforms would also help attract greater private investment, create quality jobs, and strengthen the country’s economic resilience, he added.

ADB expects inflation to remain high at 9.0 per cent in FY2026, unchanged from its April forecast, as recent increases in domestic petroleum, gas, and electricity prices continue to feed through to transport, utility, and other consumer costs.

Inflation is projected to ease slightly to 8.8 per cent in FY2027, higher than the 8.5 per cent forecast in April, owing to second-round effects from higher energy and transport costs, exchange rate pass-through, and persistent food and services inflation.

The report said economic growth in FY2026 would be supported by strong remittance inflows, steady expansion of the services sector, and targeted credit easing measures for priority sectors despite an overall tight macro-financial environment.

However, it noted that high inflation continues to erode household purchasing power and restrain private consumption, while weak exports and moderate import growth indicate subdued external demand and sluggish private investment.

On the supply side, export-oriented manufacturing is expected to remain under pressure from high energy prices, weak global demand, and structural bottlenecks. Agriculture also faces risks from fertiliser shortages, although the services sector is likely to support growth through remittance-backed household spending.

For FY2027, ADB expects moderate inflation, simplified business regulations, improved governance, tax administration reforms, and continued remittance incentives to support stronger consumption and investment.

Nevertheless, vulnerabilities in the banking sector, energy shortages, and weak competitiveness are expected to keep economic expansion gradual.

ADB also warned of significant downside risks to the outlook.

It said any further escalation of the conflict in the Middle East could push up global energy and shipping costs, intensify external pressures, weaken growth through higher inflation, and reduce remittance inflows.

The report added that higher global oil prices could widen Bangladesh’s import bill and increase fiscal pressure through larger energy subsidies, while higher tariffs, broader trade restrictions, or weaker growth in major economies could further dampen export demand and prolong weakness in the manufacturing sector.

Persistent exchange rate pressures, tight external financing conditions, and climate-related shocks also remain key risks to the country’s economic outlook.

Small and medium enterprise owners in Dhanmondi and Mohammadpur have demanded key policy reforms, including extending trade license validity to five years, lowering real estate taxes, and easing import logistics - to mitigate the rising cost of doing business.

Local entrepreneurs raised concerns over domestic trade challenges and liquidity constraints at an exchange of views "Improving the Overall Local Business, Trade and Investment Environment" organised by the Dhaka Chamber of Commerce & Industry yesterday.
Dhaka Chamber President Taskeen Ahmed highlighted that administrative hurdles, ambiguous tax rules, energy shortages, and mandatory early shopping mall closures by 7pm are severely curbing sales turnover.

Praising Finance Act 2026 initiatives, he warned that high government bank borrowing risks crowding out private sector credit.

Jonayed Kabir Sohag, chief revenue officer of Dhaka South City Corporation, pledged zero tolerance against municipal service harassment.

Regarding security, Md Tareq Zubair, deputy commissioner (crime) at Dhaka Metropolitan Police, highlighted active drives against extortionists and ongoing AI-based traffic management expansion under a "Smart Policing, Smart City" initiative.

Tax officials noted supportive measures, including quarterly VAT returns to preserve working capital and extended tax exemptions for renewable power through 2035.

Participating entrepreneurs also urged policy support for digital marketing, tax cuts on real estate signing money, expedited container clearance at the Dhaka Inland Container Depot, and easier LC access for new ventures.

The event concluded with the chamber awarding membership certificates to 39 newly enrolled business establishments.

Bangladesh retained its position as the second-largest apparel supplier to the United States in the first five months of 2026, despite a dip in shipments, as American buyers continued to pivot away from China, official data showed.

According to the US Office of Textiles and Apparel (OTEXA), Bangladesh's garment exports to the US fell 8.1% year-on-year to $3.25 billion during the January-May period. However, the drop outperformed the overall US apparel import market, which contracted by 9.3%.

Vietnam extended its lead as the top supplier to the US, with exports rising 1.5% to $6.39 billion. Meanwhile, shipments from China plunged 42.8% to $2.80 billion, signaling an accelerating shift in global retail supply chains driven by US tariffs and diversification strategies. In volume terms, China's shipments sank nearly 30%.
Indonesia and Cambodia were among the biggest beneficiaries, recording growth of 5.5% and 14.9%, respectively, while India's shipments dropped 26.4%.Although Bangladesh maintained its market ranking, the figures indicate the country has yet to capture a significant share of the orders shifting away from China, with regional competitors expanding faster.The latest monthly data, however, showed a more encouraging sign. Bangladesh's exports to the US increased 6.0% in May from a year earlier, compared with a 2.8% rise in total US apparel imports, indicating demand may be recovering after a weak start to the year.In volume terms, Bangladesh shipped 1.09 billion square metre equivalents (SME) during the January-May period, down 6.2%, while its average unit price slipped 2% to $2.99 per SME, suggesting exporters largely maintained pricing amid softer demand.China suffered a dramatic collapse, both in value and volume. China saw nearly a 43% drop in value and nearly 30% in volume as the country continues to lose market share rapidly, largely because of US tariffs and sourcing diversification.

Indonesia rose as a big challenger as the country recorded 5.49% growth in value and over 13% in volume. While Cambodia emerged as the fastest-growing apparel exporter to the US as the country achieved nearly 15% in value growth and over 18% in volume growth.

Price comparison:

Bangladesh's garment export prices to the US market remained stable despite weaker demand, hinting exporters largely avoided deep discounting to retain orders.

The average unit price of Bangladesh-made apparel slipped 2% year-on-year to $2.99 per square metre equivalent (SME) during January-May 2026, compared with the global average of $3.14.

OTEXA data shows Bangladesh continued to command higher prices than China ($1.43), Pakistan ($2.59) and Cambodia ($2.91), but trailed Vietnam ($3.39), India ($3.41), Honduras ($3.64), Indonesia ($3.77) and Mexico ($4.45).

China recorded the lowest unit value among major suppliers, reflecting its focus on lower-priced, high-volume products, while Mexico maintained the highest average price, supported by its proximity to the US market and a greater share of value-added apparel. Bangladesh's relatively stable pricing indicates that the decline in exports was driven more by lower shipment volumes than by price erosion.

An inspection team from the Dhaka Stock Exchange (DSE) recently visited the factory premises of AFC Agro Biotech Limited only to find its production and operations completely shut down.

The premier bourse published this finding on its website on Thursday.

According to existing securities laws, listed companies are legally obligated to immediately inform their investors and the regulators if factory operations are suspended.

However, AFC Agro Biotech failed to provide any such material information to the stock exchange regarding its closure.

Following this production halt, the total number of non-operational listed firms on the DSE has risen to 34.

The agro-based bio-pharmaceuticals and bio-chemicals producer has been plagued by operational and financial delays. AFC Agro last published its financial statements for the 2021-22 fiscal year, during which its board recommended a meager 0.50% cash dividend.

For that fiscal year, its earnings per share (EPS) stood at Tk0.22, up from Tk0.15 in the previous year, while its net asset value per share (NAVPS) was recorded at Tk18.19 as of 30 June 2022. In the preceding 2020-21 fiscal year, the company paid a 0.50% cash dividend solely to general investors, excluding sponsor-directors.

Adding to the regulatory non-compliance, the company has also stopped submitting its mandatory monthly shareholding reports since March 2024. According to its last submitted report from February 2024, sponsor-directors hold a 27.84% stake, institutional investors own 34.11%, and general investors hold the remaining 38.05% of its 11.52 crore total shares.

The company's financial distress was evident earlier in 2020 when the Bangladesh Securities and Exchange Commission (BSEC) permitted AFC Agro to issue a Tk100 crore non-convertible zero-coupon bond to repay bank loans and secure working capital. However, BSEC sources revealed that the company completely failed to raise the funds due to a total lack of bond subscriptions.

Alarmingly, AFC Agro's sister concern, Active Fine Chemicals Limited, is facing an identical fate. A prior DSE investigation team found Active Fine's factory closed as well. Once celebrated as the country's pioneer local producer of active pharmaceutical ingredients (APIs) with immense potential for the booming drug sector, Active Fine Chemicals has been in a steady decline and has failed to publish any financial disclosures since March 2023.

State-owned and listed Eastern Lubricants Blenders PLC has partnered with the authorised Bangladeshi distributor of US-based Ergon transformer oil as part of its strategy to diversify into higher-value speciality products.

According to a price-sensitive information (PSI) disclosure today (11 July), Eastern Lubricant signed a one-year agreement on 9 July with Premier Petroleum Products & Lubricants Limited (PPPLL), Ergon's authorised distributor in Bangladesh.

Under the agreement, the two companies will jointly market, sell and distribute Ergon-brand transformer oil to government organisations across the country.
The company's share price rose 0.94% to Tk1,889 on the Dhaka Stock Exchange on Saturday.

Transformer oil is a specialised insulating and cooling oil used in electrical transformers to dissipate heat and provide electrical insulation, helping improve the safety, efficiency and lifespan of transformers. It is widely used in power generation, transmission and distribution systems.

The company said the partnership would enable it to supply internationally recognised transformer oil to government institutions, strengthen its position in Bangladesh's specialised lubricant market, and support its broader expansion strategy.

A subsidiary of the Bangladesh Petroleum Corporation (BPC), Eastern Lubricants is the country's only state-owned lubricant manufacturer, producing, blending, marketing and distributing automotive, industrial, marine and specialised lubricants.

The company has been seeking to diversify beyond conventional lubricants in recent years. Industry observers view the Ergon partnership as a significant step towards that goal.

Market analysts said demand for transformer oil is expected to grow steadily as Bangladesh expands its electricity transmission and distribution network. Major public utilities, including the Bangladesh Power Development Board, Power Grid Bangladesh PLC, Bangladesh Rural Electrification Board and power distribution companies, require transformer oil to operate and maintain electrical equipment. Securing supply contracts with these organisations could support the company's revenue and long-term growth.

The company, however, did not disclose the agreement's financial value, expected sales volume or potential impact on earnings.

Earnings rise, cash flow weakens

Easter Lubricant also reported stronger financial performance for the first nine months of the current fiscal year.Earnings per share (EPS) rose to Tk28.64 in the July 2025-March 2026 period from Tk17.28 (restated) a year earlier. For the January-March quarter alone, EPS increased to Tk15.61 from Tk6.62 (restated).

Net operating cash flow per share (NOCFPS), however, fell to Tk34.77 from Tk57.68, which the company attributed to higher accounts receivable and increased cash payments to suppliers for product purchases.

Meanwhile, net asset value (NAV) per share rose to Tk162.91 as of 31 March 2026 from Tk139.60 (restated) as of 30 June 2025.According to the company, higher base oil sales and increased non-operating income drove the improvement in earnings during the reporting period.

Bangladesh could see its trade with the European Union (EU) expand significantly over the next three to four years, but the country may not be fully prepared to capitalise on the opportunity, warned MA Razzaque, chairman of the Research and Policy Integration for Development (RAPID).

"Trade relations between Bangladesh and the EU are likely to deepen over the next three to four years in a way not seen over the past five decades. The question is whether Bangladesh has the capacity to absorb those opportunities," he said.

Razzaque was speaking at a seminar titled "The changing landscape of Bangladesh-EU trade relations: LDC graduation, preference erosion and intensifying competition", jointly organised by RAPID and the Friedrich-Ebert-Stiftung (FES) in Dhaka today.

He said Bangladesh has not been able to effectively present its own demands to the EU, even though the bloc has put forward extensive expectations on trade, governance and sustainability.

Referring to Bangladesh's graduation from the United Nations' least developed country (LDC) category, Razzaque said the Committee for Development Policy (CDP) had recommended a short deferment of the graduation process, which is currently scheduled for November this year.

"If the United Nations does not grant an extension, Bangladesh will graduate this year," he said.

Razzaque noted that Bangladesh currently exports around $22 billion worth of goods to the EU under duty-free access, making the bloc the country's largest export destination.

"Bangladesh definitely needs duty-free market access," he said, stressing that retaining preferential access to the EU market is crucial for sustaining the country's export competitiveness after LDC graduation.

He also highlighted the EU's broader economic contribution, saying around 30 percent of Bangladesh's foreign direct investment (FDI) originates from EU member states, while the bloc has provided about $3.4 billion in development assistance over the past five years.

Although Bangladesh does not enjoy duty-free access to the US market, Razzaque said the country still has scope to secure greater benefits from the EU market if it strengthens its competitiveness and preparedness.

"To remain competitive after LDC graduation, we will have to reduce our production costs," he said, adding that improving productivity and lowering business costs would be essential to maintaining Bangladesh's position in the EU market.

He added that the EU imports about 21 percent of its readymade garment products from Bangladesh under duty-free arrangements, while China's share of the EU apparel market has been declining, creating additional opportunities for Bangladeshi exporters.

The United States on Friday announced a major easing of export restrictions on the United Arab Emirates, removing barriers to sales of advanced AI chips and military items to the Gulf ally.

The Commerce Department said it would upgrade the UAE’s status under US export rules, a move that reflects the country’s designation as a major defense partner and its role in supporting American national security objectives, including in the war in Iran.

The department’s bureau of industry and security said it would remove the UAE from two restricted country groups, making it eligible for license-free exports of controlled military items, certain satellites and spacecraft, and dual-use goods used in oil and gas production, desalination and civil nuclear power.

The changes will also lift restrictions on support for the UAE’s drone programs.

The upgraded status “is warranted in light of the ongoing US-UAE military partnership and the UAE’s commitment to preventing the diversion and misuse of sensitive US technology,” the department said.

Separately, the department said it was approving the UAE government and certain companies to receive advanced computing items -- including AI chips and servers -- without export licenses.

This was part of a May 2025 cooperation agreement in which the UAE pledged to make matching investments in AI infrastructure in the United States.

The changes came as US tech giants and chipmakers look to expand their presence in the Gulf, where countries flush with oil and gas wealth have been investing heavily in artificial intelligence infrastructure.

The move drew sharp criticism from US Senator Elizabeth Warren, who accused the Trump administration of rewarding Emirati businesses with close financial ties to the president.

Warren, a senior Democrat on the powerful banking committee, said the arrangement was proceeding “despite reported concerns about the diversion of sensitive technology to China and other national security risks.”

The International Energy Agency said Friday that “a recovery” in global oil demand had started as supplies tentatively start moving through the strategic Strait of Hormuz again and prices ease.

“A recovery in world oil demand is underway, with consumption set to rise from its May nadir,” the IEA’s monthly report said.

The agency had in June predicted a fall in demand of 1.1 million barrels a day (mbd) through 2026 because of the Middle East war, which strangled traffic through the strait. It now expects a one million barrel a day fall.

“Global oil supply rebounded by a sharp 4.1 mbd to 98.8 mbd in June, as a resumption of flows through the Strait of Hormuz underpinned a partial recovery in Gulf production. World output was nevertheless some 9.4 mb/d below pre-war levels,” it said.

“Total Gulf oil exports, including volumes bypassing the Strait, surged by 6.5 mbd in June, to 16.1 mbd – a big jump but still well below the 24 mbd average before the war started.”

According to the IEA, world supply improved to 102.6 mbd in June and would continue to get better if there was “a swift de-escalation of renewed hostilities”.

“If transit volumes improve, oil supply will expand by 7.5 mbd next year,” the agency added.

The agency said world oil reserves increased for the first time since the US-Israeli attacks on Iran on February 28 set off the war.

It added that stocks in the richest nations had fallen as their oil imports remained low despite the rise in volumes being transported by sea.

While oil prices fell dramatically in June, fresh fighting between US and Iranian forces this week “clouds the outlook”, the IEA said.

“Renewed exchanges of fire in the Gulf this week highlight the risks of not reaching a lasting peace agreement, which is a must for the normalisation in oil markets,” it commented.

The exodus of international capital from Bangladesh's premier bourse accelerated to an alarming pace in June, as foreign investors offloaded shares worth Tk358 crore – the largest monthly net sell-off so far this calendar year.

Despite recent attempts by the central bank to simplify tax repatriation procedures, global fund managers appear to be voting with their feet, driven by deep-seated concerns over regulatory interference and the shifting direction of the country's economic management, according to the stock market analysts.

Data from the Dhaka Stock Exchange (DSE) reveals a staggering imbalance in trade, with total foreign purchases amounting to a negligible Tk6 crore against the massive sell-volume, leaving the market's international participation at a historic low.

The June outflow almost doubled the Tk161 crore in foreign sales recorded in May and was nearly three times higher than the Tk124 crore seen in April.

This persistent retreat by overseas investors comes at a time when the market is struggling to find a stable footing, as the loss of institutional foreign support drains liquidity from high-quality, large-cap scrips.

According to the DSE, portfolio investment data show that while foreign funds maintain holdings in approximately 130 firms, they actively trimmed their stakes in 19 major companies during June, while showing marginal interest in only 15 others.

The brunt of the selling pressure was felt by the market's most prestigious blue-chip entities.

BRAC Bank, long a staple of international portfolios, witnessed the most significant exit, with foreign investors offloading shares valued at a massive Tk186 crore. This move saw their stake in the bank slide from 35.89% in May to 34.69% in June.

Telecommunications leader Grameenphone followed a similar path, recording Tk42 crore in foreign sales as its international holding dropped to a mere 0.33%.

Other defensive giants such as Square Pharmaceuticals, Marico Bangladesh, and Renata also faced heavy liquidations, with sell values reaching Tk35 crore, Tk23 crore, and Tk16 crore, respectively.

Even British American Tobacco (BAT) Bangladesh and Beximco Pharmaceuticals were not spared, seeing double-digit crore outflows as global funds recalibrated their exposure to the Bangladesh market.

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

While foreign investors increased their holdings in a handful of companies like Shasha Denims, ITC, and Premier Cement, the monetary value of these entries was insufficient to offset the broader exodus.

Shasha Denims attracted Tk1.24 crore in new foreign capital, while ITC and Premier Cement saw inflows of approximately Tk1.10 crore and Tk1 crore, respectively. Marginal increases were also noted in LafargeHolcim Bangladesh, IDLC Finance, and Jamuna Oil, though analysts described these as minor portfolio adjustments rather than a renewed vote of confidence in the market.

Market experts and industry leaders point to a growing disconnect between the regulator's intentions and investor perceptions.

Moniruzzaman, managing director of Prime Bank Securities and senior vice president of the DSE Brokers Association (DBA), provided a blunt assessment of the situation. He told The Business Standard that renowned global investment firms are increasingly dissatisfied with the performance and policy direction of the central bank.

He further said, "In particular, the way Governor Ahsan H Mansur was removed has raised concerns among foreign investors about the future direction of the country's economy."

He also criticised the Bangladesh Bank's recent directive requiring commercial banks to maintain paid-up capital of at least Tk2,000 crore to qualify for dividend declarations.

According to Moniruzzaman, the move effectively bypasses the globally recognised Basel III framework and penalises shareholders of otherwise healthy banks. Furthermore, the central bank's decision to cap the interest rate spread – the gap between deposit and lending rates – at a maximum of 4% is being viewed as a regressive step.

"This type of regulatory interference destroys the confidence of foreign investors," he observed. He warned that the central bank's current trajectory is moving the country toward what is known as a "command economy."

In such a system, the central government or regulator controls all major economic decisions, ignoring the fundamental market forces of supply and demand to dictate exactly what is produced and how it is priced.

For international fund managers who prioritise market-driven dynamics and transparency, the shift toward a command-style approach makes the Bangladesh equity market appear increasingly high-risk and unattractive.

The irony of the situation is that this massive sell-off occurred despite a landmark policy shift aimed at doing exactly the opposite.

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

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

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

Shares of Daffodil Computers PLC have surged more than 308% over the past five months despite weak financial performance and the absence of any price-sensitive information (PSI), raising concerns over the stock's valuation and trading pattern.

According to data from the Dhaka Stock Exchange (DSE), the company's share price climbed from Tk41.80 on 8 February to Tk170.60 on 9 July, marking a 308.13% gain during the period.

Despite the steep rally, Daffodil Computers did not disclose any PSI that could explain the price movement. The DSE sought explanations from the company twice over the unusual rise in its share price. On both occasions, the company said it had no undisclosed price-sensitive information.

The company's financial performance also offers little support for the sharp appreciation.

According to its unaudited financial statements for the January-March quarter of 2026, Daffodil Computers reported revenue of Tk9.43 crore and a net profit of Tk23 lakh. Earnings per share (EPS) stood at Tk0.05, while net asset value (NAV) per share was Tk13.41. The company attributed the earnings decline to lower sales during the quarter.

Even so, sustained buying interest continued to push the stock higher, driving its price-to-earnings (P/E) ratio to 511.8 – one of the highest among companies listed on the country's capital market.

A P/E ratio above 500 means investors are paying more than Tk500 for every Tk1 of the company's earnings, a level that market analysts say is difficult to justify unless there are strong expectations of exceptional future profit growth.

The company had earlier announced plans to issue 32.69 million ordinary shares at Tk15 each to repay a loan from Creative International and sought shareholder approval through an extraordinary general meeting (EGM).

However, on 21 May this year, the Bangladesh Securities and Exchange Commission (BSEC) declined to approve the proposed Tk49.04 crore share issuance.

In recent months, both the BSEC and the DSE have voiced concerns over sharp price increases in fundamentally weak stocks. The regulator has instructed the stock exchanges to strengthen market surveillance and investigate unusual trading activity where share prices rise significantly without any apparent reason.

Market analysts said Daffodil Computers' price movement appears disconnected from its financial fundamentals. They argued that, in the absence of any significant business development or material disclosure, such an extraordinary rally warrants closer regulatory scrutiny and raises concerns about possible market manipulation.

They also questioned why no visible regulatory action has been taken so far, noting that only the regulator can explain the absence of enforcement if irregularities are found.

Analysts advised investors not to chase rapidly rising stocks without assessing a company's earnings, asset value, financial health and long-term business prospects, warning that investments in heavily overvalued shares carry a high risk of significant losses.

The Insurance Development and Regulatory Authority (IDRA) has won the top innovation award in the regulatory agency category at the Innovation Showcasing 2025-26 for its mobile app, Insuplaint, which digitises insurance complaint management and claims monitoring.

Finance Minister Amir Khosru Mahmud Chowdhury handed over the award to IDRA Chairman Mir Nadia Nivin at the programme organised by the Financial Institutions Division (FID) on July 6.

Launched on June 23, the app enables policyholders across the country to submit insurance claims and lodge complaints remotely without visiting the regulator's office. Users can also track the progress of claim settlements and complaint resolution through the mobile application.

The platform also allows IDRA to monitor whether insurance companies are resolving customer complaints and claims in a timely manner, strengthening regulatory oversight and improving service delivery.

As part of its broader digital transformation efforts, IDRA is also implementing Bima Tathya App, a centralised digital platform designed to verify insurance policy information. The platform is expected to simplify policy verification, prevent fake and duplicate policies, enhance public confidence in the insurance sector and support higher premium collection.

The Innovation Showcasing 2025-26 featured 25 innovation initiatives from agencies and organisations under the Financial Institutions Division. Five organisations received awards in five separate categories.

The other award-winning initiatives were Janata Bank's "Janata-Pay" under the state-owned commercial bank category, Probashi Kallyan Bank's "e-Migration Loan Service" under the specialised bank category, Bangladesh House Building Finance Corporation's automated deed return process under the financial institution category, and Palli Karma-Sahayak Foundation's GIS-based Supervision and Monitoring System under the other institutions category.

The Bangladesh Securities and Exchange Commission (BSEC) plans to overhaul listing rules to attract large, well-governed companies to the stock market by allowing them to list through direct listing after selling just 10% of their shares.

BSEC Chairman Masud Khan announced the plan today (9 July) at the "CMJF Talk" organised by the Capital Market Journalists' Forum (CMJF) in Dhaka.

Currently, only state-owned enterprises can use the direct listing mechanism, and they must float at least 25% of their shares. Masud said the rules would be amended within the next three months so that eligible private companies, including firms such as Unilever Bangladesh and Incepta Pharmaceuticals, can list by offloading only 10% of their shares.

He said the move is intended to address one of the biggest barriers to attracting quality companies to the capital market.

"The current IPO process is lengthy and cumbersome. Entrepreneurs have to submit stacks of documents and wait one and a half to two years for approval. As a result, many good companies prefer bank financing over raising funds from the stock market," he said.

The BSEC is simplifying the IPO and Public Issue Rules to make fundraising through the market faster and more efficient while maintaining regulatory oversight.

To strengthen market surveillance, the commission has delegated greater authority to the Dhaka Stock Exchange (DSE). The exchange will now be able to take immediate action against abnormal price movements and suspected market manipulation without waiting for prior approval from the BSEC. It has also been given the authority to determine circuit breakers.

The regulator is also considering suspending trading in companies that have remained non-operational for a prolonged period to improve market quality.

Highlighting the importance of institutional investment, Masud said the BSEC plans to introduce a certification system for financial advisers to help retail investors make informed investment decisions. The Mutual Fund Rules are also being revised to encourage greater participation by institutional investors.

On enforcement, he said legal reforms are underway to ensure stricter punishment for market manipulators.

"The previous commission imposed fines worth Tk1,500 crore, but only Tk33 lakh could be recovered because of legal complications," he said. The government is considering establishing special court benches for capital market cases and allowing the BSEC to file cases directly with capital market tribunals.

The BSEC is also working with Bangladesh Bank to reduce the securities settlement cycle from T+2 to T+1. Plans are also in place to strengthen the bond market by allowing bonds to be listed on the main board instead of the Alternative Trading Board, while preparations are underway to introduce a derivatives market.

The commission chairman said discussions with the finance ministry on reducing taxes on dividend income, easing restrictions on mutual fund investments and providing tax exemptions for zero-coupon bonds have been positive.

Responding to questions on recent layoffs at the DSE, he said staffing decisions are an internal matter for the exchange, though issues involving dismissed BSEC employees would be resolved this month.

The event was chaired by CMJF President Monir Hossain and moderated by General Secretary Ahsan Habib Russell.

Bangladesh's financial architecture is facing significant pressure as the state-backed contingent liabilities for underperforming State-Owned Enterprises (SOEs) and autonomous bodies reached Tk 400.12 billion in sovereign guarantees till the last fiscal year, officials say.

This massive debt pile, triggered by heavy overseas and domestic borrowing by core public sectors like Biman Bangladesh, Bangladesh Power Development Board (BPDB), and state-run fertiliser companies, has surfaced as a major macroeconomic threat, they add.

A series of independent reviews and global assessments warn that these liabilities are pushing public finances toward an unsustainable path.

A recent World Bank study jointly produced with the Policy Research Institute (PRI) reveals that structural inefficiencies, operational leaks, and subsidies to these SOEs cost the national exchequer nearly Tk 882 billion in a single fiscal year.

This massive drain accounts for roughly 1.7 per cent of the nation's gross domestic product (GDP), suffocating the budget available for critical sectors like education, healthcare, and social safety nets.

According to official sources, the concentrated accumulation of debt centres heavily on three capital-intensive sectors - power (BPDB and power plants), aviation (Biman Bangladesh), and agriculture (fertiliser/ Bangladesh Chemical Industries Corporation).

The energy and power sector stands as the single largest contributor to this fiscal risk with the highest amount of sovereign guarantees, bleeding the heaviest losses across the economy.

Driven by controversial contracts, independent power producer (IPP) capacities, and delays, the government has extended over Tk 416.9 billion in guarantees to back 16 massive projects, including the Patuakhali, Payra, and Rampal 1,320MW thermal plants.

Compounding the crisis, Energy Minister Iqbal Hassan Mahmood recently said in parliament that the state was legally bound by these sovereign guarantees, meaning the complex contracts could not be easily modified or cancelled, tying the government's hands over late payment fees and capacity charges.

The national flag carrier represents the second-highest consumer of government-backed security, officials say.

Biman Bangladesh Airlines has accumulated Tk 109.09 billion across 15 aircraft acquisition and engine procurement projects.

Despite massive state backing, the airline remains classified under "high to very high risk" due to operational mismanagement and poor revenue returns, officials say.

To insulate local farmers from international price volatility and ensure a steady domestic food supply, Bangladesh Chemical Industries Corporation (BCIC) and various state-run fertiliser entities secured Tk 64.38 billion in state-guaranteed loans, they say.

Operating on high-cost imports combined with heavily subsidised retail distribution, these corporations have been fundamentally unable to generate the independent revenues needed to clear their commercial liabilities. The Finance Division's latest audit outlines a bleak picture of the institutional stability of public assets.

Over 81 per cent of Bangladesh's SOEs are currently operating under moderate to very high levels of financial risk, the report says.

The World Bank performance index ranks Bangladesh's public enterprises significantly lower than its regional neighbours.

While state-backed entities in India recorded a positive 9.7 per cent return on assets (ROA) and Vietnam achieved an 11.9 per cent return, Bangladesh's non-financial SOEs crashed into the negative, posting a negative 5.2 per cent return on assets.

A Ministry of Finance official says amid a declining tax-to-GDP ratio, rising inflation, and tight foreign exchange reserves, the ministry has launched aggressive damage-control policies to rein in the long-term exposure like the Sovereign Guarantee Penalty Fees to disincentivise unchecked reliance on state cushions, while the government has introduced a 0.25 per cent upfront fee on all sovereign loan guarantees for state, autonomous, or government-controlled entities.Finance

A senior finance ministry official says although there was no incident of sovereign loan default by the SOEs, the government plans to amend the existing guideline to streamline the process and further strengthen the debt payment capacities of the SOEs.

While the total outstanding sovereign liabilities showed a microscopic dip by late last year due to temporary bank repayments, economists warn that without deep corporate governance changes, these Tk 400-billion-plus structural safety nets remain a critical ticking clock for the national economy.

Policy Exchange Bangladesh Chairman Masrur Reaz tells The Financial Express that although sovereign guarantees by the government of developing nations are not very unusual, the fruitful utilisation of the borrowing will have to be ensured.

If the return on the loans, where the government provides guarantees, is high, only those should be considered for providing the security, he says.Banking

He also says if the government goes for providing guarantees for the less important projects or programmes of the SOEs and autonomous bodies, the country's fiscal governance as well as the rating will be downgraded.

Although 360 companies are listed on the Dhaka Stock Exchange (DSE), just 10 account for nearly 40 percent of its total market capitalisation, showing the limited depth of the local capital market.

Analysts say the concentration leaves investors with relatively few quality stocks, discourages institutional participation and keeps the market small compared with regional peers.

Grameenphone, the country’s largest listed company, alone accounts for almost one-tenth of the DSE’s total market capitalisation of Tk 360,895 crore. It is followed by Square Pharmaceuticals and Robi Axiata. Together, the three companies make up about one-fifth of the market value.

Market capitalisation is calculated by multiplying a company’s share price by its outstanding shares. The combined value of all listed companies represents the total market capitalisation of the exchange.

Majority-owned by Norway’s Telenor, Grameenphone ended fiscal year 2025-26 with a market value of Tk 35,053 crore. It had 135 crore outstanding shares, while its stock closed the year at Tk 259.

According to DSE data, Square Pharmaceuticals ranks second with a market capitalisation of Tk 19,856 crore, followed by Robi Axiata at Tk 17,075 crore. BRAC Bank, Walton Hi-Tech Industries, British American Tobacco Bangladesh, Marico Bangladesh, United Power Generation, Berger Paints and LafargeHolcim Bangladesh complete the top 10.

“This shows that the market has a lower number of giant companies,” said Saiful Islam, president of the DSE Brokers Association (DBA). “When the market does not have enough good and big companies, investors do not feel interested in coming here.”

Weak investor participation is reflected in the sharp fall in beneficiary owner (BO) accounts, which dropped to 16.75 lakh at the end of fiscal year 2025-26 from 31.53 lakh on July 1, 2016.

Saiful said the market needed more large, fundamentally strong companies and suggested direct listing could be considered to bring some of them onto the exchange.

The shrinking pool of highly valued companies has become more visible after the removal of the floor price mechanism.

Beximco, which had a market value of Tk 10,385 crore only a few months ago while its share price remained fixed under the floor price, has since seen its valuation fall to Tk 2,763 crore as the stock declined sharply.

After the political changeover in August 2024, the company faced a series of setbacks. Its factories remained closed, it has not published financial statements for the past two years, and its share price dropped to Tk 28 on Thursday last week from Tk 110 two months earlier.
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FEW HIGH-VALUE COMPANIES

Shahidul Islam, chief executive officer of VIPB Asset Management, said Bangladesh simply has too few companies capable of achieving large market valuations.

“There are a few large business groups, but the number of truly large companies is limited,” he said.

According to him, multinational firms such as Standard Chartered, HSBC and MetLife could each have exceeded Tk 10,000 crore in market value had they operated as locally listed companies instead of branches. Unilever and several local banks also have similar potential.

Bangladesh has only five listed companies with market capitalisation exceeding $1 billion. Grameenphone is valued at $2.84 billion, followed by Square Pharmaceuticals at $1.61 billion, Robi Axiata at $1.38 billion, BRAC Bank at $1.23 billion and Walton Hi-Tech Industries at $1.08 billion.

By comparison, Pakistan’s largest listed company Oil & Gas Development Company has a market capitalisation of $5.17 billion. Six Pakistani companies are valued above $2 billion and nine exceed $1 billion.

Shahidul said many Bangladeshi businesses have failed to build sustainable, profit-driven enterprises. “One of the main reasons is that many businesses in Bangladesh are not run primarily to generate sustainable profits but rather to facilitate rent-seeking and asset extraction.”

“The banking sector, for example, should have produced several banks with valuations of this scale. Instead, widespread looting and capital flight have prevented them from reaching that level.”

“A company valuation is fundamentally based on its future profit potential. Therefore, if a company cannot generate strong and sustainable earnings, it will never achieve a high valuation,” he said.

He said highly valued companies usually shared several characteristics, including strong business fundamentals, genuine profitability, sound corporate governance, quality products and services, and a consistent ability to create value for shareholders.

“Unfortunately, many companies in Bangladesh lack this fundamental business mindset and good intentions. As a result, they fail to command high valuations.”

He also said many companies underreported profits to reduce tax liabilities, contributing both to Bangladesh’s exceptionally low tax-to-GDP ratio and its low market capitalisation-to-GDP ratio.

LARGE FIRMS REMAIN OFF THE MARKET

Prof Abu Ahmed, chairman of the Investment Corporation of Bangladesh (ICB), said Bangladesh’s largest companies remain much smaller than those in comparable economies.

“Leaving aside international comparisons, the gap is massive even when compared to our neighbours. For instance, compared to any of the top ten companies in India, our large companies are only a quarter of their size.”

“Even the pharmaceutical companies in Sri Lanka or Pakistan are much larger than ours,” he added. “Among the companies in our country, only Grameenphone might come close in size to similar telecom companies in Pakistan or Sri Lanka.”

Prof Ahmed said it is natural for the top 10 companies to account for around 40 percent of market capitalisation. However, the broader problem is the shortage of large listed companies.

“It is quite natural, nothing unusual at all, for the top ten companies in our market to contribute 40 percent of the total market share. In fact, this is a good thing in one aspect; at least these large companies adhere to rules and regulations and regularly pay out dividends, which works in favour of general investors.”

He said Bangladesh has several large and successful businesses that have chosen to remain outside the stock market.

He cited Unilever and Incepta as examples.

“A multinational company like Unilever is two to three times larger than others, and a pharmaceutical company like Incepta ranks second in terms of turnover, yet they are not on the stock exchange. It is vital for these kinds of good, large companies to enter the capital market.”

“One of the major limitations of our economy is that, to this day, not a single company from Bangladesh has become globally known. To change this scenario, our promising companies must not only maintain high quality but also grow significantly in size,” Ahmed concluded.

Five consecutive days of heavy rainfall and rough seas have severely disrupted cargo handling at Chattogram Port, slowing handling and deliveries and raising concerns among businesses over potential supply chain disruptions across the country.

The adverse weather has halted lighter vessel operations at the port's outer anchorage, preventing imported cargo from being transported to destinations nationwide.

At the same time, waterlogging at port terminals and inland container depots (ICDs) has allegedly damaged imported goods, prompting importers and customs clearing and forwarding (C&F) agents to seek compensation. However, the Chattogram Port Authority (CPA) has rejected liability, describing the damage as an "Act of God."

Business leaders warned that prolonged disruptions could lead to shortages of essential commodities, including wheat, edible oil, sugar, fertiliser, clinker and other industrial raw materials in regional markets.

The disruptions have already hit wholesale trade at Chattogram's Khatunganj, the country's largest food commodity market, where daily business has dropped sharply.

Cargo handling remains below normal

Port data show cargo handling and container delivery have remained significantly below normal levels over the past several days, although operations have gradually improved.

Container handling fell to 4,797 TEUs on 7 July, compared with the port's normal daily average of 9,000 to 11,000 TEUs. It increased to 5,230 TEUs on 8 July, 6,414 TEUs on 9 July and 7,146 TEUs on 10 July, yet well below the regular average.

Container deliveries also remained subdued. The port delivered only 2,606 TEUs on 8 July, rising to 2,820 TEUs on 9 July and 3,452 TEUs on 10 July, still well below normal operating capacity.

Businesses said the slower movement of cargo is delaying industrial production and affecting domestic distribution networks.

More than 60 ships stranded

Sarwar Hossain Sagar, president of the Bangladesh Berth Operator and Ship Handling Operators Association, said more than 60 vessels are currently waiting at Chattogram Port's outer anchorage because rough seas have prevented offshore cargo operations.

"Each idle vessel is incurring demurrage costs of around $25,000 to $30,000 per day," he said.

According to him, the industry is losing between $1.2 million and $1.5 million every day, equivalent to roughly Tk15 crore to Tk20 crore. Over the past five days, cumulative losses have exceeded Tk100 crore.

He added that between 4,000 and 5,000 workers involved in offshore cargo handling have remained without work during the suspension.

Parvez Ahmed, spokesperson for the Bangladesh Water Transport Cell, said no cargo has been transferred between mother vessels and lighter vessels for the past five days because of rough sea conditions.

"Lighter vessels are waiting in the Karnaphuli River and Patenga offshore until weather conditions improve," he said. "Cargo transportation through inland waterways will remain suspended as long as the sea remains rough."

He noted that more than 70% of the country's domestic cargo transportation moves through waterways. Continued disruption, he warned, could affect supplies in warehouses across the country, particularly for wheat, sugar, edible oil and other essential commodities.

The impact is already being felt at Khatunganj, Chattogram's largest wholesale market for food commodities.

Aminur Rahman Mintu, general secretary of Khatungonj Trade and Industry Association, said daily transactions that usually range between Tk200 crore and Tk250 crore have fallen to only around Tk30 crore because of transport disruptions and slower cargo arrivals.

He warned that if supplies from Chattogram continue to slow, rural markets may also experience shortages of essential food commodities.
Garment factories face production disruptions

The adverse weather has also affected the readymade garment sector.

SM Abu Tayyab, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said flooding in low-lying residential areas prevented many workers from reporting to factories over the past five days.

"Attendance declined significantly on at least two working days, forcing some factories to reduce production while others temporarily suspended operations," he said.

Factories will have to operate additional shifts to recover lost production, he added.

He also warned that delays in releasing imported raw materials from the port could create shortages of industrial inputs and further disrupt garment manufacturing if normal operations are not restored quickly.

He urged authorities to ensure full-scale port operations as soon as weather conditions permit.
Importers seek compensation for damaged cargo

Importers and freight operators alleged that waterlogging at port yards and several private container terminals damaged imported cargo stored in containers.

Captain Salahuddin, president of the Bangladesh Shipping Agents Association, said water accumulated because of inadequate drainage facilities inside the port.

"A considerable amount of cargo has reportedly been damaged, but no formal assessment has yet been conducted," he said.

He urged the port authority to assess losses and compensate affected importers.

Khairul Alam Sujan, former vice-president of the Bangladesh Freight Forwarders Association, said the flooding exposed weaknesses in the port's drainage infrastructure.

"Modern ports should have alternative drainage systems capable of quickly removing rainwater during extreme weather," he said.

He alleged that waterlogging occurred not only inside the port yard but also at four or five private container depots, causing damage to importers' goods.

According to him, depot operators should also share responsibility where inadequate infrastructure contributed to the losses.

Despite repeated attempts, Ruhul Amin Sikder, secretary general of the Bangladesh Inland Container Depot Association (BICDA), could not be reached for comment on the alleged damage to goods at the depots as he did not respond to calls from this correspondent.
Port disclaims liability

On Friday, the Chattogram Port Authority issued a public notice informing importers, exporters, shipping agents and other port users that it would not accept responsibility for any losses or damages caused by continuous rainfall and flooding inside port-protected areas since 5 July.

The notice described the incident as an "Act of God" and cited Regulation 199(14) of the Regulations for Working of Chittagong Port (Cargo & Container), 2001, stating that the authority is legally immune from compensation claims arising from such natural calamities.

The notice further said the CPA disclaims any liability for compensation under both the Chittagong Port Authority Act, 2022 and the Regulations for Working of Chittagong Port (Cargo & Container), 2001.

Despite repeated attempts, CPA Secretary Refayet Hamim could not be reached for comment on the alleged damage to goods at the port terminals as he did not respond to calls from this correspondent.

The stock market regulator is set to suspend trading in shares of non-operational companies as part of a broader market reform aimed at protecting investors and improving market integrity, said its new chief.

"There is no other market in the world where shares of closed companies continue to be traded," said Masud Khan, chairman of the Bangladesh Securities and Exchange Commission (BSEC), as the chief guest at the CMJF Talk, organised by the Capital Market Journalists' Forum (CMJF) at the CMJF Auditorium in the capital on Thursday.

"In many countries, [share] trading is automatically halted if a company's production remains suspended for three consecutive months." In Bangladesh, many companies have remained non-operational for 10-20 years but their shares are still transacted on the bourses.

The BSEC chairman said the commission had already delegated greater regulatory authority to the Dhaka Stock Exchange (DSE), enabling it to take real-time action against abnormal price movements and suspicious trading without seeking prior approval from the regulator.

Previously, the DSE needed approval from the BSEC before any action, creating scope for irregularities to continue for longer periods.

"We have empowered the stock exchanges to take immediate action and also given them the authority to determine circuit breakers. Such deregulation is essential for a more efficient market," Mr Khan said.

Meanwhile, the DSE on Thursday suspended trading of shares of two more closed companies-Usmania Glass Factory and Meghna Pet Industries-after detecting abnormal price surges.

Presently, the number of closed companies is 34.

The BSEC chief also outlined plans to introduce day netting for selected quality stocks to improve liquidity and attract more investors to the secondary market.

He said the proposal for introducing day netting had recently been submitted by the DSE Brokers Association. However, the facility cannot be implemented for all listed securities under the current market conditions.

"We are considering introducing day netting initially for quality companies. The facility may begin with around 30 fundamentally strong stocks," Mr Khan said.

The BSEC chief also described the revival of the mutual fund industry as one of his top priorities, saying a strong mutual fund sector is essential for the development of the country's capital market.

"Retail investors often lack the expertise to identify fundamentally sound companies. We want to encourage them to invest through professionally managed mutual funds," he said.

To improve investment decisions, the regulator plans to introduce an internationally benchmarked certification programme for financial advisers while revising the Mutual Fund Rules.

To strengthen oversight of brokerage houses, the BSEC will classify brokers into three risk categories-low, medium and high risk.

Brokerage firms labelled as highly risky will be subject to surprise inspections, the BSEC chief said, adding that investor approval through mobile phone or email before share transactions would be made mandatory to strengthen investor protection.

Responding to a question on bringing multinational and large domestic corporations to the stock market, Mr Khan said the BSEC will amend the rules to allow private companies to be directly listed.

"If they still do not come to the market, despite using public money through bank loans, we will fix a ratio. Companies exceeding that threshold will be required to list in the public interest," Mr Khan added.

The BSEC is also reviewing the margin rules and public issue rules to make the market more investor-friendly.

The BSEC chairman said the existing margin loan regulations contain too many restrictions, making it difficult for investors to access leverage. A draft of the revised rules will be published next week, after which obtaining margin loans is expected to become much easier for good investors, Mr Khan added.

As part of broader market reforms, the securities regulator is also preparing to simplify the initial public offering (IPO) process and introduce a direct listing framework to encourage more fundamentally strong and reputable companies to enter the stock market.

Mr Khan said the existing IPO process discourages quality companies from going public because of lengthy approval procedures and excessive documentation.

"Companies have to wait nearly one-and-a-half years and submit piles of documents for an IPO. Bank financing is much quicker. We have to simplify the IPO process if we want fundamentally strong companies to come to the market," he said.

The regulator also plans to expand direct listing facilities. Under the proposed framework, private companies will be allowed to list by offloading only 10 per cent of their shares, compared with the existing provision under which only state-owned enterprises can directly list by offering at least 25 per cent of their shares.

To deepen the debt market, government and corporate bonds will be shifted from the Alternative Trading Board to the main board of the stock exchanges, while preparations are also underway to introduce derivatives trading.

The BSEC is also gearing up to install T+1 settlement, reducing the settlement cycle from T+2. Bangladesh Bank is currently working with the commission on the implementation framework.

To strengthen market surveillance, Mr Khan said an artificial intelligence (AI)-based monitoring system would be introduced within a year. The DSE has already been instructed to bring the necessary changes for the new surveillance platform.

Mr Khan acknowledged that enforcement has long been one of the weakest aspects of Bangladesh's capital market.

He said the BSEC is considering filing criminal cases instead of civil suits when taking action against market manipulation, irregularities and fraud to make enforcement more effective.

The BSEC chief said the previous commissions had imposed around Tk 15 billion in penalties, of which only about Tk 3.3 million was recovered because most cases remained pending with the courts.

To address the problem, the commission is pursuing legal reforms, including the establishment of a dedicated HC bench for capital market cases and authority to file cases directly with the capital market tribunal to ensure quicker punishment for offenders.

The BSEC chairman also defended the commission's decision to remove the floor prices of two stocks despite criticism, saying the move was necessary to restore normal market functioning.

Referring to the recent regulatory initiatives, Mr Khan said the regulator had intervened to prevent the delisting of Beximco Pharmaceuticals from the London Stock Exchange in order to protect Bangladesh's reputation in international capital markets.

Responding to a query on the dismissal of DSE employees, Mr Khan said recruitment and termination of the exchange's employees fall entirely under the authority of the stock exchange and that the BSEC has no role in such administrative decisions.

However, he expressed hope that issues relating to dismissed BSEC employees would be resolved within this month.

Reflecting on his appointment, Mr Khan said he had initially declined the position because many people warned him that almost everyone who had previously served at the BSEC had left office with a damaged reputation.

"I accepted the responsibility only after receiving assurances from the government's top leadership that I would have complete independence to carry out reforms."

CMJF President Md Munir Hossain presided over the event, while General Secretary Ahsan Habib conducted the programme.

A significant amendment to Bangladesh's income-tax law has paved the way for taxing foreign digital businesses that have no physical presence in the country but serve 0.1 million or above Bangladeshi users.

The new provision, effective from July 1, targets non-resident entities-both companies and individuals -- that earn income from digital activities involving users in Bangladesh. Only the portion of income attributable to Bangladesh would be subject to tax.

Under the amendment, a non-resident entity will be deemed to have a permanent establishment (PE) in Bangladesh if it has 100,000 or more digital or online customers or subscribers in the country.

Tax officials say information on the subscriber base of such digital businesses, including online content creators and "view-based" businesses, would be obtained from the Bangladesh Telecommunication Regulatory Commission (BTRC).

However, Bangladeshi freelancers and local content creators will not fall within the scope of the new provision.

A senior tax official says view-based businesses, including YouTube channels, have grown rapidly in recent years, with many individuals and companies attracting millions of subscribers or viewers.

"The owners of such pages will be taxed under the new provision if they are non-resident entities and meet the prescribed threshold," says the official.

He adds that identifying the number of subscribers would not be difficult because subscriber counts are publicly displayed on most digital platforms.

"Bangladesh is already collecting tax at source on payments made to Google, YouTube, Netflix, Meta and other global technology companies when users pay subscription fees," he told The Financial Express.

The change has been introduced through the Finance Act 2026 by expanding the definition of Permanent Establishment under Section 2(92) of the Income Tax Act.

The amended provision now includes: "Any digital or online activity or presence in Bangladesh by a non-resident entity where such entity has 100,000 or more digital or online customers or subscribers."

Tax experts say the amendment represents one of Bangladesh's most significant attempts to bring the digital economy within the tax net by recognising a substantial digital presence even without a physical office.

Adeeb H. Khan, Senior Partner at Rahman Rahman Huq, says the measure could be viewed as a step forward in taxing digital businesses at a time when countries worldwide are struggling to determine how to tax cross-border digital activities.

"However, it could also give rise to double-taxation issues, depending on the provisions of Bangladesh's tax treaties with other countries," he notes.

Bangladesh currently has Double Taxation Avoidance Agreements (DTAAs) with 36 countries to prevent taxpayers from being taxed on the same income in both jurisdictions.

Snehasish Barua, Chartered Accountant and Partner at Snehasish Mahmud & Co., thinks the practical effectiveness of the new provision could be limited by those international tax treaties.

"Under Bangladesh's income tax law, the provisions of Double Taxation Avoidance Agreements prevail over domestic law," he says.

"Most existing tax treaties require a physical presence before a country can impose tax. Therefore, unless these treaties are amended, the new provision may not, in practice, enable Bangladesh to collect taxes from many foreign digital businesses."

He also cautions that implementing the measure without adequate research and careful consideration could create complications with Bangladesh's trading partners.

The amendment strengthens Bangladesh's legal framework for taxing the digital economy. Although the income-tax law already taxes income derived from electronic sales and digital services connected to Bangladesh, the revised definition of permanent establishment provides a stronger legal basis by treating a significant digital user base as creating a taxable presence.

The key challenge, however, will be implementation.

Tax analysts say the success of the measure will depend on whether the National Board of Revenue (NBR) can identify qualifying individuals and companies, determine the portion of profits attributable to Bangladesh, and enforce tax collection from non-resident digital businesses, particularly where tax treaty-obligations apply.

The country's premier bourse orchestrated a robust rally last week as the benchmark index successfully reclaimed the psychological threshold of 5,800 points, marking its highest level in nearly two years.

Buoyed by high-level political commitments toward capital market development and the prospect of significant regulatory easing, an aggressive buying spree by investors added approximately Tk6,000 crore to the total market capitalisation of the Dhaka Stock Exchange (DSE), said market participants.

The DSEX, the broad index of the Dhaka bourse, gained 60 points or 1.04% over the five trading sessions to settle at 5,804. This is the first time the index has closed above this level since September 2024.The blue-chip segment also mirrored this upbeat sentiment, with the DS30 index – comprising fundamentally strong companies – advancing by 15 points to settle at 2,177.The week's trading reflected a dominant bullish sentiment, as 251 issues managed to post gains against 122 that declined, while 15 remained unchanged.The primary catalyst for this sustained upward momentum was a dual dose of optimism from the highest levels of government and the regulator. Investor conviction was significantly restored after Prime Minister Tarique Rahman unveiled a comprehensive 17-point capital market reform agenda in parliament. Market participants perceived this move as a definitive signal that the government is prioritising the stability and growth of the financial sector, according to the market insiders.

Simultaneously, sentiment was further bolstered by reports that the newly appointed Chairman of the Bangladesh Securities and Exchange Commission (BSEC), Masud Khan, plans to overhaul and simplify margin loan regulations within the next fortnight. Investors expect these revisions to increase the liquidity flow and make trading more accessible for retail participants.

According to the weekly market review by EBL Securities, the indices maintained a positive trajectory for most of the week, despite a brief corrective phase mid-week. While a bout of profit-taking in recently appreciated blue-chip scrips caused a slight dip in the middle of the week, the downside was effectively checked by selective buying in momentum-driven stocks. Sentiment recovered fully in the final session as investors reacted positively to the reaffirmed policy commitments, allowing the index to finish the week higher.

Sheltech Brokerage Limited noted in its weekly review that the market's performance was largely shaped by this persistent buying interest. Although selling pressure intensified during the mid-week sessions as traders moved to lock in short-term gains, the resurgence of buyers following the prime minister's announcement and the BSEC Chairman's reform roadmap enabled the benchmark index to extend its winning streak.

The brokerage observed that while geopolitical uncertainties remain a background concern, the focus has shifted firmly toward domestic structural improvements.

Market participation remained healthy throughout the week, even though the daily average turnover saw a marginal decline of 3.49%, settling at Tk1,383 crore compared to the previous week's Tk1,433 crore.

Sector-wise participation showed that the textile sector was the most active, accounting for 18.3% of the total turnover, followed by general insurance at 11.9% and pharmaceuticals at 10.1%.

In terms of returns, the travel and leisure sector emerged as the top gainer with a 12.3% surge, followed by the jute sector at 6.3% and mutual funds at 5.6%.

In the individual scrip segment, Usmania Glass led the gainers' chart with a staggering 38.7% price appreciation, followed by Emerald Oil, which jumped 36.5%, and Renwick Jajneswar, which rose by 32.6%. Other notable performers included CAPM IBBL Mutual Fund and Phoenix Finance First Mutual Fund.

On the liquidity front, Malek Spinning, Beximco Pharmaceuticals, ITC, Beximco Limited, and BRAC Bank remained the most traded stocks, indicating sustained interest in both manufacturing and high-cap banking entities.

Conversely, the losers' list was dominated by several non-bank financial institutions and textile firms. FAS Finance faced the steepest decline, shedding 14.3% of its value, followed by Intech at 13.9% and Dulamia Cotton at 9.6%.

Bangladesh's apparel exports to the United States declined more than 8 per cent in the first five months of 2026 as weaker consumer demand weighed on imports, although a rebound in May signalled a potential recovery in export orders.

Data from the US Office of Textiles and Apparel (OTEXA) showed Bangladesh exported apparel worth US$3.25 billion to the US during January-May 2026, down 8.08 per cent from the same period a year earlier.

The decline came as the overall US apparel import market contracted sharply.

Total US apparel imports fell 9.25 per cent year-on-year to $28.78 billion during the five-month period, while import volumes dropped 9.48 per cent, reflecting softer consumer demand.

Average import prices edged up just 0.25 per cent.

Despite the weak cumulative performance, Bangladesh recorded a turnaround in May, with apparel exports rising 6.04 per cent year-on-year to $582 million, indicating improving sourcing demand.

In volume terms, Bangladesh shipped 6.21 per cent fewer garment pieces to the US market during January-May, while the average unit price declined by 2.0 per cent, underscoring continued pressure on both shipment volumes and prices.

The OTEXA data also pointed to an ongoing reshuffle in global sourcing patterns.

Vietnam, the largest apparel supplier to the US, recorded 1.46 per cent growth during the period, while Cambodia emerged as the fastest-growing major supplier with exports rising 14.9 per cent. Indonesia also expanded its apparel exports by 5.49 per cent.

By contrast, China's apparel exports to the US plunged 42.75 per cent, highlighting the continued impact of trade tensions and buyers' diversification strategies. India's exports declined 26.37 per cent, while Pakistan recorded a 12.35 per cent fall.

Cambodia also led volume growth, with shipments increasing 18.03 per cent, followed by Indonesia (13.16 per cent) and Vietnam (3.01 per cent). Bangladesh's export volume declined 6.21 per cent, while China's plunged 29.67 per cent.

Average unit prices fell across most major suppliers. China recorded the steepest decline at 18.59 per cent, followed by Pakistan (6.84 per cent) and Indonesia (6.78 per cent). Bangladesh's average unit price fell by a comparatively modest 2.0 per cent.

Mohiuddin Rubel, former director of BGMEA, said the latest figures reflected both weaker US import demand and an ongoing shift in global sourcing.

"The sharp contraction in China's exports and the continued growth of Cambodia and Vietnam suggest buyers are actively diversifying their sourcing. Bangladesh has also benefited from this trend to some extent, but the overall decline in US imports has constrained its export performance," he said.

He said Bangladesh's return to positive growth in May was an encouraging sign, but sustaining the momentum would require stronger competitiveness, shorter lead times and higher productivity.

"With China's share of the US market shrinking rapidly, Bangladesh has an opportunity to secure additional orders if it can strengthen logistics, enhance compliance and maintain competitive pricing," he added.

Rubel also expressed optimism that exports to the US market would continue to improve in the coming months as order inflows strengthened, a trend that is also reflected in Export Promotion Bureau (EPB) data.

Think of it like driving with one foot on the accelerator and the other pulling the handbrake. All you get is burnt tyres, a damaged engine, and no movement at all.

That's the direction Bangladesh's economic policy is heading. The government has announced an expansionary budget designed to jumpstart a sluggish economy, while the central bank holds the line on a bruising 10% policy rate to fight stubbornly high inflation. It's a classic macroeconomic standoff and in this collision, it is the private sector, the engine of growth, that takes the hit.
Economists say that when fiscal policy is expansionary and monetary policy is contractionary at the same time, the typical outcome is predictable: interest rates stay high, suppressing private investment; government spending crowds out private spending through the credit channel; inflation moderates, but at the cost of weaker growth than the fiscal expansion intended.

The newly elected government's first budget took an expansionary stance - cutting taxes, protecting local industries, boosting investment incentives, raising the development outlay, deregulating business processes, and expanding social protection. The message to businesses and investors: the cost of operating is lower, the environment more supportive, now is the time to invest and hire.The central bank's contractionary stance sends the opposite signal: borrowing is expensive, credit is constrained, conditions are tight.The million-dollar question is whether businesses will invest when lending rates sit at 12-14%. Businesses say they need 15-18% operating profit just to service debt but profits remain thin or nonexistent. Without that margin, investment stalls.The numbers bear this out. Private sector credit growth has stayed below 5% for months, down from the usual double digits. Many mills are shutting down for want of working capital and energy supply. Private investment as a share of GDP sits at around 21% and, per the government's own medium-term macroeconomic outlook, will stay there for the next two fiscal years. Against this backdrop, absorbing the roughly 25 lakh people entering the job market each year looks increasingly difficult.

Two legitimate priorities, one policy clash

This mismatch isn't accidental or irrational, according to Dr Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD). It reflects two genuinely competing priorities that are both legitimate given Bangladesh's current conditions: the government needs to stimulate growth through investment, while also reining in inflation.

"It's a double whammy for the government," she said. It creates a problem of policy coherence, yet an expansionary monetary policy now could have been more devastating.

Even with an expansionary fiscal stance, she said, the government must be disciplined about how public money is spent - earning real returns on that spending, and plugging leakages and corruption so investment actually pays off. She hopes fiscal and monetary policy will eventually align, and that the central bank may review its tightened stance within six to twelve months.

Dr Mustafa K Mujeri, former chief economist of Bangladesh Bank, agreed the two policies appear mismatched on the surface. But he argued that contractionary monetary policy has limited real impact on inflation in Bangladesh, since price pressures stem largely from market management and supply chain issues rather than credit conditions alone.

Still, he said the expansionary budget could work if the government channels spending into productive activity while controlling leakage and corruption. "If the government can do this, then there will be no mismatch visible but that is a tough task," he said.

How the mismatch plays out in practice

Tax cuts lower businesses' operating costs, but the interest rate environment determines the cost of the capital they need to expand. A factory owner who saves Tk50 lakh in annual taxes gains little if his working capital loan costs 14-15% and term loan repayments are eating into cash flow. For most businesses in Bangladesh right now, financing cost, not the tax rate, is the binding constraint.

The credit channel itself is broken. Private credit growth at 4.7% isn't primarily a function of high interest rates; it reflects a banking system stressed by over 32% classified loans, wary of borrower quality, and hoarding liquidity overnight rather than lending term. Bangladesh Bank's stance doesn't fix this structural problem - keeping interbank liquidity costly potentially makes it worse by discouraging lending further.

An investor weighing a new project looks at the whole environment: tax rates, energy supply reliability, regulatory ease, political stability, financing cost, and expected demand. The budget improves some of these variables; monetary policy worsens ao critical one. Whether the net effect is positive depends on which factor binds for that particular investor.

For many factories - from spinning, weaving, ceramics - energy supply is the constraint, and neither fiscal nor monetary policy touches it. For domestic-market businesses, weak consumer demand, itself partly a legacy of four years of inflation eroding real incomes - is the constraint. For new investment projects, financing cost and banking sector health are critical. The budget helps with some of these; monetary policy helps with none.

Rising government borrowing compounds the problem. The budget's NBR revenue target of Tk6.04 lakh crore is, by any honest assessment, unlikely to be met given the NBR's recent track record. When revenue falls short, as it has for years, the government borrows more from the domestic banking system to cover the gap and that borrowing competes directly with private credit for the same pool of funds. Every Tk1,000 crore the government borrows is Tk1,000 crore unavailable for private sector loans. With Bangladesh Bank keeping rates high and liquidity tight, that crowding-out effect is even larger than it would be in a looser monetary environment.

The United States in the early 1980s offers the textbook parallel: Reagan's expansionary fiscal policy - tax cuts, defence spending - collided with Paul Volcker's Federal Reserve holding extremely tight monetary policy. The result was high real interest rates, a strong dollar, a recession, and eventually lower inflation but the growth benefits of the fiscal expansion were significantly delayed and diluted.

Bangladesh's financial system is far less developed, its monetary transmission mechanism weaker, and its fiscal capacity more constrained than the US in the 1980s. But the directional logic holds. Perhaps Bangladesh's development partners have already priced this in as the ADB projected on Thursday that GDP will grow just 4.5% in FY27, well below the government's 6.5% target.