The government is planning to merge four investment promotion agencies into a single authority under a draft law aimed at simplifying investor services, reducing bureaucratic hurdles and improving coordination among state institutions.

The proposed Integrated Investment Development Authority Act, 2026 seeks to establish the Unified Investment Development Authority (UniDA).
The agency would bring the Bangladesh Investment Development Authority (Bida), Bangladesh Economic Zones Authority (Beza), Bangladesh Hi-Tech Park Authority (BHTPA) and the Public-Private Partnership Authority (PPPA) under one umbrella.The draft law, prepared by Bida, aims to boost domestic and foreign investment, support industrialisation, improve service delivery and ensure more effective use of state-owned industrial and commercial assets.

UniDA would be a statutory body with administrative and financial powers, headquartered in Dhaka, with the authority to open branch offices at home and abroad.

Ashik Chowdhury, executive chairman of Bida, said the proposal was designed to create a single point of contact for investors who now have to approach multiple agencies depending on the nature and location of their projects.

“Investors have repeatedly told us that they want to deal with a single entity instead of navigating multiple organisations for different approvals and services,” he said. “The objective is to reduce hassle for investors and make the entire process more coordinated.”

The merger would not change the services currently offered by the four agencies, Ashik said. “The difference is that the services will be coordinated through one institutional framework.”

Under the draft law, UniDA would be governed by a board chaired by the prime minister or a nominee holding ministerial rank, including key economic ministers or advisers, the Bangladesh Bank governor, heads of the constituent agencies and three private-sector representatives.

An executive council headed by an executive chairman would oversee day-to-day operations. The authority would oversee investment promotion, economic zones, hi-tech parks and public-private partnership projects.

It would formulate investment policies, approve projects, coordinate infrastructure support, monitor approved projects and help remove administrative and legal bottlenecks delaying investment.

If the law is enacted, all private industrial projects not governed by specialised authorities would require registration or approval from UniDA, as would foreign companies seeking to establish branch, liaison or representative offices in Bangladesh.

Once an investment is approved, UniDA would set binding timelines for key services, including land allocation, utility connections, customs clearance and environmental approvals.

The law would also empower the government to declare industrial areas, economic zones and hi-tech parks through gazette notifications, acquire land where necessary under the Acquisition and Requisition of Immovable Property Act, 2017, and transfer unused government-owned industrial and commercial assets for investment projects.

The proposal, however, has drawn concern from some public-private partnership specialists.

Tapas Chandra Bose, a deputy director and researcher on PPPs, said Bangladesh’s low tax-to-GDP ratio and declining access to concessional foreign financing have made PPPs increasingly important for infrastructure development.

He said the PPP Authority’s institutional independence had helped develop a project pipeline worth more than $41 billion, and warned that folding it into a broader investment authority could undermine investor confidence and weaken private-sector participation in infrastructure projects.

He called for wider consultation before the legislation is finalised.

M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, questioned whether merging only a few agencies would substantially improve the investment climate, saying the reform overlooks deeper institutional issues.

He said Bangladesh has created multiple agencies with overlapping mandates, with investment-related regulatory services delivered by more than 50 organisations -- yet the proposed merger covers only four bodies, which have fundamentally different functions.
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He explained that Beza and BHTPA manage industrial estates, Bida is the country’s main investment promotion agency, and PPPA structures public-private partnership projects.

The priority, he said, should be cutting unnecessary licences, registrations and approvals, rather than relying on institutional mergers alone.

The draft law is in its final stage after stakeholder consultations and is expected to be sent to the Cabinet Division by the end of this month, said Nahian Rahman Rochi, executive member (investment) at Bida.

Rochi said the initiative comes as Bangladesh seeks to attract more foreign investment after several years of relatively weak FDI inflows and amid intensifying competition from regional peers.

“The objective is to create a single, integrated platform for investors without reducing the scope of services currently provided by the existing agencies,” he said.

The Bangladesh Bank has made it mandatory for banks to obtain certifications confirming that applicants were not involved in money laundering, fraud, fund diversion or misuse of previous loans before extending financing under the government's Tk20,000-crore pre-financing scheme aimed at reviving closed industrial and service sector enterprises.

The central bank issued a circular to all banks today (7 July), introducing additional conditions for lending under the scheme.

Under the new instructions, enterprises that are loan defaulters or have been involved in money laundering, fraud, forgery, diversion of funds or misuse of previous loan proceeds will not be eligible to receive financing from the fund.

To enforce these restrictions, banks must obtain certifications confirming that prospective borrowers have not engaged in such activities before approving loans.

The circular also requires banks with surplus liquidity to certify that those funds have been invested in the country's productive sectors.

The Bangladesh Bank first announced the scheme in a circular issued in June. The Tk20,000-crore fund forms part of the government's previously announced Tk60,000 crore "Production and Employment Revival" stimulus package.

The initiative is intended to restart closed factories, revive stalled export activities and create employment opportunities for unemployed young people through targeted credit support.

Under the scheme, participating banks will pay 4% interest to the Bangladesh Bank, while the maximum lending rate for borrowers has been capped at 7%. Borrowers will receive a six-month grace period on interest payments, after which interest servicing will commence.

The maximum loan available to any single company or business group under the scheme has been set at Tk200 crore. Each loan will have a maximum tenure of one year, although renewals will be allowed subject to the availability of funds and satisfactory repayment performance.

Foreign currency reserves have remained above the $31 billion mark after Bangladesh cleared nearly $1.5 billion in import bills through the Asian Clearing Union (ACU).
Net reserves stood at $31.72 billion, while gross reserves were $36.17 billion.

Bangladesh Bank reported these amounts at the end of Monday, using the International Monetary Fund's Balance of Payments (BPM-6) accounting method.
The net reserves were $33.20 billion and the gross amount was $37.85 billion at the end of Sunday.

Central bank spokesperson Arief Hossain Khan said the country's import bill of $1.48 billion for May and June was paid on Monday.

The reserves that remain after the adjustment can also cover four and a half months of import expenses, he said.
The reserves have been on a positive trend for the past few months.

Continued inflow of remittances coupled with the addition of a $1 billion budget support loan from the Asian Development Bank led to the net reserves exceeding $31 billion to $31.07 billion on Jun 14.

The gross reserves soared to $35.62 billion at that time.

Two weeks later, the BPM-6 estimate increased to $32.47 billion with the addition of $667.1 million in World Bank budget support loans.

On Jun 29, the gross reserves surged to $37.05 billion.

The net reserves jumped to $33.01 billion on Jul 2, boosted by remittances and export earnings. On that day, the gross reserves were $37.65 billion.

Bangladesh's infrastructure drive is reshaping not only the country's skyline but also the future of its steel industry.

As major projects such as the Padma Bridge, Dhaka Metro Rail, elevated expressways, economic zones and high-rise buildings require stronger and more durable materials, engineers and industry people say the focus must gradually shift from producing more steel to producing better-quality steel through advanced technology.

Industry insiders estimate that the country now consumes around 8 million tonnes of steel annually, with nearly 80% used in construction.

Backed by investments worth tens of thousands of crores of taka, the sector has reduced dependence on imported finished steel and created employment for hundreds of thousands of people.

Globally, steelmaking is undergoing a technological shift.

According to the World Steel Association, production through electric arc furnaces is expanding as countries focus on cleaner manufacturing, greater recycling and higher-quality steel.

Unlike conventional induction furnaces, modern electric arc furnaces combined with ladle refining furnaces allow manufacturers to better control chemical composition, remove impurities and produce more consistent steel.

Such qualities are increasingly needed for bridges, ports, airports, power plants and high-rise buildings, industry people said.

Despite its rapid expansion, much of Bangladesh's reinforcing bar production still relies on induction furnace technology, particularly among small and medium-sized mills.

While the technology helped build the domestic steel industry through lower investment and quick capacity expansion, engineers say future infrastructure will require better refining and stronger quality control.

Prof Md Aminul Islam, professor at the Department of Materials and Metallurgical Engineering of Bangladesh University of Engineering and Technology (Buet), said higher-grade construction materials could improve both structural efficiency and sustainability.

Upgrading from Grade-400 to Grade-500 reinforcing steel, while increasing concrete strength from 30MPa to 60MPa, could reduce structural weight by nearly 28% without compromising safety, he said.

He also said steel and cement together account for a significant share of global carbon emissions, underscoring the need for cleaner steelmaking technologies as Bangladesh prepares for its next phase of industrial and infrastructure development.

Leading producers invest in advanced technology

Some of Bangladesh's largest steelmakers have already begun shifting towards advanced production technologies.

Abul Khair Steel introduced one of the country's early electric arc furnace facilities in 2015. GPH Ispat followed with a Tk2,500 crore Quantum Electric Arc Furnace project at Sitakunda in 2020, while BSRM and KSRM have continued investing in automation, quality assurance and higher-specification production lines.

Manufacturers say these investments improve product consistency, reduce energy consumption, lower emissions and strengthen Bangladesh's ability to compete in export markets, where buyers increasingly demand certified and environmentally compliant products.

Industry executives believe technological upgrading is gradually becoming a competitive necessity rather than simply an engineering choice.

Real estate sector seeks higher standards

The country's real estate developers, among the largest consumers of construction steel, are also calling for higher-quality materials as urban buildings become taller and more technically demanding.

Ali Afzal, president of the Real Estate and Housing Association of Bangladesh (Rehab), said developers are increasingly prioritising structural durability over short-term cost.

"Buildings are expected to serve for generations. As Bangladesh is located in a seismically active region, earthquake resilience must remain a priority," he said.

"It is now time to gradually implement the mandatory use of refined, high-quality steel in major construction projects and ensure wider compliance with the Bangladesh National Building Code."

Industry insiders said stronger material standards would improve buyer confidence while supporting the long-term sustainability of Bangladesh's real estate sector.

Engineers call for updated practices

Construction engineers said building codes and industry practices should evolve alongside technological advancements.

Md Nurul Islam, chief engineer (implementation) of Rajuk, said demand from both government and private developers would ultimately determine the industry's direction.

"If demand for refined and higher-quality steel increases, manufacturers will naturally invest in producing it," he said.

He noted that public infrastructure projects account for a major share of steel consumption. While manufacturers are already capable of producing reinforcing bars up to Grade 700, the Bangladesh National Building Code currently allows Grade 500 reinforcement for most applications.

"We are gradually preparing our engineering workforce for greener and more advanced construction technologies," he added.

Md Shamsuddoha, additional chief engineer of the Public Works Department, said steel would remain indispensable for Bangladesh's development, but the industry must also reduce its environmental footprint through modern production technologies and greater recycling.

Investment remains a challenge

Industry leaders acknowledge that modernising Bangladesh's steel industry will require significant investment, reliable electricity supply and supportive industrial policies.

Electric arc furnace projects involve substantially higher capital expenditure than conventional melting technologies, making access to long-term financing and affordable energy essential for wider adoption.

M Zakir Hossain Khan, chief executive of Change Initiative, said Bangladesh now needs a national roadmap for cleaner steel production.

"Bangladesh should define how the steel industry will become cleaner, smarter, safer and more resilient by 2030 or 2035," he said.

He added that greater use of renewable energy, improved scrap recycling and adoption of Environmental, Social and Governance standards could help Bangladesh strengthen export competitiveness and position itself in the emerging green steel market.

Bangladesh recorded a strong rebound in foreign direct investment (FDI) in 2025, ending two consecutive years of decline, but the gains were not enough to close the gap with regional players.

The country remained the third-largest recipient of FDI in South Asia after India and Pakistan, according to the World Investment Report (WIR) 2026, released yesterday by the UN Conference on Trade and Development (UNCTAD).

As per the report, FDI inflows into Bangladesh rose 45 percent to $1.78 billion in 2025 from $1.23 billion a year earlier.

Separately, Bangladesh Bank data showed a similar trend, with FDI rising 45.5 percent to $1.79 billion, which it attributed to higher reinvested earnings from existing foreign investors.

Earlier in mid-May, the Bangladesh Investment Development Authority (Bida) said FDI inflows increased 39.36 percent year-on-year to $1.77 billion in 2025.

“A series of measures to improve investment facilitation and bring greater discipline to the approval process contributed to last year’s rebound,” said Nahian Rahman Rochi, executive member (investment) at Bida.

“All three components of FDI -- equity investment, reinvested earnings and intra-company loans -- posted positive growth last year. Although equity investment declined globally, Bangladesh recorded around 8 percent growth in equity inflows, which is encouraging given the country’s political transition,” he said.

Rochi said Bida also maintained regular communication with existing and prospective investors. “That engagement gave them confidence, and we believe it contributed to the recovery in FDI.”

He, however, said the growth remained well below Bangladesh’s investment needs.

Rochi said Bida has an investment pipeline worth about $1.5 billion that could materialise over the next 18-24 months.

GLOBAL FDI RECOVERY UNEVEN

Globally, FDI rose 6 percent to $1.6 trillion following two years of decline, though UNCTAD said the recovery was “fragile and uneven”. Inflows rose 11 percent to $723 billion in developed economies and 2 percent to $901 billion in developing economies.

Developing Asia remained the largest recipient among developing regions, at $644 billion, though trends diverged within it: inflows declined in East Asia, including China, but rose in South-East Asia, South Asia, West Asia and Central Asia.

S ASIA GETS $46b

Total inflows into South Asia climbed to $46.1 billion in 2025 from $34.1 billion a year earlier.

India remained the region’s dominant investment destination, attracting $38.9 billion in 2025, up 44 percent from $27.1 billion in the previous year, supported by strong investments in manufacturing, services and supply-chain diversification.

Pakistan received the second-highest amount in the region, $1.85 billion, though inflows fell from $2.67 billion in 2024; it remained marginally ahead of Bangladesh.

Among smaller South Asian economies, the Maldives attracted $857 million, up from $806 million, largely on tourism projects; Nepal’s inflows fell to $44 million from $57 million; Bhutan received $9 million, unchanged.

China remained one of the world’s largest FDI recipients despite a decline from about $116 billion to $105 billion, continuing to draw higher value-added investment in R&D and pharmaceutical manufacturing.

ASIA SHAPING FUTURE, BUT OUTLOOK CLOUDED

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The WIR report said Asia is increasingly shaping where future industries are being built, even as investment patterns within the region evolve.

The report noted that investment worldwide is increasingly flowing into semiconductors, digital infrastructure, artificial intelligence, advanced manufacturing and energy-transition technologies.

Many Asian economies are entering this period with important advantages, including established manufacturing capacity, supplier networks, large consumer markets, growing industrial ecosystems and deep integration into regional production networks, it added.

“But these advantages are uneven, and not all economies can compete for the same projects,” UNCTAD said, adding that competition for global capital is becoming more intense.

The report said success in attracting investment is becoming harder to take for granted as governments increasingly use industrial policies and incentives to attract projects linked to future growth industries, while investors become more selective about where they commit long-term capital.

Bangladesh's Purchasing Managers’ Index (PMI) for June has recorded a sharp slowdown, falling 9.9 points from May to settle at 52.9, as manufacturing and construction sectors slipped back into contraction while agriculture and services continued to expand at a softer pace, according to a report released on Tuesday.Bangladesh Politics News
The Bangladesh PMI, jointly compiled by the Metropolitan Chamber of Commerce and Industry (MCCI), and Policy Exchange Bangladesh (PEB), is developed with support from the UK government and technical assistance from the Singapore Institute of Purchasing & Materials Management (SIPMM).The index is designed to provide timely and reliable insights into the country's economic health to help businesses, investors and policymakers make informed decisions.Commenting on the findings, M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, said the June reading suggested Bangladesh's economy remained in expansion overall, but with clear sectoral divergence.He said agriculture and services continued to grow, though more slowly, while manufacturing returned to contraction on weaker orders, exports, employment and supplier deliveries.

Construction also contracted amid softer activity and new business, he said, adding that long Eid holidays, the onset of the monsoon and fading pre-Eid demand had weighed on business conditions during the month.

The agriculture sector recorded its tenth consecutive month of expansion in June, although growth moderated from May. New business, business activity, employment and input costs all continued to expand, while the order backlogs index remained in contraction for the second straight month.

The manufacturing sector returned to contraction after two months of expansion, dragged down by weaker new orders, new exports, employment, supplier deliveries and order backlogs. Factory output, input purchases and imports continued to grow, though at a slower pace, while input prices accelerated and the finished goods index swung back into expansion.Economic Policy Reviews

The construction sector also reverted to contraction after posting expansion in May, with new business, construction activity and employment all falling back. Input costs and order backlogs, however, continued to expand at a faster pace within the sector.

The services sector expanded for the 21st consecutive month in June, though growth slowed across new business, business activity, employment and input costs, while the order backlogs index contracted at a faster rate.

Looking ahead, the Future Business Index points to continued expansion in agriculture, construction and services, while manufacturing is expected to return to expansion, reflecting cautious optimism about business conditions in the coming months.

Respondents across major economic sectors described business conditions in June as challenging amid rising production costs and weaker market conditions. Many firms cited higher LPG and fuel prices, rising transportation and operating costs, and increasing labour expenses as key pressures squeezing profit margins.

Several businesses also pointed to financial constraints, disruptions from ongoing road construction activities, and concerns over the recently imposed 15 percent VAT, which they said had raised the cost of doing business. Agricultural respondents flagged weather-related uncertainties affecting production and seasonal demand, while some firms noted that local economic activity remained subdued.

Despite the challenges, respondents expressed hope that improvements in the business environment, stable energy supplies and supportive government policies would help strengthen business confidence and economic activity in the months ahead.Capital Market Insights

Several respondents also recommended maintaining a representative and high-quality respondent panel to further enhance the reliability of the Bangladesh PMI.

The report was signed by Farooq Ahmed, Secretary-General and CEO of MCCI, and M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh.

Bangladesh netted a phenomenally higher annual foreign direct investment worth US$1.78 billion in 2025 as the global flow of FDI marked resurgence last year after two barren years.
The global and local FDI rises are quantified in the World Investment Report (WIR) 2026 just released in Geneva on Tuesday morning by the UN Conference on Trade and Development (UNCTAD).

Bangladesh's FDI inflow recorded 44-percent growth in 2025 against $1.23 billion in 2024, according to the UNCTAD report.The amount is the highest in the last five years. As a result, FDI as percentage of gross fixed capital stood at 1.40 per cent in the past year which was 0.90 per cent in 2024.Outstanding stock of FDI reached $19.63 billion at the end of 2025, according to UNCTAD estimate.The report also shows that outward FDI from Bangladesh to the rest of the world increased by 72.60 per cent to $25 million in the last year from $15 million in 2024.The amount of global FDI stood at $1.62 trillion in 2025 which was $1.53 trillion in 2024 and $1.32 trillion in 2023.

"But the recovery remains narrow, fragile and uneven," says the report, prepared and published by the UN agency.

Inflows of FDI to developed economies rose 11 per cent although developing economies recorded only 2,0-percent growth, reaching $901 billion.

"The figures point to a rebound that is not translating evenly into development opportunities," observed the UNCTAD.

"The issue is not only how much capital is moving, but where it is going, what it is building and whether it is expanding productive capacity, creating jobs, strengthening skills and supporting technology transfer."

The world's top 20 host economies attracted more than 80 per cent of global FDI in 2025, according to the WIR 2026. The figure underscores a trend: "investment is becoming more concentrated across countries, sectors and projects".

"The recovery should also be interpreted with caution: headline FDI numbers do not always translate into new factories, infrastructure, jobs or technology transfer," adds the annual flagship report of the UNCTAD under the theme 'International Investment in a Turbulent Era'.

It also shows that strategic sectors are reshaping flows: they accounted for 44 per cent of greenfield project value, up from 16 per cent in 2020.

"Developing impact remains uneven: what matters is where investment goes, what it builds and who benefits," WRI 2026 further adds. "Policy is becoming more selective, as governments steer investment towards strategic sectors and national priorities."

Though developing nations received more than half of the global FDI in the last year, growth was modest and uneven across regions. For instance, developing Asia remained the largest recipient region, attracting FDI worth $644 billion, while FDI in Latin America and the Caribbean rose 14 per cent to $188 billion.

Again, Africa received about $70 billion as FDI, which is one third above its 2010-2024 average.

Inflow of FDI in least-developed countries (LDCs) rise 21 per cent to $43 billion, but the group still accounted for only 2.7 per cent of global FDI, with flows concentrated in a small number of mostly resource-rich economies.

"This concentration is particularly visible in industries linked to technology, energy and industrial policy," says the report.

Strategic sectors such as AI infrastructure, semiconductors, critical minerals and energy-transition technologies and services accounted for 44 per cent of global greenfield project values in 2025, up from 16 per cent in 2020.

"The growth in project values was driven mainly by data centres, followed by oil and gas and semiconductors," the report explains. "Most other sectors registered declines, including renewable energy, infrastructure and manufacturing, showing how narrow the recovery remains."

Bangladesh Bank (BB) has issued comprehensive guidelines for scheduling banks to access its newly formed Tk 200 billion (Tk 20,000 crore) revolving pre-finance scheme, aimed at revitalising closed and capital-starved units in the country’s large industry and service sectors, particularly export-oriented ones.Bangladesh Politics News
The central bank's Banking Regulation and Policy Department-3 (BRPD-3) issued a circular for the managing directors and chief executive officers of all scheduled banks on Tuesday, detailing the operational modalities, reports UNB.According to the circular, the three-year revolving fund titled “Closed Industry and Service Sector Facilitation Pre-finance Scheme” will be sourced from the surplus liquidity of scheduled banks.To participate in the scheme, interested banks must execute a "Participation Agreement" with the BRPD-3. After obtaining approval from their respective boards of directors, banks can apply for the pre-finance facility using a designated format, complete with necessary documentation, before disbursing the loans to end-borrowers.

The central bank stipulated that borrowers who are already availing working capital facilities from other BB re-finance or pre-finance schemes must undergo a thorough review of their requirements before a fresh application is submitted.

To ensure transparency and prevent financial irregularities, Bangladesh Bank has mandated that participating banks must collect specific declarations and reports from applicants alongside standard documentation.

These include a declaration from the borrower confirming that they have never been involved in money laundering, forgery, fund diversion, or loan misuse, a certification verifying the client’s production or service delivery capability, sales and revenue reports from the beneficiary entities, a commitment from banks to conduct quarterly factory inspections and submit inspection reports.

Reporting and Compliance

Participating banks will be required to submit quarterly statements on loan disbursement and recovery to Bangladesh Bank by the 10th of the month following the end of each quarter.

Bangladesh is borrowing US$1.0-billion hard-term loan from the Islamic Development Bank (IsDB) for much-needed upgrading of Eastern Refinery's oil-refining capacity by 3.0 million tonnes a year, officials say.Bangladesh Politics News
The government's Standing Committee on Non-Concessional Loans, headed by Finance and Planning Minister Amir Khosru Mahmud Chowdhury, approved the borrowing of this foreign loan, recently assured by the Islamic Development Bank.

The credit facility marks one of the largest single-project financial packages ever extended by the Jeddah-based IsDB to a member-country.

The critical funding package is explicitly earmarked for the long-delayed Unit-2 expansion project of the state-owned Eastern Refinery Limited (ERL) in Chittagong, a senior Economic Relations Division (ERD) official has said.

The decision signals a tactical pivot in the country's macro-energy strategy. The government is intentionally leaning into market-based, high-cost foreign debt to finance critical infrastructure.

This happens at a time when traditional concessional financing windows from development partners are getting tightened globally.

As the loan features a grant element of less than 25 per cent, it is classified under International Monetary Fund (IMF) guidelines as non-concessional or "hard-term" loan.

Situated in the port city of Chittagong, ERL, a subsidiary of the state-owned Bangladesh Petroleum Corporation (BPC), would have its second unit with a crude-refining capacity of 3.0 million tonnes per year by investing some Tk 354.65 billion or $2.89 billion.

As per the project, the government would provide Tk 212.78 billion as loans from its internal resources while the remaining Tk 141.88 billion will come from the Eastern Refinery's internal resources.

Currently, ERL has its first unit with 1.5-million-tonne capacity for refining crude oil, mostly imported from the now-troubled Gulf region.

According to the official sources, the $1.0-billion credit will come under the IsDB's "Lease Financing" model where interest rate is charged on the Secured Overnight Financing Rate (SOFR) rate plus a 1.60-percent spread.

According to the Federal Reserve Bank of New York, the SOFR rate on a 6-month basis on Tuesday was recorded at 3.66892 per cent.

Total maturity tenure of the credit will be 20 years with a grace period of five years.

Economic Relations Division (ERD) officials say the interest rate, floating on top of the global SOFR benchmark, "exposes the treasury to international market volatility".Economics

"With global benchmarks remaining elevated, the interest burden is expected to test state coffers significantly," says one official.

Furthermore, the IsDB deal incorporates a rigid Shariah-compliant "forward lease" model.

The core objective of the capital injection is the total modernisation and capacity scaling of ERL's plant, in the wake of worldwide fuel woes amid the Middle East turmoil.

Originally built back in 1968 using French technology, ERL has long struggled to meet the nation's rapidly ballooning fuel demands.

Currently, the ancient refinery processes roughly 1.5 million tonnes of crude annually, fulfilling a meagre 20 per cent of local petroleum demand. The remaining 80 per cent must be imported as pre-refined fuel at a massive premium.

The Unit-2 (ERL-2) expansion project will construct an entirely new, highly sophisticated processing wing next to the existing facility.

By tripling the plant's total processing limits to 4.5 million tonnes per year, the expansion will enable Bangladesh to import cheaper raw crude oil and refine it domestically.

This shift will significantly reduce the country's dependence on expensive, pre-refined foreign petroleum.

Additionally, the new plant is architected to yield clean, Euro-5-standard diesel and gasoline, mitigating growing domestic environmental concerns regarding fuel quality.

The total capital expenditure was initially estimated by the Executive Committee of the National Economic Council (ECNEC) at Tk 354.65 billion.

Independent energy experts and ERD officials agree that the commercial survival of this loan hinges entirely on swift, corruption-free project execution.

Because the interest rate floats with the SOFR benchmark, any construction delay beyond the targeted November 2030 completion time will exponentially escalate the state's debt-servicing liabilities.

Conversely, if ERL-2 goes operational on schedule, massive foreign-exchange savings achieved by cutting refined-fuel imports will easily offset the aggressive borrowing terms.

The government will act as the primary procurement agent under the IsDB model, taking full ownership of contract negotiations, risk compliance, and project-management oversight.

With the official go-ahead now granted by the non-concessional committee, the ERD is poised to conclude final signatures with IsDB delegates to pave the way for construction mobilisation in Chittagong.

"Since the loan is endorsed by the government's standing committee on non-concessional loans, we will now go for signing contract with the IsDB in a bid to confirm the disbursement for the procurement of the refinery-upgradation works," says the ERD official.

The government has extended the state guarantee for the Investment Corporation of Bangladesh (ICB), a state-owned investment bank, for a Tk3,000 crore loan from Bangladesh Bank, granting a three-year extension until 2029 with a view to stabilising the country's capital market.

Amid mounting pressure and failure to repay the outstanding loan despite the expiration of the original deadline in May, the ICB applied to the government urging an extension, as it is struggling to repay due to a severe liquidity crunch.

In a letter expressing its concerns, the ICB stated that if it is forced to repay the loan now, it would have to sell shares in the secondary market, which would have a negative impact on the market.

According to an official letter from the Financial Institutions Division (FID) of the Ministry of Finance, the sovereign guarantee has been extended for three years, effective from 13 May, 2026 with the primary objective of stabilising the country's capital market.

However, the relief comes with strict financial strings attached that ICB must ensure full repayment of the principal amount within the extended deadline, while keeping all other original terms of the loan agreement unchanged.

The letter states that the primary objective of extending the state guarantee is to ensure stability in the capital market. To this end, ICB's share trading activities and portfolio restructuring activities during the extended period must be closely monitored by the FID.

Also, with the aim of bringing ICB's administrative and operational expenses down to a rational level, reducing the burden of rising interest costs, and overcoming the erosion of portfolio capital, a specific, time-bound, and implementable "Business Recovery Plan" must be formulated and submitted to the FID, and the progress of the implementation of the said plan must be monitored regularly.

The ICB must submit an updated report on ICB's financial liquidity position, capital market investment activities, and the progress of loan repayment preparations must be sent to the Finance Division and the FID every 3 months during the extended period.

Also, the ICB is directed to finalise an updated repayment Schedule, coordinated with Bangladesh Bank, which must be submitted to the Finance Division.

Currently, the ICB is facing a severe capital shortage with around Tk5,506 crore fund erosion due to volatile capital market.

The corporation has invested around Tk12,500 crore in the capital market, but the current market value of those investments has fallen to about Tk8,000 crore as of December 2025.

As a result, ICB is facing an acute capital shortage. It has failed to pay nearly Tk1,200 crore in accrued interest on loans from state-owned banks.

The ICB, once one of the country's most profitable institutional investors, earning hundreds of crores of taka from stock market investments, is now facing mounting losses.

ICB officials said the current board has overhauled the management of government funds following allegations of irregularities in previous years.

The board has strengthened oversight of the Portfolio Management Committee, responsible for buying and selling shares using ICB funds. Officials said weak monitoring previously allowed some corrupt officials, allegedly influenced by market operators, to purchase highly overpriced shares.

A senior ICB official, speaking on condition of anonymity, said, "The loopholes that previously existed at ICB have now been closed. Oversight of the portfolio committee has increased, and purchases through the block market have been stopped. As a result, the erosion of the portfolio has slowed, although the damage has already been done."

The official said investment decisions are now reviewed daily.

"After decisions to buy or sell shares are taken in the morning, a progress report is prepared and discussed at the end of the trading day. That report is presented to the board every 15 days for review, which has helped reduce losses."

The official said ICB urgently needs further government financial support or low-interest funding.

"The government has already provided funds at an interest rate of 4%. If additional low-interest funds are provided solely to repay existing loans, the institution can be saved. Our annual operating expenses are only around Tk100-120 crore, but interest payments alone amount to nearly Tk1,000 crore. It is simply not possible to sustain ICB under these circumstances."

According to ICB's financial statements, income from capital gains, dividends and subsidiary companies is now lower than its interest expenses. The corporation is also incurring substantial losses because of operating costs and provisions against investments.

After posting a record loss of Tk1,213 crore in the 2024-25 financial year, ICB reported a further loss of Tk588 crore during the first nine months of FY26. Although the final quarter's accounts have yet to be published, the corporation expects to remain in the red for the full year.

Bangladesh is exploring the possibility of issuing China's proposed Panda Bond as an international sovereign bond to establish its presence and begin marketing itself in the global capital market.

The government is forming an inter-ministerial committee to assess the feasibility of issuing the bond and prepare recommendations.

Alongside the conventional US dollar-denominated Eurobond, the committee will review the risks associated with issuing Panda Bonds in Chinese currency, as well as examine the bond's structure, timing and size before making recommendations to the finance ministry.

The previous Awami League government had also considered issuing sovereign bonds. However, it ultimately backed away after taking into account the financial crises experienced by sovereign bond issuers such as Argentina and Sri Lanka. Former Bangladesh Bank governor Dr Ahsan H Mansur has advised that, whether the government opts for a Panda Bond or a Eurobond, any sovereign bond issuance should be undertaken with extreme caution.

Officials at the finance ministry said the issue of issuing a Panda Bond as an international sovereign bond was discussed at a recent meeting on exploring alternative sources of financing, chaired by Finance Minister Amir Khosru Mahmud Chowdhury at the Prime Minister's Office. Following the meeting, the Finance Division prepared a summary seeking the finance minister's approval to form an inter-ministerial committee to examine the proposal.

The committee is expected to include officials from the Finance Division, the Economic Relations Division (ERD), the Bangladesh Bank, the Prime Minister's Office, the Financial Institutions Division, and the Bangladesh Securities and Exchange Commission.

According to the minutes of the meeting held on 20 June, Bangladesh Bank Governor Mostaqur Rahman supported the idea of issuing Panda Bonds in Chinese currency, saying, "Alongside the conventional US dollar-based Eurobond, the possibility of issuing Panda Bonds denominated in Chinese renminbi (RMB) can be explored.

"The first issuance should be relatively small – equivalent to around $50 million – to test market response and keep risks at a manageable level."

Before Prime Minister Tarique Rahman's visit to China, a delegation from the Export-Import Bank of China (Exim Bank) visited Dhaka to discuss the introduction of Panda Bonds in Bangladesh. During the Prime Minister's visit, the Chinese government also included the Panda Bond proposal on the agenda, according to sources.

At the meeting, ERD Secretary Md Shahriar Kader Siddiky said several countries, including Pakistan and Sri Lanka, had issued sovereign bonds. He noted that Bangladesh should consider establishing its footprint in the international capital market.

However, the ERD secretary cautioned that issuing sovereign bonds could raise concerns from the International Monetary Fund (IMF). He added that China would be willing to assist Bangladesh if it decided to proceed with a Panda Bond.

The finance minister said in the meeting that Bangladesh's entry into the international capital market should be viewed positively. He noted that an initiative is underway to establish a Bangladesh Investment Fund for equity investment by the private sector. Once the Hong Kong-based fund is established, it will create opportunities for equity investment in both private enterprises and state-owned companies.

The finance minister also said that alongside the proposed equity fund, the government could continue exploring the possibility of issuing sovereign bonds. He instructed officials to begin internal discussions and institutional preparations.

The meeting also discussed incorporating the possibility of issuing Eurobonds or other international sovereign bonds into the upcoming Medium-Term Debt Strategy, Annual Borrowing Plan and Debt Sustainability Analysis (DSA). Participants agreed that signalling such plans to the market and investors in advance would be appropriate.

Finance Secretary Dr Khairuzzaman Mozumder said the Finance Division had previously been reluctant to pursue sovereign bond issuance because of the associated risks. However, he said the current situation warranted a fresh assessment.

In his view, Bangladesh should improve its sovereign credit rating before making any final decision so that bonds can be issued at favourable interest rates in the international market.

"As this would be Bangladesh's first international sovereign bond issuance, it is necessary to carefully examine the associated risks as well as the bond's structure, timing, currency and denomination before proceeding," the finance secretary added.

Former Bangladesh Bank governor Dr Ahsan H Mansur told TBS that the government had also considered issuing sovereign bonds in 2014-15, when Bangladesh's economic situation and international image were stronger than they are today. However, after observing the debt crises faced by Sri Lanka and Argentina following their sovereign bond issuances, the government abandoned the plan.

He said the biggest risk associated with such borrowing is ensuring the proper management of large amounts of money raised abroad under a sovereign guarantee. It is essential to determine where the funds will be spent and to ensure effective oversight of their use.

"Many countries avoid borrowing from the international capital market because such loans carry commercially determined interest rates. For US dollar-denominated borrowing, the interest rate is generally the US Treasury bill rate plus around 3%. The rate Bangladesh would receive will depend on its international sovereign credit rating," Ahsan H Mansur added.

The country’s plastic industry has slowed sharply following the recent Middle East crisis, as rising raw material prices and weak consumer demand continue to hit manufacturers hard, industry leaders said.

The steep rise in the cost of imported plastic raw materials has severely affected producers, Shamim Ahmed, president of the Bangladesh Plastic Goods Manufacturers & Exporters Association (BPGMEA), told journalists at the association’s office in Dhaka’s Paltan yesterday.
Before the conflict, key raw materials were imported at around $800 to $900 per tonne. Prices have now increased to between $1,500 and $1,600 per tonne, he said.

“The sharp rise in raw material costs is putting immense pressure on the industry. Higher production costs are also driving up the prices of finished products,” Shamim said.

The country’s plastic and packaging industry, worth around Tk 60,000 crore annually, recorded monthly sales of about Tk 5,000 crore before the conflict. This has now fallen to around Tk 3,750 crore, a decline of at least 25 percent, according to the BPGMEA.

Shamim said at least 25 percent of customers have reduced their orders since the conflict began, while some segments have seen demand drop by as much as 40 percent.

The packaging segment, which accounts for about 40 percent of the industry, has been the worst affected as demand for fast-moving consumer goods weakens amid lower household spending, he added.

“We are not the end product; we supply other industries,” Shamim said. “When consumers buy less detergent, food or household products, demand for our packaging and plastic components drops immediately.”

According to him, Bangladesh has around 6,000 plastic manufacturing units, of which 4,000 to 4,500 supply products to other sectors, including garments, pharmaceuticals, food processing and beverages. The industry serves around 30,000 businesses in total.

“Many people still think plastic means buckets, mugs and kitchenware. But plastic has become an essential part of industrial production and supply chains,” he said.

He warned that any disruption in the sector would quickly affect the wider economy, as most manufacturing industries depend heavily on plastic packaging and components.

Shamim also alleged that customs authorities often assess imported raw materials at higher values than invoice prices to meet revenue targets, even though such materials are sourced from large international suppliers where under- or over-invoicing is unlikely.

On recycling, Shamim said Bangladesh has a relatively high plastic recycling rate in the region, but investment in waste-to-energy infrastructure remains behind neighbouring countries.

KM Iqbal Hossain, senior vice-president of BPGMEA, said manufacturers have been absorbing much of the increased production costs instead of passing them on to buyers.

“We are negotiating with our clients to raise prices because production costs have increased by at least 30 percent, but we have not yet fully adjusted our prices,” he added.

Industry leaders said higher costs and weak consumer demand are putting severe pressure on profit margins, with many firms struggling to stay viable.

Iqbal also said Bangladesh is lagging in developing waste-to-energy projects. “Countries like Indonesia are rapidly expanding waste-to-energy projects. In Bangladesh, we have been trying to set up even one large-scale waste-to-energy plant for the past five years,” he said.

Despite the slowdown in traditional plastic manufacturing, Shamim said the recycling segment continues to grow and is creating new jobs as businesses place greater focus on sustainability.

Iqbal criticised high industrial land prices, weak incentives and complex regulations, saying these factors are discouraging investment and job creation.

He questioned why industrial plots developed by the Bangladesh Small and Cottage Industries Corporation are sold at prices much higher than acquisition costs, forcing entrepreneurs to spend heavily on land instead of production.
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Comparing with neighbouring countries, Iqbal said governments in India provide industrial land, utilities and incentives to support manufacturing and exports.

He also highlighted challenges faced by plastic and toy manufacturers, saying many key components must be imported because local production is not commercially viable. However, manufacturers still pay commercial import duties on these inputs, reducing competitiveness against producers in countries such as China and Sri Lanka.

Bangladesh’s foreign exchange reserves stood at $37.85 billion, according to the latest data released by the Bangladesh Bank (BB) on Monday.Bangladesh Politics News

The central bank said that under the International Monetary Fund’s (IMF) Balance of Payments and International Investment Position Manual (BPM-6) accounting standard, the country’s reserves were recorded at $33.20 billion.

Officials noted that the reserve position reflects the country’s external sector stability amidst ongoing global economic uncertainties.

The Bangladesh-German Chamber of Commerce and Industry (BGCCI) yesterday (5 July) hosted a seminar on the FY27 national budget, with business leaders, policymakers and tax officials calling for stable and predictable fiscal policies to boost investment and private sector growth.

The seminar, titled "National Budget 2026–27: Impact on Business, Trade, and Investment", was held at The Westin Dhaka, where participants discussed the budget's key tax measures, customs reforms and their implications for businesses and investors.

Speaking as the chief guest, Anja Kersten, Chargé d'Affaires a.i. of the German Embassy in Bangladesh, emphasised the importance of maintaining a transparent, predictable and business-friendly fiscal environment to support sustainable economic growth and deepen trade and investment ties between Bangladesh and Germany.

Senior officials from the National Board of Revenue (NBR), including First Secretary (Customs: Policy and ICT) Md Tariq Hassan, First Secretary (VAT Policy) Md Mashiur Rahman and Deputy Commissioner of Taxes Nusrat Farzana, attended the event as special guests.

Snehasish Barua, partner at Snehasish Mahmud and Co, presented the keynote paper, outlining the major fiscal measures proposed in the FY27 budget, including changes to tax, customs and VAT policies, and assessing their potential impact on business, trade and investment.

Moderating the session, BGCCI Senior Vice President Md Farooque Khan highlighted the importance of sustained engagement between the government and the private sector to foster a competitive business environment and support long-term economic growth.

BGCCI President Md Rokonuzzaman said the chamber would continue facilitating dialogue between policymakers and businesses while promoting bilateral trade and investment between Bangladesh and Germany.

The seminar also featured an interactive discussion, with participants exchanging views on taxation, customs procedures, VAT issues and other investment-related concerns with NBR officials and the keynote speaker.

The programme concluded with a vote of thanks from BGCCI Director and event chairman Md Jahangir Alam Sharker, who reiterated the chamber's commitment to strengthening public-private dialogue and supporting sustainable economic development.

The government is working to fully digitalise Bangladesh as quickly as possible to improve access to banking and financial services, enhance transparency and reduce the time and costs involved in receiving public services, Finance Minister Amir Khosru Mahmud Chowdhury said today (6 July).

Speaking as the chief guest at the "Innovation Showcasing 2025-26" programme organised by the Financial Institutions Division, the minister said every citizen - including businesses, farmers and workers - must be brought into the country's digital transformation so that the benefits of technology reach all segments of society, reads a press release.

He said the primary objective of digital technology is to simplify service delivery while ensuring greater transparency and accountability.

Referring to the FY27 national budget, Khosru said the government had sought to make development more inclusive by incorporating people from all walks of life, including artisans, artists and singers, adding that technology would play a key role in achieving that objective.

He also said the government has undertaken a broader initiative to increase citizens' participation in political, social and economic activities through the wider use of digital technology.

Highlighting international best practices, the finance minister said a high-level government delegation is currently visiting Estonia to study the country's digital governance and technological advancement.

The delegation includes the ICT adviser, Bangladesh Bank Governor Mostaqur Rahman and other senior government officials, reports UNB.

Khosru urged policymakers and financial institutions not to delay adopting proven international practices that could strengthen Bangladesh's financial sector.

Addressing officials of banks and financial institutions, he said the innovations showcased at the event were encouraging but stressed that continuous improvement would be necessary to achieve the country's digital transformation goals.

He called on banks and insurance companies to assess how many of their customers currently use digital services and take measures to expand that coverage.

The minister also urged branch officials to encourage customers to adopt online services instead of relying on conventional banking methods. Financial institutions should actively inform customers about available digital services through effective communication, he added.

He further emphasised expanding digital services across banks, insurance companies and capital market institutions so that people can access financial services easily from home or while travelling.

Reducing unnecessary travel, costs and harassment for citizens would save time and ultimately improve national productivity, he said.

According to information presented at the event, 329 public services provided by 25 offices and agencies under the Financial Institutions Division have so far been digitalised.

Much of the discussion surrounding Bangladesh's FY2026–27 energy budget has centred on a single headline figure: the reduction in overall budgetary allocation to the power and energy sector.

Yet an exclusive focus on the size of the allocation risks overlooking a far more important question: whether the budget provides a credible roadmap for addressing the structural challenges that have long constrained the country's energy sector.

The significance of this year's budget lies less in the scale of its allocation than in the direction of its policy priorities. The budget signals a gradual yet important transition from an import-dependent, subsidy-intensive and increasingly costly energy model towards a more diversified, secure and financially sustainable energy system. Viewed through this lens, the FY27 budget represents a strategic realignment of Bangladesh's energy policy.

More importantly, the budget reflects a growing recognition that energy policy is no longer merely about keeping the lights on; it is fundamentally linked to industrial competitiveness, export performance, investment attraction, employment generation and macroeconomic stability.

For an economy aspiring to accelerate industrialisation, strengthen its position in global value chains and sustain higher economic growth, reliable and affordable energy is no longer a supporting factor; it is a prerequisite.

The broader significance of the budget therefore extends well beyond the energy sector. Its success will ultimately be measured not only by megawatts generated or infrastructure built, but by its ability to strengthen economic resilience, enhance industrial productivity and reduce vulnerabilities associated with excessive dependence on imported energy.

Energy security as economic security

Energy security can no longer be viewed as a standalone sectoral concern; it has become a fundamental pillar of economic security. Bangladesh currently imports approximately 95% of its petroleum products, a significant share of its natural gas demand in the form of LNG, and nearly all of its LPG requirements. As a result, fluctuations in global energy markets have direct implications for inflation, foreign exchange reserves, fiscal stability and overall economic growth.

Recent geopolitical tensions in the Middle East, the aftermath of the Russia–Ukraine conflict and recurring disruptions to global supply chains have underscored a critical reality: countries with high levels of energy import dependence are increasingly vulnerable to external economic shocks. For Bangladesh, the challenge is not simply securing adequate energy supplies, but ensuring that energy remains affordable, reliable and resilient in an increasingly uncertain global environment.

In this context, the government's emphasis on domestic gas exploration, offshore bidding, refinery expansion, LNG infrastructure development and the creation of strategic energy reserves reflects a broader effort to strengthen the country's energy security architecture. These initiatives should therefore be viewed not merely as energy-sector projects, but as strategic investments aimed at enhancing economic resilience, reducing exposure to external shocks and supporting long-term sustainable growth.

Domestic gas: The foundation of affordable and secure energy

For Bangladesh, no energy source currently offers greater economic value than domestically produced natural gas. Every additional unit of domestic gas production reduces LNG imports, conserves foreign exchange, lowers electricity generation costs and eases the fiscal burden associated with energy subsidies.

With pressures on the balance of payments remaining elevated and energy demand continuing to grow, increasing domestic gas production remains one of the most effective ways to strengthen energy security and reduce exposure to external shocks.

The budget's emphasis on Bapex's exploration programme, including the drilling of 69 new wells, 31 workover operations, expanded seismic surveys and the procurement of new exploration rigs, represents one of its most strategically important initiatives. It signals a renewed policy focus on developing domestic energy resources rather than relying excessively on imported fuels to meet growing energy needs.

Exploration, of course, carries inherent risks, and not every well will lead to a commercial discovery. Yet countries that fail to invest in exploration effectively guarantee continued dependence on imported energy. From that perspective, the budget's renewed commitment to domestic resource development is both economically prudent and strategically necessary.

Offshore exploration: Bangladesh's next energy frontier

Few developments are likely to have a greater impact on Bangladesh's long-term energy future than a significant offshore gas discovery. Recognising this opportunity, the government has revised the Production Sharing Contract (PSC) framework and reopened 24 offshore blocks, nine shallow-water and 15 deep-water blocks, to international investors.

However, attracting major international energy companies will require more than competitive contract terms. Investors also place considerable emphasis on policy consistency, regulatory efficiency, access to high-quality geological data, profit repatriation mechanisms and foreign-exchange convertibility.

Encouragingly, the government appears to be pursuing a dual-track strategy: attracting international expertise and capital while simultaneously strengthening BAPEX's own exploration capabilities. This balanced approach can help combine global experience with domestic institutional development.

At a broader level, offshore exploration is not merely an energy initiative; it is a strategic investment in Bangladesh's future economic and energy security.

Renewable energy: From policy ambition to economic opportunity

Perhaps the most forward-looking aspect of the FY27 budget is its strong and sustained support for renewable energy. The government has proposed tax exemptions for the renewable energy sector until 2035, duty waivers on key solar components, tax incentives for battery manufacturing and energy storage technologies, and tax rebates for renewable energy users.

More importantly, it has reaffirmed ambitious targets of generating 20% of electricity from renewable sources by 2030 and between 30% and 50% by 2050.

Collectively, these measures signal a broader shift in policy thinking. For much of the past two decades, Bangladesh's energy strategy was primarily focused on expanding electricity generation capacity to meet rapidly growing demand. The challenge today is fundamentally different. The objective is no longer simply to generate more electricity, but to produce it in a manner that is more affordable, sustainable, resilient and economically efficient.

The success of the budget will ultimately be measured not only by megawatts generated or infrastructure built, but by its ability to strengthen economic resilience, enhance industrial productivity and reduce vulnerabilities associated with excessive dependence on imported energy.

The FY27 budget therefore reflects the early foundations of a broader transition from energy expansion to energy transition.

The significance of this transition extends well beyond its environmental benefits. For a country that remains heavily dependent on imported fuels, renewable energy is increasingly becoming an economic necessity as much as an environmental imperative. Diversifying the energy mix can reduce exposure to volatile international energy markets, strengthen long-term energy security and improve economic resilience.

At the same time, renewable energy presents a significant economic opportunity. The expansion of solar power, battery storage, energy management systems and associated supply chains could stimulate new investment, encourage technology transfer and create green employment opportunities.

Why grid modernisation matters

Achieving renewable-energy targets will require a comprehensive transformation of the energy system, not merely the addition of new generation projects. A modern energy system depends not only on how electricity is produced, but also on how efficiently it is transmitted, distributed, stored and managed.

As the share of renewable energy increases, investments in smart grids, battery storage, advanced transmission infrastructure and rooftop solar integration will become increasingly important. The next phase of Bangladesh's energy transition will therefore be less about building additional power plants and more about modernising the systems that connect, distribute and manage electricity.

Rooppur and Bangladesh's future energy mix

Another significant development highlighted in the budget is the anticipated integration of the first 1,200 MW unit of the Rooppur Nuclear Power Plant into the national grid. This represents an important milestone in Bangladesh's efforts to diversify its energy mix and establish a more balanced and resilient power system. Unlike solar and wind power, nuclear energy is not weather-dependent, while its exposure to international fuel-market volatility is generally lower than that of gas-fired generation.

As Bangladesh plans for the coming decades, a balanced energy portfolio combining domestic gas, renewable energy, nuclear power and regional electricity trade is likely to provide the most resilient and cost-effective pathway for meeting growing energy demand.

Power sector reform: The missing piece of long-term sustainability

The budget also acknowledges a critical reality: achieving energy security will ultimately require a financially sustainable power sector. Annual subsidies in the power and energy sector now exceed Tk40,000 crore. While subsidies have played an important role in maintaining affordability and supporting economic activity, their continued expansion is neither fiscally desirable nor economically sustainable.

Given these realities, the government's emphasis on reviewing capacity payments, reassessing power purchase agreements (PPAs), adopting least-cost generation principles and promoting competitive bidding represents an important step towards improving efficiency and strengthening financial discipline. These measures have the potential to reduce unnecessary costs, improve resource allocation and ensure that future investments deliver greater value for both consumers and taxpayers.

The challenge, however, is not simply to reduce subsidies, but to do so in a manner that preserves affordability, protects vulnerable consumers and maintains industrial competitiveness.

EVs and the future of energy demand

The budget's support for electric vehicles (EVs) deserves particular attention. While EV incentives are often viewed primarily through an environmental lens, they are equally important from the perspectives of energy security and economic efficiency.

The transport sector remains one of the largest consumers of imported petroleum products. Gradual electrification, particularly of public transport, could reduce dependence on imported diesel, improve urban air quality, lower carbon emissions and ease pressure on foreign exchange reserves.

Viewed through a broader policy lens, the expansion of electric mobility represents not merely a transformation of the transport sector, but a strategic component of Bangladesh's efforts to strengthen energy security, reduce dependence on imported fuels and advance the transition towards a cleaner, more resilient and sustainable energy future.

The bigger picture: From energy expansion to energy transition

The FY27 energy budget is not without its challenges. Important hurdles remain, including project implementation, financing constraints, regulatory reforms, institutional capacity and the need to sustain investor confidence. Yet despite these challenges, the broader policy direction is increasingly clear.

The budget seeks to bring together energy security, domestic resource development, renewable energy expansion, fiscal discipline, technological modernisation and sectoral governance within a single strategic framework.

Its significance therefore lies not in the size of the allocation, but in the vision it articulates for the future of Bangladesh's energy sector. At its core, the budget reflects a growing recognition that energy policy and economic policy are increasingly inseparable. Energy security, industrial competitiveness, export performance, investment attraction and macroeconomic stability are now deeply interconnected policy objectives.

If effectively implemented, the FY27 budget may ultimately be remembered not for the size of its allocation, but for marking the beginning of Bangladesh's transition towards a more secure, competitive and sustainable energy future, one that supports industrial transformation, strengthens economic resilience and enhances long-term growth prospects.

Inflation fell slightly in June but still remained above 9%, extending a three-month streak of elevated price pressures.

According to the latest data released by the Bangladesh Bureau of Statistics (BBS) today (6 July), point-to-point inflation at the national level stood at 9.16% in June, down from 9.42% in May. In preceding two months, i.e in March and April, the rate stood at 8.71% and 9.02% respectively.

In June last year, the rate was 8.48%.

Although the revised budget for FY2025-26 targeted average inflation at 7%, the goal was not achieved.

According to BBS, the 12-month moving average inflation for the period from July 2025 to June 2026 stood at 8.68%, down from 10.03% during the corresponding period from July 2024 to June 2025.

The BBS report shows that both food and non-food inflation declined in June. Food inflation fell to 8.60% in June from 9.06% in May, while non-food inflation eased to 9.61% from 9.71%.

Food inflation was 7.39% in June 2025, rising to 8.60% over the past year. During the same period, non-food inflation increased from 9.37% to 9.61%.

Explaining the slight decline in June inflation, Dr Mustafa K Mujeri, Executive Director of the Institute for Inclusive Finance and Development (InM), said the fall could largely be attributed to seasonal factors.

"First, the modest decline in inflation in June can largely be regarded as a seasonal effect. At this time of the year, supply generally improves, particularly for food items. As a result, market pressures ease somewhat and inflation temporarily declines. Therefore, it is reasonable to explain the decline in both food and non-food inflation primarily by seasonal factors," he said.

However, he cautioned that the decline should not be interpreted as a lasting shift.

"For most of the current fiscal year, inflation has remained persistently high and has not declined significantly. Overall, it has followed either an upward or consistently elevated trend, clearly indicating that the government has failed to achieve its inflation target," he added.

Mujeri said that despite the slight decline, inflation remained at an uncomfortably high level.

"Although inflation has eased somewhat, it is still too high to provide any real relief. The cost of living remains under considerable pressure because the current rate is still well above a desirable or tolerable level."

He stressed that effective measures were urgently needed to bring inflation under control.

"It will not be enough to rely solely on the central bank's monetary policy. Although the policy interest rate has been maintained at 10%, stronger coordination is needed through supply-side management, fiscal policy and market supervision. A comprehensive and robust policy response will be essential if the government is to achieve its target of bringing inflation down to 7.5%."

Mujeri also noted that fuel prices had contributed to inflationary pressures.

"Although the fuel sector has stabilised somewhat and prices have been adjusted in line with the market, the full impact has not yet been reflected in the economy. The effects of higher fuel prices usually take time to filter through, so they may become more evident in the coming months."

Professor Dr Sayema Haque Bidisha of the Economics Department at the University of Dhaka said June's modest decline should not be interpreted as a significant improvement.

"While it is a positive sign, it would be premature to describe it as a lasting trend. We need to observe the situation over the next one or two months to determine whether this is merely a temporary fluctuation or the beginning of a sustained decline. If inflation continues to fall consistently, that would certainly be encouraging."

Rural inflation falls to 9.23%

Inflation in rural areas also eased slightly in June, although it remained elevated.

According to BBS, point-to-point inflation in rural Bangladesh fell to 9.23% in June from 9.48% in May.

Food inflation in rural areas declined to 8.52% from 8.95%, while non-food inflation stood at 9.98%, virtually unchanged from the previous month.

Urban inflation declines to 9.01%

Inflation in urban areas also remained high in June despite a slight decline.

The BBS report showed that point-to-point inflation in urban areas fell to 9.01% in June from 9.25% in May.

Urban food inflation declined to 8.76% from 9.29%, while non-food inflation eased to 9.16% from 9.24%.

Wage growth continues to lag inflation

At the national level, point-to-point wage growth stood at 8.18% in June, down slightly from 8.21% in May.

According to BBS, wage growth has remained below the inflation rate for 52 consecutive months.

Bangladesh's export competitiveness is coming under increasing pressure ahead of its graduation from the least- developed country (LDC) status due to uncertainty over post-graduation market access, tougher compliance requirements, and new free-trade agreements (FTAs) signed by competing exporting countries, according to the Research and Policy Integration for Development (RAPID). Geographic

Weak infrastructure, high production costs, inefficient logistics, and slow export diversification are further constraining export growth, it says.

With Bangladesh preparing for LDC graduation, the research organisation has called for an urgent and coordinated competitiveness reform programme.

The observations came in a keynote paper presented at a workshop titled "LDC Graduation and Trade Competitiveness" and held at the National Press Club in the capital on Monday.

The presentation was delivered by RAPID Chairman Dr Mohammad Abdur Razzaque.

Speaking as the chief guest, Information and Broadcasting Minister Zahir Uddin Swapon called for making the most of the possible three-year LDC graduation extension by strengthening export competitiveness, implementing policy reforms, and preparing for post-LDC challenges.

He also stressed that sustainable development would not be possible without economy-friendly politics.

" Politics must support the economy. Otherwise, discussions on these issues will remain merely theoretical," he said.

The minister said although Bangladesh had not yet formally graduated from the LDC category, effective preparations must begin immediately to address the challenges in the export sector.Politics

Those challenges were expected to intensify after graduation, he added.

Swapon noted that the government had applied to the relevant United Nations committee in February this year to defer the graduation until November 2029.

The additional period, he said, should not be viewed as an opportunity for delay but as a window to complete the necessary preparations for a smooth transition.

"The government's policymakers and relevant officials are already working on the issue," he said, adding that if the extension was approved, it would facilitate policy reforms, boost export growth, remove administrative bottlenecks, and help the country better adapt to the post-LDC environment.

Presenting the keynote, Dr Razzaque said Bangladesh's export sector was entering a far more challenging global trading environment as competition intensified and preferential market access gradually eroded.

He noted that competitors such as India and Vietnam were expanding their network of free trade agreements, strengthening their position in key export destinations, including the European Union, while Bangladesh risked losing its traditional competitive edge after graduation.Economic Policy Reviews

He warned that the withdrawal of duty-free market access following graduation could expose Bangladeshi exports to higher tariffs, undermining their price competitiveness unless the country undertook comprehensive reforms.

At the same time, he observed that global trade was increasingly being shaped by environmental, climate, and labour-related standards, making compliance an essential requirement for sustaining market access.

According to Dr Razzaque, Bangladesh can no longer rely solely on low production costs.

Enhancing productivity, improving trade competitiveness, and meeting evolving sustainability and compliance requirements would be critical to maintaining export growth in the post-LDC era, he said.

Doulot Akter Mala, president of the Economic Reporters' Forum (ERF), attended the programme as the guest of honour.

She stressed the need for urgent strategic preparations ahead of graduation, saying the absence of a revised transition strategy, declining foreign direct investment (FDI), and weak competitiveness remained major concerns.Geographic Reference

Mala also called for restoring business confidence through stable policies, reducing bureaucratic hurdles, strengthening research and development, and aligning budgetary commitments with the country's economic realities.

Dr M Abu Eusuf, executive director of RAPID, delivered the address of welcome.

Bangladesh is no longer the biggest beneficiary of China's shrinking share in the global apparel market, with Cambodia and Vietnam overtaking it in attracting orders over the past four years, according to a new study by Research and Policy Integration for Development.

The study also warned that Bangladesh's readymade garment exports to the European Union could decline by more than 43% after its graduation from the least developed country category if exports become subject to the EU's most favoured nation tariffs.

The findings were presented at a workshop organised by RAPID at the National Press Club in Dhaka yesterday (6 July).

According to the study, China's share of the global apparel market fell from 26.33% in 2022 to 23.56% in 2025. However, Bangladesh failed to capitalise on the shift. Its global market share remained almost stagnant, slipping slightly from 11.67% in 2022.

During the same period, Cambodia's share rose from 3.34% to 4.26%, while Vietnam's increased from 8.57% to nearly 9%.

"Bangladesh is no longer the automatic beneficiary of orders shifting away from China, signalling a weakening position in the global apparel market," said RAPID Chairman Dr MA Razzaque while presenting the keynote paper.

The study showed that between 2015 and 2022, Bangladesh had been the biggest winner from China's declining dominance. During that period, China lost nearly 10 percentage points of global apparel market share, while Bangladesh gained 3.75 percentage points. Vietnam and Cambodia gained 2.46 percentage points and 0.90 percentage points respectively.

The trend changed after 2022. While China lost another 2.77 percentage points of market share between 2022 and 2025, Cambodia captured 0.90 percentage points and Vietnam gained 0.40 percentage points. Bangladesh's share, meanwhile, remained virtually unchanged.

Speaking to TBS, Razzaque attributed the slowdown to policy inconsistencies, an unfavourable investment climate, growing Chinese investment in Cambodia and Vietnam, and Bangladesh's limited capacity to produce man-made fibre and other high-value apparel products.

Industry leaders cited additional domestic challenges.

Fazlul Hoque, managing director of Plummy Fashions Ltd, said Bangladesh has failed to compete with regional rivals in attracting new business despite China's declining exports.

"For the past two and a half years, Vietnam, Cambodia and China have pursued aggressive marketing strategies, while Bangladesh has failed to do so," he told TBS.

He said high business costs, persistent energy shortages and elevated bank lending rates have weakened the country's competitiveness, discouraging new investment.

"We do not see signs of improvement in the near future," he added.

EU tariff risk after LDC graduation

The study also warned that Bangladesh's exports could face a sharp decline after the country graduates from the least developed country status if it fails to secure a preferential trade arrangement with the European Union.

According to the study, Bangladesh's total exports to the EU could fall by more than 36%, while RMG exports could decline by over 43% if the country becomes subject to the EU's Most Favoured Nation tariffs and competing exporters continue to enjoy duty-free access through free trade agreements.

The European Union currently accounts for about half of Bangladesh's roughly $48 billion annual exports.

Bangladesh now enjoys duty-free access to the European Union under the Everything But Arms scheme. However, this preferential treatment will expire after LDC graduation and the transition period unless a new trade arrangement is secured.

Meanwhile, key competitors such as Vietnam and India have already signed free trade agreements with the European Union, enabling them to export many apparel products at zero or preferential tariffs.

Without a similar agreement, Bangladeshi apparel exports could face Most Favoured Nation tariffs of up to 12%, significantly eroding the country's price competitiveness in its largest export market, the study said.

The workshop was attended by Information and Broadcasting Minister Zahir Uddin Swapon as the chief guest. RAPID Executive Director Dr M Abu Yusuf moderated the programme, while Economic Reporters' Forum President Doulot Akter Mala also spoke.

Bangladesh Bank (BB) has introduced a Tk 30 billion refinancing scheme to accelerate agricultural production, agro-processing, preservation infrastructure and export-oriented activities in the Rajshahi and Rangpur divisions.Geographic Reference

To this end, the central bank issued a circular today, saying the fund aims to transform the country’s northern region into a competitive agro-based economic hub by addressing supply chain bottlenecks, reducing post-harvest losses and expanding value-added agricultural industries.

The refinancing facility will remain effective for three years from the date of the circular.

According to the circular, scheduled banks will receive refinance from Bangladesh Bank at an interest rate of 4 percent and will not be allowed to charge borrowers more than 9 percent. The ceiling applies to both conventional and Shariah-based financing.

Bangladesh Bank said the initiative seeks to increase production in the crop, fisheries and livestock sectors, strengthen preservation and marketing facilities, promote agro-based industries and CMSMEs, boost exports of agricultural products and generate employment in the northern region.

Of the total fund, 15 percent has been allocated for agricultural production, including crop cultivation, fisheries, livestock and irrigation equipment.

Another 35 percent will finance preservation and infrastructure projects, including cold storage, warehouses, silos and cold-chain logistics, while working capital will also be eligible under this category.

A further 35 percent has been earmarked for agro-processing industries, including automatic rice mills, bio-fertiliser plants and biotechnology-based vaccine and medicine manufacturing. Working capital for these industries will also qualify for financing.

The remaining 15 percent will support export-oriented processing and supply of agricultural products.

Under the scheme, individual farmers or groups will be eligible for loans of up to Taka 30 lakh for production activities. Loans of up to Taka 40 crore will be available for preservation infrastructure and agro-processing industries while export-oriented projects will be eligible for financing of up to Taka 15 crore. Banks may increase these limits by up to 20 percent based on justified demand.

The repayment period has been fixed at a maximum of 18 months, including a three-month grace period, for production loans. Loans for preservation, processing and export sectors will have a tenure of up to 36 months, including a grace period of three to six months.

To encourage financial inclusion, Bangladesh Bank has instructed banks to consider alternative collateral arrangements, including personal, social and group guarantees, for women entrepreneurs and marginal farmers who lack conventional security.

The central bank also directed that the refinancing facility be used only for fresh loan disbursements and not for adjustment, rescheduling or settlement of existing loans.

Banks must sign a participation agreement with the Agricultural Credit Department-2 (ACD-2), which will administer the scheme. Refinance claims must be submitted by the 15th of the following month, while delayed claims beyond two months without valid justification will not be accepted.

Bangladesh Bank warned that any bank charging borrowers above the prescribed interest ceiling or misusing the refinancing facility would be subject to an additional 2 percent penal interest on the misused amount.

The circular, issued under Section 45 of the Bank Company Act, 1991, came into effect immediately.