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

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

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

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

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

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

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

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

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

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

Panda bond financing

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

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

Bida meeting with Chinese delegation tomorrow

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW BANGLADESH COMPARES WITH ITS PEERS

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

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

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

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

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

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

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

HIGH TAX RATES, WEAK RETURNS

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

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

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

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

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

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

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

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

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

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

BROADENING TAX NET THE KEY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Startups and IT-based businesses may no longer have to pay turnover tax from the next fiscal year, as the government looks to encourage entrepreneurship and innovation.

Around 5 lakh freelancers and individual content creators are also likely to be exempt from the existing 7.5 percent source tax in the 2026-27 national budget.

In addition, the government is considering reducing source tax on mobile network services, such as phone calls, text messages and data packages, from 12 percent to 10 percent.

“A zero turnover tax provision is likely to be applicable for innovative startups, marking one of the most notable fiscal relaxations for the sector in recent years,” said a finance ministry official, seeking anonymity.

A startup is a newly established business, usually small, built around an innovative idea, product or service. Under tax law, annual turnover must be below Tk 100 crore to qualify in this category. Some well-known local startups include Pathao, Shohoz.com and Chaldal.com.

According to industry estimates, Bangladesh now has more than 1,200 active startups, directly and indirectly employing around 15 lakh people. These small businesses currently pay a 0.1 percent turnover tax -- a tax levied on the gross sales of a business regardless of expenses or profitability.

On the other hand, an IT-based business is any company that mainly uses information technology to deliver products or services, ranging from Facebook pages selling goods to mobile financial services such as bKash.

Regarding the budget boost for the telecom sector, finance ministry officials said the government plans to impose 15 percent VAT on SIM cards instead of the existing flat fee of Tk 300.

They said these measures are designed to support the country’s rapidly expanding digital economy at a time of intensifying global competition in the tech sector.

Finance Minister Amir Khosru Mahmud Chowdhury is expected to formally propose the measures while presenting the national budget in parliament on June 11. Officials said the proposals have already received in-principle approval from Prime Minister Tarique Rahman at a high-level meeting last month.

Industry people said removing the turnover tax could help new startups survive the critical early years, when many businesses struggle with cash flow and operational sustainability.

Former BASIS president AKM Fahim Mashroor said the decision would particularly benefit early-stage firms, allowing them to reinvest initial revenues into growth rather than tax payments, and that easing fiscal pressure could improve survival rates among early-stage companies.

Raisul Kabir, founder and chief executive officer of Brain Station 23, one of Bangladesh’s largest software firms, also welcomed the move, saying tax burdens often weigh heavily on businesses in their early stages.

Kabir said simplifying the tax structure would allow entrepreneurs to focus more on building products and scaling operations.

While welcoming the zero turnover tax proposal for startups, Pathao chief executive officer Fahim Ahmed said the eligibility criteria must be designed in a non-restrictive way so that companies generating meaningful revenues can also benefit.

He said previous proposals placed undue restrictions on operational duration and maximum turnover when determining eligibility.

Ahmed also called for a reduction in withholding tax and VAT withholding at source for startups and tech-enabled firms, saying most operate in informal sectors where vendors often do not have a tax or VAT footprint.

“The requirement to withhold taxes and VAT from such vendors results in a cost increase for such startups and ultimately limits scalability or risks passing such cost burden to the customers,” he said.

In the next budget, the government is also considering exempting income from annual turnover of up to Tk 50 lakh for SME entrepreneurs, and up to Tk 70 lakh for women entrepreneurs and entrepreneurs with disabilities.

To promote industrial decentralisation, it may introduce accelerated depreciation benefits for investment in plant, machinery and equipment for manufacturing, tourism and sports facilities outside the Dhaka and Chattogram city corporation areas.

The proposed incentive would allow businesses to claim depreciation at 60 percent in the first year and 40 percent in the second year.

Officials said the measures are aimed at boosting private investment, supporting small businesses and creating jobs across the country.

Bangladesh’s economy appears to have expanded at a faster pace in May than in the previous month, supported largely by stronger activity in the manufacturing and services sectors, as the Bangladesh Purchasing Managers’ Index (PMI) climbed 8.2 points from April to 62.8 in May.

Meanwhile, the construction sector returned to expansion, while growth in the agriculture sector slowed, according to the May PMI report released by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and Policy Exchange Bangladesh (PEB).

“The May PMI shows that the Bangladesh economy moved onto a stronger expansionary path, with manufacturing, construction and services recording faster growth compared with April,” said M Masrur Reaz, chairman and CEO of PEB.

“Although the Middle East conflict has continued to raise energy costs, disrupt supply chains and sustain inflationary pressures, stronger domestic demand and increased business activity ahead of Eid appear to have supported broader-based expansion across major sectors.”

The PMI is a pioneering initiative designed to provide timely and accurate insights into the country’s economic health, helping businesses, investors and policymakers make informed decisions.

It was developed by MCCI and Policy Exchange, with support from the UK government and technical assistance from the Singapore Institute of Purchasing & Materials Management (SIPMM).

According to the report, the agriculture sector recorded its ninth consecutive month of expansion, albeit at a slightly slower pace.

Business activity and employment posted stronger growth, while new business and input costs expanded at a slower rate. However, the order backlogs index remained in contraction.

The manufacturing sector registered faster expansion, marking its second consecutive month of growth. The stronger performance was driven by robust increases in new orders, new exports, input purchases and employment.

Growth in factory output and input prices moderated. Contractions in finished goods persisted, although supplier deliveries contracted at a slower pace. Both imports and order backlogs returned to expansion.

The construction sector returned to growth after three consecutive months of contraction. New business, construction activity and employment all reverted to expansion.

Input costs expanded at a faster pace, while the growth of order backlogs slowed.

The services sector expanded for the 20th consecutive month and at a faster pace than in April. Business activity, employment and input costs all recorded stronger growth, while new business returned to expansion. However, order backlogs contracted at a faster pace.

Respondents across Bangladesh’s major economic sectors said business conditions remained challenging in May 2026 due to persistent electricity and energy shortages, rising fuel prices, increasing labour costs and higher transportation expenses.

Many firms reported that electricity disruptions continued to affect productivity and production schedules, while escalating input costs further squeezed profit margins.

Several respondents expressed concerns over the potential economic impact of ongoing geopolitical tensions in the Middle East, particularly the risk of higher fuel prices, supply-chain disruptions and weaker export demand.

Agricultural businesses highlighted weather-related uncertainties affecting seed sales and production planning. Some firms also raised concerns about imported rice, high bank interest rates and the broader slowdown in domestic economic activity.

Despite these challenges, a number of respondents remained cautiously optimistic, expecting business conditions to improve if the energy situation stabilises, economic conditions strengthen and supportive policy measures are introduced for businesses, particularly SMEs.

The Bangladesh Bank has launched four refinance schemes worth a combined Tk 19,000 crore to ease financing constraints on small businesses and farmers, stimulate green investment, generate employment and reduce the country’s heavy dependence on the readymade garment sector for export earnings.

The central bank announced the funds through separate circulars issued on June 7 and June 8, covering a Tk 5,000 crore working capital fund for cottage, micro, small and medium enterprises (CMSMEs); a Tk 3,000 crore export diversification scheme; a Tk 10,000 crore agricultural refinance scheme; and a Tk 1,000 crore green industries and factories fund.

Under all four schemes, participating banks may obtain refinancing from Bangladesh Bank at rates ranging from 2 to 4 percent and lend to customers at maximum rates between 5 and 9 percent, depending on the scheme.

Funds for the CMSME and the export diversification schemes will be drawn from the surplus liquidity of scheduled banks, while the agriculture and green factory schemes will be funded from Bangladesh Bank’s own resources.

The announcements come as businesses continue to struggle with high borrowing costs, liquidity shortages and weak demand, while policymakers seek to broaden the country’s export base and strengthen food security amid growing global competition.

Tk 5,000cr FOR CMSMEs

CMSMEs remain a key driver of Bangladesh’s economy through job creation, support for local industries and production of import-substituting goods. Yet many such enterprises struggle to secure adequate working capital, preventing them from operating at full capacity.

The revolving fund will stay operational for three years. It will cover working capital loans and investments extended to CMSMEs that cannot run at full capacity due to working capital shortages.

Renewed working-capital facilities will also qualify. Borrowers classified as defaulters in the Credit Information Bureau (CIB) database will not be eligible.

The central bank said the objective of the fund is to help businesses increase production capacity, strengthen economic activity and create both direct and indirect employment opportunities across the country.

Tk 3,000cr FOR EXPORTS

The export refinance scheme targets non-garment sectors, with the BB citing the economy’s heavy concentration in RMG as a vulnerability to sector-specific shocks and shifts in global demand.

Refinancing support will be available for industries listed under the highest-priority and special development sectors in the Export Policy 2024-27. Priority will go to producers and exporters using domestically sourced raw materials, particularly in jute and leather.

Financing will be in the form of term loans or investments in local currency. The scheme will run for three years and may include a grace period of up to six months, BB stated in the circular.

Borrowers must maintain a satisfactory credit record. Defaulters will not qualify, and applications will be rejected if export proceeds are not repatriated through the formal banking channel.

Participating banks will also be required to collect updated CIB reports before applying for refinancing support.

According to the BB, many export-oriented industries possess strong growth potential but have failed to expand because of inadequate access to financing. The refinance facility is expected to address this gap and encourage fresh investment in emerging export sectors.

Tk 10,000cr FOR AGRI AND LIVESTOCK

The scheme, the largest of the four, is aimed at boosting agricultural production, strengthening national food security and generating employment in rural areas.

Scheduled banks participating in BB’s agricultural and rural credit programme will receive refinancing at 4 percent and may lend to farmers and entrepreneurs at a maximum of 8 percent.

The five-year fund, financed from the central bank’s own resources, will be managed by its Agricultural Credit Department-1.

The scheme covers crop cultivation, fisheries, livestock, agricultural machinery, irrigation equipment and other income-generating agricultural activities.

Small and marginal farmers may obtain loans of up to Tk 5 lakh for crop production without collateral, against crop hypothecation.

Loan ceilings have been set at Tk 30 lakh for crop production; Tk 15 lakh for livestock and other agricultural activities; Tk 20 lakh for agricultural machinery; and Tk 1 crore for fisheries and livestock projects.

Banks will be required to maintain separate accounts, submit regular reports and ensure proper monitoring of loan utilisation and recovery under the scheme.

Tk 1,000cr FOR GREEN INDUSTRIES AND FACTORIES

The fund is designed to accelerate investment in green industries and environmentally sustainable factory buildings, in support of Bangladesh’s climate and sustainable development goals.

Under the scheme, banks and financial institutions will be able to access refinance support at a 2 percent interest rate -- the lowest rate among the four schemes -- and lend to eligible borrowers at a maximum of 5 percent.

The scheme’s tenure will range from three to 10 years, with a grace period of up to one year. The fund, sourced from Bangladesh Bank’s own resources, will take immediate effect.

The facility will finance the establishment of green industries and factory buildings certified or pre-certified under internationally recognised standards, including LEED, EDGE, BEEER and GreenARCH.

A single borrower may receive up to Tk 100 crore, with projects required to maintain a minimum debt-equity ratio of 70:30. Defaulted borrowers will not be eligible.

Participating banks and financial institutions must comply with the BB’s sustainable finance, environmental and social risk management, and climate risk management and disclosure guidelines.

MONITORING

To access any of the four facilities, scheduled banks must sign participation agreements with the BB and meet all relevant risk management and regulatory requirements.

The central bank will monitor fund utilisation through reporting requirements and on-site inspections. Misuse of funds, submission of inaccurate information or non-compliance with scheme conditions could result in cancellation of refinancing facilities and financial penalties.

After more than a decade of delays due to administrative, financing and implementation hurdles, the proposed Chinese Economic and Industrial Zone in Chattogram's Anwara upazila is finally moving towards implementation.

The Bangladesh Economic Zones Authority (Beza) is working to complete the developer agreement and secure approval for the project's supporting infrastructure before Prime Minister Tarique Rahman's scheduled four-day visit to China starting on 23 June.

As part of that effort, a Tk4,189.46 crore infrastructure development project for the economic zone will be placed before the Executive Committee of the National Economic Council today (9 June).

The project has been initiated by the Prime Minister's Office, while Beza will serve as the implementing agency.
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According to sources, a delegation from the Export-Import Bank of China (China Exim Bank) is scheduled to meet Beza tomorrow to discuss financing arrangements, infrastructure development and implementation mechanisms.

"We hope to complete the developer agreement with the Chinese company within this month," Beza Executive Chairman Ashik Chowdhury told The Business Standard yesterday.

"Our target is to finalise the agreement before the prime minister visits China," he added.

The Chinese economic zone is being developed on nearly 800 acres in Anwara under a government-to-government initiative between Bangladesh and China. Although the two countries reached an understanding on the project in 2014, progress remained stalled for years due to complications surrounding developer selection, financing arrangements and administrative procedures.

Initially, China Harbour Engineering Company Limited was expected to develop the project, but failure to finalise an agreement led to years of delays. In 2022, the Chinese government nominated China Road and Bridge Corporation as the new developer.

Officials said preparation and approval of the Development Project Proposal also took considerable time. While Beza is responsible for off-site infrastructure such as roads, gas, electricity and water connections, the developer will carry out internal development works. Lack of coordination between the two components slowed implementation.

According to Beza, all required land acquisition has already been completed and infrastructure construction can begin once the developer agreement is signed.

Under the revised development project proposal submitted to Ecnec, the project includes construction of a multipurpose jetty with a capacity of 20,000 deadweight tonnes, a jetty access road and bridge, four-lane roads, a 25-million-litre central effluent treatment plant, power substations and transmission lines, gas supply facilities, water reservoirs, boundary walls and other supporting infrastructure.

Of the total project cost, Tk1,722 crore will come from government funds, while Tk2,467 crore is expected from China's Preferential Buyer's Credit facility.

Explaining the rationale behind the site selection, Beza said the upazila was chosen for the project due to its strong geographical and economic advantages, making it a strategically important location.

The area is situated close to key national infrastructure, including Chittagong Port, Karnaphuli Tunnel, Shah Amanat International Airport, and several industrial hubs in the port city.

Beza estimates the economic zone will generate at least 100,000 direct and indirect jobs and attract around $500 million in foreign investment. The zone is expected to draw investment in textiles, pharmaceuticals, light engineering, information technology and other manufacturing sectors.

Major General (retd) Md Nazrul Islam, executive member (Planning and Development) at Beza, told TBS that the project would be implemented over five years if approved by Ecnec and is scheduled for completion by 31 December 2031.

"Although five years have been allocated for the entire project, we expect to prepare at least 60% of the factory-ready industrial plots within the first three years," he said.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bangladesh on Monday sought Spain’s support at the United Nations General Assembly (UNGA) for its smooth graduation from the Least Developed Country (LDC) category.

The appeal was made when Spanish Ambassador to Bangladesh Gabriel María Sistiaga Ochoa de Chinchetru called on State Minister for Foreign Affairs Shama Obaed Islam at the foreign ministry here, said a ministry’s press release.

During the meeting, the state minister highlighted the importance of strengthening bilateral and multilateral cooperation and sought Madrid’s backing for Bangladesh’s post-LDC transition efforts.

Shama also reiterated the need for stronger and sustained international attention and support to resolve the protracted Rohingya crisis.

The Spanish envoy congratulated Bangladesh on its election to the presidency of the 81^st session of the United Nations General Assembly (UNGA) for the term 2026-2027.

Both sides underscored the importance of a Free Trade Agreement (FTA) between Bangladesh and the European Union to boost trade and economic cooperation.

The two sides reaffirmed their commitment to advancing the mutually beneficial partnership between Bangladesh and Spain and explored avenues for expanding cooperation in trade, investment, supply chains, railway connectivity, education, skills development, migration, sports, culture and people-to-people exchanges.

They also discussed the possibility of holding bilateral consultations and arranging high-level visits to further strengthen bilateral relations.

The discussions also covered regional and global developments, with both sides emphasizing the importance of peace, stability and enhanced international cooperation.

Bangladesh Bank (BB) on Monday launched a Tk 50 billion (Tk 5,000 crore) revolving refinance fund for the Cottage, Micro, Small and Medium Enterprise (CMSME) sector to ease working capital shortages, boost production and support employment generation.

The central bank introduced the fund through an SMESPD circular issued by its SME and Special Programmes Department, utilizing surplus liquidity of scheduled banks. The scheme will remain effective for three years from the date of issuance.

According to the circular, the fund aims to strengthen production activities, revive economic momentum and create direct and indirect employment opportunities by providing working capital support to active CMSMEs facing financial constraints.

Under the scheme, Bangladesh Bank will provide refinance to participating banks at an interest or profit rate of 4 percent, while banks may charge a maximum interest or profit rate of 9 percent to end borrowers.

The revolving nature of the fund will ensure continued liquidity as repayments are recycled into new financing. Interest will be calculated quarterly in March, June, September and December.

Borrowers will be eligible for a grace period of three to six months before repayment of installments begins.

The circular directs Shariah-based banks and Islamic banking windows of conventional banks to provide financing under approved Shariah-compliant models while maintaining the maximum profit rate of 9 percent and complying with all conditions of the scheme.

Active CMSMEs experiencing production or service disruptions due to working capital shortages will be eligible for financing under the fund. Refinance facilities will also be available against renewed working capital loans.

However, borrowers classified as defaulters by the Credit Information Bureau (CIB) will not qualify for the facility.

Bangladesh Bank said clients already benefiting from other refinance schemes may also be considered for financing under the new fund, subject to banks’ assessment and credit limits.

All scheduled banks will be eligible to participate after signing a Participation Agreement with Bangladesh Bank’s SME and Special Programmes Department.

Banks maintaining an advance-to-deposit ratio (ADR) or investment-to-deposit ratio (IDR) above 70 percent will receive priority in accessing the fund, although they must remain within overall regulatory limits.

The central bank said participating banks would bear full responsibility for loan recovery and would be required to repay Bangladesh Bank regardless of whether funds are recovered from borrowers.

To mitigate credit risk, banks may obtain collateral from clients but will not be allowed to charge any fees beyond the approved Schedule of Charges.

Bangladesh Bank expects the fund to contribute to income growth, employment generation and the development of import-substituting products and services, while supporting small entrepreneurs and stimulating industrial activity.

Issued under Section 45 of the Bank Company Act, 1991, the circular takes immediate effect. Bangladesh Bank also reserved the authority to inspect loan utilization and seek relevant documents from participating banks to ensure compliance with the scheme’s provisions.

The central bank has found the Section 18(a) of the Bank Resolution Act, which provides for ownership return of the merged troubled banks not 'maintainable' and has recommended its deletion.

Bangladesh Bank Governor Md Mostaqur Rahman expressed such view Monday as Editors' Council in a meeting with him expressed deep concern over the impugned section of the act and stressed the need for its further scrutiny for the sake of the banking sector.

The apex body of editors of the country's leading print-media outlets raised the concern and also listed other financial-sector problems during the meeting with the BB Governor at the central bank's headquarters in Dhaka.

Explaining reasons for suggesting removal of the section, the BB governor said, " There is no scope for application of the provision. The government has already invested nearly Tk. 520 billion in five merged Islamic banks, namely, Sammilita Islamic Bank. These banks in total have Tk. 1.32 trillion depositors' money, Tk. 320 billion performing loans and Tk. 1.64 trillion non-performing loans. It might be possible to recover Tk.200--Tk.300 billion. Thus. There will be a gap of at least Tk 650 billion. None, it seems, would come to reclaim ownership. Already two months have elapsed since adoption of the law. None has showed interest until now."

Members of the council, led by its president and New Age Editor Nurul Kabir, discussed a range of issues affecting the country's banking sector with the leadership of the banking regulator.

The council members also shared their concerns over the challenges facing the banking sector, particularly the rising volume of non-performing loans, the need to establish good governance in banks, the security of depositors' funds, and the current situation on the foreign- exchange market.

Emerging from the meeting, Nurul Kabir said the governor informed them about various reform initiatives and plans undertaken by the central bank to address the sector's problems and assured them that necessary measures would be taken.

The meeting also discussed the recent instability surrounding Islami Bank Bangladesh PLC as well as issues related to inflation control, investment and employment conditions, and various aspects of the proposed new national budget.

The Editors' Council emphasised the need for effective measures to ensure transparency, accountability and stability in the banking sector.

In a press release, the central bank stated that the BB governor briefed the editors on its ongoing reform agenda aimed at strengthening the country's banking sector. Key issues discussed included the management of non-performing loans (NPLs), governance reforms, oversight on weak banks, foreign-exchange market stability, digital transformation, and measures to ensure overall financial-sector stability.

Governor Mostaqur Rahman updated them on the merger progress of financially weak banks, noting that some administrative and management-related changes have already been completed. "The process is expected to gain a momentum following upgradation of the banks' Core Banking Systems (CBS)."

Addressing the challenge of default loans, the governor informed that the amendment and changes in the existing money loan court to ensure faster settlement of the cases linked to defaulted loans got underway.

"Simultaneously", it says, "the governor told them that distressed-asset- management company act will also be formulated to deal with unrecoverable assets more effectively."

The editors have also been informed that the BB's stolen asset-recovery moves helped freeze laundered assets worth $25 million in the United Kingdom (UK), which will be brought back soon.

Emphasizing the importance of "depoliticizing" the banking sector, the governor said the central bank's reform programme "is focused on ensuring professionalism, accountability, and good governance in bank management and lending practices".

Participants were also informed about regulatory measures taken in several large banks, including Islami Bank Bangladesh PLC, involving board restructuring, management changes, and initiatives aimed at protecting depositors' interests.

The governor also disapproved of the owning of any bank by any political party, saying that people from all walks of life should have confidence in the operations of a bank.

On digital transformation, Mr. Rahman said the central bank was working to build an integrated digital financial ecosystem. Planned initiatives include expanding digital-payment services, introducing AI-based credit-assessment systems, broadening agent-banking services, and implementing the "One Citizen, One Identity, One Wallet" concept to enhance access to digital financial services.

The governor further notes that wider adoption of Bangla QR could accelerate cashless transactions, improve transaction security, and contribute to higher government revenue collection.

In cases where patients require foreign currency exceeding the approved limit for medical treatment abroad, the governor said the regulator is providing approval as quickly as possible upon application through the bank concerned.

"In addition, the interest rate on funds used for bill discounting under the UPAS (Usance Payment at Sight) facility has been reduced, which is expected to help lower the prices of goods," the BB statement says.

Other council members who attended the meeting are Editor of The Financial Express Shamsul Huq Zahid, Editor of Bonik Barta Dewan Hanif Mahmud, Editor of Manabzamin Matiur Rahman Chowdhury, Editor of Prothom Alo Matiur Rahman, Editor of Daily Inqilab AMM Bahauddin, Editor of The Daily Samakal Shahed Mohammad Ali and Editor of Agamir Somoy Mustafa Mamun.

Bangladesh's trade deficit widened significantly during the first 10 months of the current fiscal year as import growth outpaced exports despite the fact that robust financial inflows helped keep the overall balance of payments (BoP) in surplus.

The trade deficit rose to $22.2 billion during the July-April period of FY26.

Exports fell by 1.5 per cent year on year to $36.02 billion, while imports spiked by 6.2 per cent to $58.2 billion, during the period under review.

The rise in imports was largely driven by higher purchases of fuel and food grains.

The imports of petroleum products climbed 72 per cent to $7.64 billion, while wheat imports surged by 49 per cent to $1.96 billion.

The increased fuel imports reflected higher domestic demand as well as elevated global energy prices amid the ongoing geopolitical tensions in the Middle East over the US-Israel attack on Tehran, now on a ceasefire.

The current account deficit, another key component of the BoP, widened to more than $1.0 billion during the July-April period from $586 million in the July-March period of this fiscal year.

The capital account, however, posted modest growth, increasing by more than 9.0 per cent year-on-year to $325 million.

The financial account recorded a sharp improvement as it rose to $4.47 billion during the period from $1.13 billion in the corresponding period a year earlier.

Net foreign direct investment (FDI) inflows stood at $1.14 billion, down more than 20 per cent from a year earlier.

Portfolio investment, which reflects foreign investment in capital market instruments, remained negative, recording a net outflow of $132 million during the period under review.

Data also showed that medium- and long-term (MLT) loan disbursements declined by around 20 per cent, while MLT loan amortisation payments increased by more than 19 per cent.

Despite the wider current account deficit, the overall balance of payments remained in surplus at $3.74 billion, indicating that foreign currency inflows exceeded outflows during the period.

The surplus helped the Bangladesh Bank strengthen its foreign exchange reserve position amid huge import payments.

Dr Zahid Hussain, an independent economist, says the country's external sector remained in a favourable position despite the widening current account deficit mainly due to strong inflows through both financial account and remittances.

"The positive development is that the imports of capital machinery increased by 6.1 per cent during the period, suggesting continued expansion of manufacturing activities and investment in productive sectors," he said.

BD Thai Food & Beverage Limited, a listed company on the stocks exchanges, has inked a manufacturing agreement with Sajeeb Group and Evergreen Beverage to produce carbonated soft drinks by ensuring full utilisation of its production capacity.

According to a stock exchange disclosure issued yesterday, Sajeeb Group and Evergreen Beverage will jointly utilise 70% of BD Thai Food's carbonated soft drink production capacity, while BD Thai Food will use the remaining capacity to manufacture its own beverages.

Under the agreement, Sajeeb Group will manufacture its "Wings" brand soft drinks and Evergreen Beverage will produce "Suncrest" brand beverages using BD Thai Food's carbonated soft drink production line.

According to the disclosure, BD Thai Food will earn manufacturing fees, which will help cover utility costs, salaries and wages, factory overheads, and financing expenses.

The company said full utilisation of its carbonated soft drink production line would enable the factory to operate at 100% capacity, boosting profitability and safeguarding the interests of shareholders and other stakeholders.

BD Thai Food, which markets juices, carbonated beverages, hard and soft candies, lollipops, and chewing gum under the Nectar brand, reported a loss of Tk13.40 crore in FY25. Owing to the losses, the company did not declare any dividend for shareholders.

In the first nine months of the current fiscal year, the company incurred a loss of Tk5.94 crore, translating into a loss per share of Tk0.73 as of March 2026.

BD Thai resumes operations after robbery

In a separate disclosure yesterday, BD Thai Food said production has resumed smoothly after a major robbery at its factory on 10 February. The robbery resulted in the theft of valuable cables and other equipment, rendering the factory inoperable.

The company subsequently invested a substantial amount to restore its electrical substation, generator and power cable network, enabling normal operations to resume. Currently, factory's production is running smoothly.

Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) on Sunday approved BD Thai Food & Beverage's proposal to raise Tk15 crore through a fixed-price initial public offering.

The company had previously raised Tk15 crore through an IPO in 2021 at a face value of Tk10 per share to support business expansion.

Shares of BD Thai Food closed at Tk26.30 each yesterday on the Dhaka Stock Exchange (DSE).

The Bangladesh Securities and Exchange Commission (BSEC) has withdrawn the floor price - the minimum price limit - imposed earlier on shares of Beximco Limited and Islami Bank Bangladesh PLC, paving the way for a return to normal market-based trading.

The decision was made at a special commission meeting held today (8 June) and subsequently formalised through an official circular.

With effect from tomorrow, both stocks will trade freely without any minimum price restriction, ending a prolonged period of regulated pricing that had limited natural market movement.

BSEC spokesperson Abul Kalam confirmed that the removal of the floor price will come into effect from tomorrow.

He said the last floor price levels stood at Tk110.10 for Beximco Limited while Tk32.60 for Islami Bank Bangladesh PLC.

Both the two stocks had been trading at these fixed levels for an extended period, leading to a virtual stagnation in market activity.

Market participants believe the decision will help restore a more realistic price discovery mechanism in the capital market.

However, they also warned that short-term selling pressure and volatility may increase in these two counters once trading resumes without restrictions.

The move comes after the new commission had already indicated plans to gradually withdraw floor prices as part of broader capital market reforms.

Earlier yesterday (7 June), during a meeting with the Dhaka Stock Exchange (DSE) delegation, the commission signaled its policy direction regarding market liberalisation and structural improvements.

Discussions also covered investor confidence building, deregulation, automation, modernised surveillance systems, simplified IPO approvals, and strengthening the autonomy of stock exchanges.

The floor price mechanism was first introduced on 19 March 2020 during the Covid-19 pandemic, when global markets faced severe volatility.

It was designed to prevent panic selling and sharp declines by setting a minimum allowable price based on the average of the previous five trading days. While it initially helped stabilize the market, prolonged use later created unintended consequences.

In 2022, against the backdrop of mounting global economic uncertainty - fuelled by the Russia-Ukraine war, acute dollar shortages, rising inflationary pressure, and a prolonged domestic market downturn - the regulator reintroduced floor prices across most listed securities.

The move, however, came at a significant cost. A large portion of the market became effectively inactive, as stocks could not trade below their set minimum limits, severely restricting liquidity and hampering the natural process of price discovery.

The regulator had defended the mechanism, arguing it was necessary to prevent excessive price declines, shield retail investors from panic-driven selling, and preserve overall market stability during a period of acute crisis.

Market experts, however, have long pushed back against the measure, contending that it distorted natural price formation and eroded the efficiency of the capital market over time.

Although most listed stocks were gradually freed from the floor price system, Beximco and Islami Bank remained exceptions due to their specific financial and operational challenges.

Market analysts noted that both companies were facing significant stress, including debt concerns and profitability pressure, raising fears of sharp corrections if restrictions were removed abruptly.

Experts now expect that lifting the floor price will lead to increased volatility in the short term, particularly in these two stocks.

However, in the long run, the move is expected to strengthen market-based pricing, improve transparency, and enhance liquidity across the market.

Globally, most developed and emerging markets do not use long-term floor price systems. The United States relies on circuit breakers to temporarily halt trading during extreme volatility.

India and China use daily price bands to limit excessive fluctuations, while Pakistan and Sri Lanka also apply temporary control mechanisms.

However, prolonged price freezing as seen in Bangladesh is rare internationally.

Market analysts view this decision as more than just a technical adjustment for two stocks. It is widely seen as a significant step toward a more liberal, efficient, and internationally aligned capital market structure in Bangladesh, where price discovery can function freely and investor participation can return to normal levels.

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

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

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

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

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

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

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

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

Locally manufactured AC, refrigerator prices may decline

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

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

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

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

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

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

Gold, mobile phones, healthcare items may get cheaper

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

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

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

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

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

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

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

Items that may become more expensive

Some products may see higher taxes.

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

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

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

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

Bangladesh has set itself an ambitious objective: developing a creative economy that can generate jobs, exports and investment through media, entertainment and digital content.

Policymakers increasingly recognise that film, television, streaming platforms and digital creators can become important drivers of economic growth, employment and global reach of Bangladeshi content.

For this ambition to succeed, Bangladesh must also address a growing challenge that threatens the long-term sustainability of the media and entertainment ecosystem.

A creative economy can only thrive when creative assets have value.

When intellectual property is routinely copied, redistributed and consumed without authorisation, the incentives that drive investment, innovation and content creation begin to erode.

Piracy is therefore no longer merely a copyright issue -- it is a direct challenge to Bangladesh's creative economy ambitions.

In Bangladesh today, illegal access to broadcast and entertainment content is no longer confined to obscure websites. It is becoming increasingly normalised.

What is often described as “piracy” reflects a broader shift in content distribution.

Content is increasingly accessed through a mix of illicit streaming services, social media streams and unlicensed platforms that carry broadcast signals over IP-based networks outside established licensing frameworks.

It is the emergence of an unregulated digital distribution layer operating alongside, and increasingly replacing the formal system.

As internet penetration rises and streaming becomes mainstream, piracy is expanding rapidly.

Bangladesh, with its growing appetite for sports, entertainment and digital content, is entering a critical phase where piracy risks becoming deeply entrenched across the content ecosystem.

While the immediate impact falls on broadcasters, rights holders and content distributors, the broader implications extend across the creative economy.

For a country seeking to expand the global reach of its content and attract investment into media and entertainment, ensuring that those who create, distribute and invest in content can capture its value becomes increasingly important.

Every successful creative economy is ultimately built on intellectual property.

Whether through long-form, short-form or creator-led content, the underlying asset is content that can be licensed, monetised and exported.

That value chain also depends on broadcasters, Pay TV operators, streaming platforms and licensed distribution networks that invest in acquiring, distributing and monetising local and international content.

Piracy directly undermines this model.

When it becomes widespread, legitimate revenues decline, weakening incentives to invest in new content and reducing the broader economic contribution of the formal media ecosystem.

Investors become more cautious, content budgets shrink, and creators struggle to capture the value of their work.

The consequence is not merely lost revenue today but less content, less innovation and fewer opportunities tomorrow.

Over time, this can also limit job creation across the broader media and entertainment value chain, from production and distribution to creative and technical professions.

Ambitions to increase the global reach of Bangladeshi films, television programmes and digital content will be strengthened by a regulatory environment that gives creators, investors and distributors confidence that intellectual property rights are effectively protected. Bangladesh already has a legal framework.

The Copyright Act 2023 prohibits unauthorised distribution and retransmission of broadcast content, including digital distribution over IP networks.

The law provides both civil and criminal remedies against infringement. Yet piracy continues to thrive because the challenge is not legal absence but enforcement.

As broadcast and internet-based distribution increasingly converge, regulatory responsibilities are spread across multiple authorities, including the Ministry of Information and Broadcasting (MoIB), the Bangladesh Telecommunication Regulatory Commission (BTRC) and relevant authorities responsible for digital governance and cybersecurity.

Addressing piracy in its current form therefore requires coordinated enforcement rather than isolated action.

Piracy itself is evolving as content distribution becomes increasingly digital and interconnected.

It increasingly occurs through digital and IP-based platforms operating outside established licensing and regulatory frameworks, creating new challenges for enforcement. The implications extend beyond lost revenue.

These networks often operate outside regulatory visibility, relying on foreign-hosted infrastructure and opaque payment channels, while exposing consumers to cybersecurity risks and weak protections.

Piracy is therefore not only a content issue but also a broader question of digital governance and ecosystem integrity.

Digitalisation is often presented as an important solution to piracy, but not all digital systems are equal.

To be effective, digitalisation must be supported by technologies and systems that enable traceability, content protection, compliance and accurate subscriber reporting.

Without these safeguards, digital platforms can simply make unauthorised redistribution more efficient. Effective digitalisation should strengthen visibility, accountability and enforcement.

The challenge facing Bangladesh is therefore not one of legislation but of execution.

Two priorities stand out. First, more effective enforcement of existing laws, supported by stronger coordination between broadcasting, telecommunications and digital governance authorities to address increasingly complex digital distribution models.

Second, a structured approach to digitalisation that prioritises transparency, traceability and system-wide accountability.

As Bangladesh seeks to strengthen its position in media and entertainment, the protection and commercialisation of creative assets will become increasingly important to attracting investment, supporting innovation and fostering sustainable growth.

In this context, piracy should be viewed through a broader lens of economic competitiveness and digital governance.

Bangladesh's creative economy will increasingly depend on its ability to create, monetise and export intellectual property.

As media, entertainment and digital content become more important drivers of growth, ensuring that creators and investors can realise the value of their work will be essential.

Ultimately, the success of the creative economy will depend not only on producing more content, but also on creating the conditions that allow that content to generate lasting economic value.

While an established legal framework exists, the opportunity now lies in strengthening enforcement, improving coordination across institutions and building a digital ecosystem that supports innovation, investment and accountability.

Doing so can help create the conditions for a more vibrant media and entertainment sector and support the continued growth of Bangladesh's creative economy.

The country’s steel manufacturers yesterday urged the government to reverse the recent electricity tariff hike, warning that it will increase production costs, push up steel prices and slow economic activity.

The government raised electricity tariffs for industrial consumers by about 17 percent, effective from June. Industry leaders said the move comes at a time when steelmakers are already struggling with weak demand, high borrowing costs, a weaker taka, gas shortages and difficulties in opening letters of credit.

“The new tariff alone will increase steel production costs by around Tk 1,785 per tonne,” said Mohammad Jahangir Alam, president of the Bangladesh Steel Manufacturers Association (BSMA), at a press conference at the Jatiya Press Club in Dhaka.

He added that when VAT, port charges, fuel, transport costs and higher raw material prices are included, the total additional cost could reach Tk 3,560 per tonne, while overall production costs have already increased by nearly Tk 5,000 per tonne.

Industry leaders also called for a review of capacity payments, power contracts and reserve margins, saying lower electricity costs, better energy efficiency and diversified energy sources are essential for sector growth and competitiveness
Alam warned that the price of 60-grade MS (mild steel) rod, the most widely used steel product in construction, is currently Tk 91,000 to Tk 92,000 per tonne at the retail level and could rise to at least Tk 97,000 per tonne.

“The burden will fall directly on the construction and infrastructure sectors. Higher project costs could slow both public and private investment and ultimately weigh on overall economic growth,” he said.

The BSMA said the sector has attracted over Tk 1 lakh crore in investment and employs around 10 lakh people.

It added that Bangladesh has about 40 modern steel mills and over 150 re-rolling mills, with a combined annual production capacity of around 1.22 crore tonnes, while domestic demand is only about 50 lakh tonnes a year, meaning mills are operating at less than half of their installed capacity.

Alam also said steelmakers have made significant investments in their own power infrastructure, including 230kV, 132kV and 33kV substations, allowing them to receive electricity directly and avoid adding to distribution losses.

Referring to a recent public hearing by the Bangladesh Energy Regulatory Commission, he said the Bangladesh Power Development Board admitted that high-voltage consumers like steel mills face almost no system losses and are profitable customers.

Despite this, electricity tariffs have increased by around 60 percent to 70 percent over the past five years.

Alam urged the government to withdraw the latest tariff hike and gradually reduce annual capacity payments of Tk 40,000 to Tk 50,000 crore, warning that further cost increases could threaten the sustainability of the steel industry.

BSMA Secretary General Sumon Chowdhury also called for a review of recent electricity price hikes and a reduction in capacity payment burdens, saying these measures are weakening the competitiveness of local industries.

“Reducing electricity costs is essential for sustaining industrial growth,” he said.

According to Chowdhury, capacity payments to power producers rose from Tk 32,000 crore in the fiscal year (FY) 2023-24 to nearly Tk 42,000 crore in FY2024-25.

He suggested reviewing these costs and renegotiating power contracts to reduce pressure on both industries and consumers.

Chowdhury also proposed revising or cancelling costly power sector agreements, phasing out expired rental and quick-rental power plants, and reducing the country’s reserve generation margin to below 25 percent.

He further called for greater energy diversification, including higher investment in renewable energy and reduced dependence on imported fuels and LNG.

He also urged greater transparency in public spending and stronger engagement between policymakers and business leaders to support industrial growth and protect the economy.

BSMA Vice President Maruf Mohsin said ferroalloy is a key raw material used in steel production and has been manufactured locally for the past 17 years, helping the country save millions of dollars in foreign exchange by reducing import dependence.

He said the production process is highly electricity-intensive, and any further rise in power costs would significantly reduce profitability, putting ferroalloy producers under severe financial pressure and potentially forcing some plants to shut down.

Former BSMA president Manwar Hossain, former vice president Sk Masadul Alam Masud, and BSRM adviser Kazi Anwar Ahmed were also present at the conference.

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

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

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

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

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

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

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

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

HOW LONG CAN STOCKS GO?

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

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

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

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

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

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

THE CHINESE ENIGMA

Another key unknown is China.

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

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

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

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

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

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

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

THE INVISIBLE BALANCING FORCE

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

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

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

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

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

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

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

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

That is a precarious foundation.