The National Board of Revenue is set to remove restrictions preventing non-bonded exporters from sourcing raw materials locally through back-to-back letters of credit (LCs), a move expected to ease exports and improve access to inputs for hundreds of garment factories.

NBR Chairman Abdur Rahman Khan confirmed to The Business Standard that the board is actively working to remove these barriers.

"We are working to remove existing barriers preventing non-bonded exporters from sourcing raw materials from deemed exporters operating under bonded facilities," he said.

Officials at the revenue authority say an order on the matter may be issued soon after the necessary legal changes are completed.

Infograph: TBS
Infograph: TBS

A senior official of the NBR's VAT division, speaking on condition of anonymity, said a summary seeking approval from the finance ministry has already been prepared as part of the legal amendment process.

Once approved, the VAT Policy Division will issue a formal order, based on which the Customs Bond Wing will publish a separate order outlining the conditions under which the facility will operate.

If implemented, the measure is expected to benefit more than 1,100 ready-made garment exporters that currently operate without bonded licences but rely on locally sourced inputs for exports.

According to the Bangladesh Garment Manufacturers and Exporters Association, these factories export garments worth around $6.5 billion annually and employ nearly seven lakh workers.

Responding to concerns about possible irregularities once the facility is allowed, the NBR chairman said automation and integration of data systems would help reduce misuse.

"We are moving towards automation. With integration among relevant institutions, it will be possible to collect information and monitor activities, which will reduce the scope for irregularities," he said.

A long-standing bottleneck

Garment industry leaders have been lobbying the NBR for several years to resolve the issue.

When asked why these complexities had not been resolved sooner, a senior official from the NBR Customs Wing said, "It is relatively straightforward to identify irregularities when bond-licensed firms trade raw materials amongst themselves without exporting or by committing other breaches.

However, he said, detecting such issues when they supply raw materials to non-bonded institutions is difficult under the current system.

The official added, "This arrangement has persisted primarily due to a lack of capacity within Customs to detect these specific irregularities."

After the ouster of the government led by Sheikh Hasina in August 2024, the BGMEA raised the matter again. In a letter sent to the NBR on 30 November 2024, the association warned that more than a hundred factories had already shut down due to their inability to open back-to-back LCs or procure raw materials and accessories from bonded companies.

"The remaining factories are also losing capacity and are on the verge of closure," the letter read.

Exporters believe that the proposed decision will mark a significant step towards improving the ease of doing business in Bangladesh.

Md Shehab Udduza Chowdhury, vice president of BGMEA – who has been liaising with the NBR on behalf of the association for the past year to resolve this issue – welcomed the new initiative.

He said, "Discussions on this matter began back in 2021. Multiple committees were formed to solve the problem, yet no progress was made. Although the NBR took action after our letter 11 months ago, the process eventually stalled.

"It was only during a meeting two weeks ago that a final decision was reached."

Shehab added, "The question remains: if this could be resolved now, why did it take so long? Action should also be taken against those responsible for obstructing the process for so long."

Obstacles faced by non-bonded exporters

Under existing regulations, exporters holding bonded licences can collect yarn, fabrics or accessories from other bonded companies through back-to-back LCs against their master LCs. However, factories without bonded licences are not allowed to use this facility.

Exporters say banks often hesitate to open such LCs for non-bonded companies due to concerns over potential legal complications with the NBR.

As a result, many small exporters are forced to purchase raw materials and accessories in cash from the local market, often at higher prices.

During export procedures, customs authorities frequently ask for proof that VAT has been paid on those inputs. In addition, factories face further complications during annual VAT audits.

Consequently, non-bonded exporters often incur additional costs both in sourcing materials and in dealing with customs and VAT procedures, leaving them at a competitive disadvantage.

RL Apparels Limited, a knitwear exporter based in Badda in the capital, is one such company struggling under the current system.

Its Managing Director Md Rokonuzzaman told this newspaper that banks refuse to open back-to-back LCs due to the lack of permission under existing rules.

"As a result, we have to purchase raw materials and accessories from the open market in cash at higher prices," he said. "This increases our costs, and we also face difficulties during export clearance at ports and during VAT inspections."

According to him, the factory's workforce has already fallen from 160 to about 100 workers due to these challenges.

Rokonuzzaman noted that exporters of sweaters and woven garments without bonded licences face the most difficulties.

However, he said the removal of the restriction would significantly ease business operations for such factories.

Why exporters avoid bonded licences

Entrepreneurs say obtaining a bonded warehouse licence is often difficult for small and medium-scale exporters.

According to Rokonuzzaman, applicants must meet several strict conditions, including maintaining a specific warehouse size, having wide access roads nearby and holding paid-up capital of at least Tk1 crore.

"Even if these conditions are met, applicants often have to wait months or even years after submitting their application," he said.

Beyond these requirements, entrepreneurs have also alleged corruption in the process.

One garment exporter, requesting anonymity, said he had once planned to apply for a bonded warehouse licence but later learned that obtaining it would require paying around Tk30 lakh in bribes at different stages.

"If the bribe is paid, whether the conditions are actually met becomes less of a concern," he alleged.

According to NBR data, around 6,000 factories across sectors, including garments and plastics, currently enjoy duty-free raw material sourcing under the bonded warehouse facility.

Data from the Export Promotion Bureau shows that Bangladesh exports around 87 types of manufactured goods. In the 2024-25 fiscal year, total exports of manufactured goods amounted to about $48 billion, with more than 80% coming from the ready-made garment sector.

Tackling irregularities through automation

Officials said one of the key reasons the government had previously been reluctant to extend this facility was the risk that duty-free raw materials might be diverted to the domestic market instead of being used for exports, which could result in revenue losses and create unfair competition for regular importers.

However, NBR officials now believe the risk can be mitigated through digital monitoring systems.

A senior official said several government processes have already moved online, including the e-VAT system and the Customs Bond Management System.

These systems will be integrated enabling data sharing among customs, VAT authorities, banks and other relevant institutions.

"With online data sharing among the relevant institutions, it will become easier to track whether non-bonded companies are purchasing raw materials from bonded companies and whether those inputs are ultimately used for exports," the official said.

He added that such integration would significantly reduce the chances of false export declarations or misuse of duty-free inputs.

A prolonged US-Israel war on Iran could reduce Bangladesh’s gross domestic product (GDP) by as much as 3 percent over the next two years, according to a new policy analysis by the South Asian Network on Economic Modeling (Sanem).

The study says that Bangladesh’s heavy reliance on imported energy, remittances from Gulf countries, and global trade networks leaves the economy exposed to geopolitical shocks in the Middle East.

“Real wages could come under pressure and export growth would likely slow,” the report said.

The study was conducted by using the Global Trade Analysis Project (GTAP) computable general equilibrium model, a widely used analytical framework for assessing global trade and policy shocks.

Researchers modelled three scenarios to estimate the potential damage.

The first assumed a sharp rise in global energy prices, with crude oil and liquefied natural gas (LNG) prices climbing around 40 percent and 50 percent, respectively, if the conflict disrupts production or transport routes.

Higher fuel costs would push up domestic electricity generation costs, manufacturing expenses and consumer prices. Under such a situation, Bangladesh’s GDP is likely to decline by 1.2 percent, according to the paper.

“This contraction mirrors how central energy is to production and transportation throughout the economy. High fuel prices set off a chain reaction across industries, pushing production costs higher,” it said.

The second scenario examined disruptions to international trade and shipping routes, estimating a 25 percent rise in freight costs due to higher fuel prices and increased insurance premiums for vessels in high-risk maritime zones.

In this scenario, there could also be a 5 percent drop in export demand to the European and American markets. These shocks would altogether cause a 1.4 percent GDP decline, said the study.

The paper said Bangladesh’s export sectors are very sensitive to transport costs and delivery reliability.

“When exports shrink, the related backward linkages, such as textiles, logistics, and supporting services, decline. The economy, therefore, experiences a slowdown that spreads gradually through multiple layers of the production network.”

The third scenario combined several shocks at once, including a 10 percent fall in remittance inflows from Gulf countries, reflecting possible economic disruptions in the nations where millions of Bangladeshi workers are employed.

The combined shock scenario produces the largest effect, including a roughly 3 percent decline in GDP, said the paper.

Prof Selim Raihan, executive director of Sanem and author of the study, said these pressures combined could trigger moderate to significant economic stress in the short to medium term.

“This result is not surprising,” he said. “The effects reinforce each other when multiple external pressures come at the same time. Higher fuel prices raise production costs. Trade disruptions weaken export demand. At the same time, declining remittance inflows lower household income and consumption.”

“These forces work together, impacting the supply and demand sides of the economy. This is because rising costs and a weakening market mean firms cut back production. Households struggle with lower purchasing power and tighten their belts. The interaction between these changes generates a deeper slowdown than any of the shocks would create on their own.”

The paper said Bangladesh’s exports may decline by about 2 percent in the case of an energy price shock. This is because industries’ higher production costs can make Bangladeshi goods a little less competitive in international markets.

“This decline gets even larger when introducing trade disruptions. In the shipping disruption scenario, exports would shrink by about 3.4 percent. Freight costs and the uncertainty of logistics are significant here.”

In the combined scenario, however, that pressure is multiplied. Exports drop by nearly 6 percent, a sign of the cumulative effect of rising costs, reduced demand, and shipping disruptions, it added.

The report said Bangladesh’s export-oriented garments sector stands out as one of the most vulnerable sectors in both of the simulations. Its output may decline as much as 4.5 percent.

But the transport and logistics sector would be the worst hit, by as much as 5 percent, energy-intensive manufacturing 4 percent, and agriculture 1.5 percent, according to the findings.

Prof Raihan said in the case of a prolonged war, the effect could be felt in around two years. “In fact, the impact can be larger if the situation gets worse,” he said.

The paper said Bangladesh’s development model has relied on export-led manufacturing and overseas employment, but that same integration exposes it to external shocks when geopolitical crises erupt elsewhere.

The study recommends diversifying energy sources, improving trade logistics infrastructure, expanding export markets and broadening strategies for overseas employment.

Credit growth to the private sector has been staying around 6 percent as businesses continue to be shy about taking on fresh projects amid economic uncertainty.

In January, banks’ credit to the private sector grew by 6.03 percent, the lowest in at least five years. This makes it the eighth straight month of below 7 percent growth in credit demand.

The ongoing US-Israel war on Iran has already made oil and gas prices volatile and created fears of a ripple effect on the global economy and of stoking inflation. This has dampened the prospect of a sharp recovery in private sector credit demand and the much-needed spike in fresh investment.

“The Middle East crisis has made things volatile. It appears that the situation is not conducive. Under such circumstances, it is uncertain whether anyone would consider making fresh investments,” said Mati Ul Hasan, managing director of Mercantile Bank PLC.

Since the launch of US-Israel attacks on Iran in February, oil prices have soared. They hit nearly $120 per barrel last week as Iran effectively blocked the Strait of Hormuz, a key maritime chokepoint through which one-fifth of the world’s oil travels.

The price of Brent crude, the benchmark international oil contract, briefly dipped below $100 on Friday. It closed at $103.14 per barrel, and has soared by more than 42 percent since the start of the conflict, according to an AFP report.

Like other economies, the spike in oil prices, a key commodity, has also created concerns here, as Bangladesh meets 95 percent of its oil and 30 percent of its gas through imports.

The South Asian country imports over 60 percent of its crude oil from Saudi Arabia, the United Arab Emirates (UAE), Oman, Kuwait and Iraq. For liquefied natural gas, the country imports most of the energy from Qatar.

Worries have also increased because of the spike in shipping costs following the escalating war.

Hasan said the impact of the war has been visible in the foreign currency market. The taka has weakened against the US dollar.

“Our existing clients are worried about the risk of higher import costs,” he said.

“Businesses are in a stressful situation. They do not have the mindset to go for fresh investment now. They are likely to wait to see where things settle down.”

Bangladesh’s private investment fell for the third consecutive year, reaching 22.03 percent of gross domestic product (GDP) in the fiscal year 2024-25, the lowest level in 11 years.

The consistent slowdown in credit demand in the private sector means investment will remain subdued, the much-needed boost to the economy will be delayed, and there will be fewer jobs than required in the country.

Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh, said that in periods surrounding national elections, it is quite common for entrepreneurs to delay major investment decisions until there is greater clarity regarding the political and policy environment.

As a result, demand for credit from the private sector tends to remain subdued. At the same time, banks have also become more cautious in extending loans because of concerns about asset quality and the broader macroeconomic environment, he said.

“Restoring confidence through political stability and credible economic reforms will therefore be critical for reviving private sector credit demand,” he said. However, the emerging geopolitical tensions have added another layer of risk to the macroeconomic outlook.

“Any escalation in the conflict in the Middle East could push up global oil prices and disrupt energy markets. For an energy-importing country like Bangladesh, this would increase the import bill, put pressure on the balance of payments, and complicate inflation management,” he added.

US Federal Reserve policymakers are expected to leave interest rates unchanged at their meeting next week, as the US-Israel war on Iran sends shock waves through markets and recent economic data has begun to show weakness.

The Fed will start its two-day meeting on Tuesday, with an announcement of the benchmark lending rate in the world's largest economy a day later.

The central bank cut rates three consecutive times last year before holding them steady at its January meeting.

It has a dual mandate of holding inflation near a long-term target of two percent while ensuring maximum employment.

With war in the Middle East causing global oil prices to spike, potentially increasing overall inflation and curbing growth, analysts say policymakers are unlikely to make any moves now.

"This is certainly a bind for the Fed, because supply shocks are extremely hard to deal with in that they lift inflation and they curb output," EY-Parthenon chief economist Gregory Daco told AFP.

Affordability is a key political issue for President Donald Trump, who has claimed that prices are cooling even as consumers complain of the high costs of basic goods.

Trump has repeatedly insulted Fed Chair Jerome Powell as he demands lower rates, and the Justice Department threatened Powell with a criminal indictment as part of an investigation into cost overruns for a Fed renovation project.

While consumer inflation has dropped from a peak of 9.1 percent during the Covid pandemic, it remains well above the Fed's two- percent target.

"Unlike other countries, which have already achieved some level of price stability, we're five years in without price stability," said Diane Swonk, chief economist at KPMG.

She warned that, depending on how long the Iran war lasts, inflation could again soar past four percent.

"I think the main story here is that we are seeing inflation moving away from the Fed's two-percent target, and that will lead many Fed policymakers to adopt an even more hawkish stance," said Daco.

Raising rates to cool the economy, however, could bring the Fed into tension with its other mandate: managing unemployment.

The United States unexpectedly lost 92,000 jobs in February, government data showed, while the unemployment rate rose to 4.4 percent.

Analysts say a relatively steady unemployment rate has been masking churn beneath the surface.

Labor demand has been dropping, but unemployment has not spiked because that has been accompanied by a drop in supply due to Trump's immigration crackdown.

Daco said labor demand gauges were showing signs of concern, including a weak hiring rate "at a decade low," slowing wage growth and business leaders talking about labor replacement due to AI.

Swonk noted that spiking uncertainty due to war in Iran and its knock-on effects would further curb labor demand.

"Uncertainty acts as its own tax on the economy, and one of the first lines of defense that firms do is they freeze hiring," she said.

And recent data ahead of the Fed meeting is not encouraging, with US GDP growth revised sharply lower in the final months of 2025.

Some Fed policymakers, however, have been cautious in describing the possible inflationary shocks of the war.

Fed Governor Christopher Waller expressed sympathy on Bloomberg TV last week for consumers facing spiking gasoline prices.

"But for us thinking about policy going forward, this is unlikely to cause sustained inflation," he said.

Swonk warned, however, that any economic slowdown from the war could be tough to recover from in the immediate term.

"I think people are discounting the risk of the lingering effects," she said, noting that supply disruptions affect more than oil prices.

"There's no question they're between a rock and a hard spot, and it just got harder," Swonk said of policymakers having to balance inflation and unemployment.

To Daco, however, uncertainty means the Fed is more likely to hold rates steady "for a long period of time."

Traders have begun to reduce their outlook for rate cuts, and Swonk said that hikes could even be on the menu.

"This is not a one-way street. We're at a busy intersection, and the stoplight's broken," she said.

Oil prices could extend gains at Monday's open as the US-Israeli war against Iran entered a third week, putting oil infrastructure at risk and keeping the Strait of Hormuz shut in the world's largest supply disruption.

US President Donald Trump threatened further ​strikes on Iran's Kharg Island oil export hub, drawing a defiant response of further retaliation ​from Tehran.

Brent and US West Texas Intermediate crude futures have already spiked sharply and ⁠rattled global financial markets. Both contracts have surged more than 40% so far this month to their ​highest levels since 2022 after the US-Israeli attacks on Iran prompted Tehran to halt shipping through the Strait ​of Hormuz - a key chokepoint for a fifth of global oil supply.

Trump has urged China, France, Japan, South Korea, Britain and others to deploy warships to secure the strategic gateway.

The United States struck military targets on Kharg Island on Saturday, which was swiftly ​followed by Iranian drone attacks on a key oil terminal in the United Arab Emirates.

"This marks an escalation ​in the conflict," JP Morgan analysts led by Natasha Kaneva said.

"Until now, the region's oil infrastructure has largely been spared."

Besides ‌UAE's ⁠Fujairah, Saudi Arabia's Ras Tanura export terminal and Abqaiq oil processing facilities have been listed as critical and highly vulnerable energy nodes in the Gulf, the analysts said.

However, oil loading operations at Fujairah have resumed, a Fujairah-based industry source told Reuters on Sunday.

Fujairah, outside the Strait of Hormuz, is the outlet for about 1 ​million barrels per day ​of the UAE's flagship ⁠Murban crude oil - a volume equal to about 1% of world demand.

Global oil supply is expected to fall by 8 million bpd in March due to disruptions ​to shipping while Middle Eastern producers have cut output by at least ​10 million bpd, ⁠according to the International Energy Agency.

Last week, the IEA agreed to release a record 400 million barrels of oil from strategic stockpiles held by member nations to combat price spikes. Japan plans to start releasing its oil on ⁠Monday.

Meanwhile, the ​Trump administration has rebuffed efforts by Middle Eastern allies to start ​diplomatic negotiations, according to three sources familiar with the efforts, while Iran has rejected the possibility of any ceasefire until U.S. and ​Israeli strikes end, dimming hopes of a quick end to the conflict.

The Bangladesh Securities and Exchange Commission (BSEC) and the Asian Development Bank (ADB) have charted a transformative course to quadruple the size of the national capital market, aiming to elevate its contribution from the current 10 percent of GDP to at least 40 percent within the next three years.Bangladesh Investment Guide

In a high-level meeting held on March 9, at the BSEC office in Agargaon, both organizations deliberated on strategic reforms, digitalization, and market diversification to ensure long-term sustainable growth for the country’s financial ecosystem, BSS reports citing a press release on Sunday.

To provide a data-driven foundation for this massive expansion, BSEC announced plans to conduct a comprehensive "Capital Market Diagnostic."

This initiative is designed to identify structural bottlenecks and formulate evidence-based policies for long-term development.

The meeting underscored a clear mandate: to transition the capital market from its current state to a dominant pillar of the economy, setting an ambitious target of reaching a market-to-GDP ratio of 40 percent by 2029.

The meeting emphasized the urgent need to align national market governance with the International Organization of Securities Commissions (IOSCO) standards to attract global institutional investors.

BSEC highlighted its commitment to using its full legal authority under existing frameworks to create robust incentives for listing.

In the short term, the Commission is prioritizing the digitalization and automation of market processes to eliminate opacity and ensure absolute accountability.

This modernization drive, coupled with a focus on human resource development, is intended to rebuild and strengthen investor confidence in the regulatory environment.

A central theme of the discussion was the necessity of shifting the burden of long-term industrial financing away from the banking sector and toward the capital market.

To facilitate this, BSEC and Bangladesh Bank (BB) are developing a joint framework to encourage large borrowers to raise capital through the stock exchange rather than relying on bank loans.

Under this initiative, BSEC is exploring specific incentives to encourage companies with significant market share to list their shares.

Furthermore, the introduction of a "Bond Guarantee Fund" was discussed as a vital security mechanism to mitigate risk and attract a broader spectrum of investors to the fixed-income market.

The ADB delegation expressed strong interest in providing technical assistance to drive these priority reforms.

Specifically, the ADB has committed to supporting feasibility studies for the proposed "Bond Guarantee Fund" and assisting BSEC in identifying the most appropriate government agency to manage and implement the fund.

The ADB representatives expressed optimism that this joint partnership would successfully build a more transparent, robust, and investor-friendly market.

BSEC Chairman Khondoker Rashed Maqsood presided over the meeting.

The high-level representation included Farzana Lalarukh, Commissioner; Md. Abul Kalam, Director; and Syed Muhammad Golam Mowla, Joint Director.

Bangladesh Bank Governor Md Mostaqur Rahman has invited the World Bank to expand its engagement in supporting Bangladesh's financial sector development and broader economic growth.

The call came during a meeting with a high-level World Bank delegation at the central bank's head office on Sunday (15 March).

The delegation was led by John Zutt, regional vice president of the World Bank, and included Jean Pesme, division director for Bangladesh and Bhutan; Imad Najib Ayed Fakhoury, director at the International Finance Corporation; Gayle H Martin, operations manager for Bangladesh and Bhutan; Wilfred Tamegon, manager at the International Finance Corporation; and Mehrin A Mahbub, senior external affairs officer.

Deputy governors Md Habibur Rahman and Md Kabir Ahmed, along with other senior officials of Bangladesh Bank, were also present at the meeting.

During the meeting, both sides discussed ongoing projects supported by the World Bank in Bangladesh and explored opportunities to strengthen future cooperation, particularly in the financial sector.

Governor Mostaqur Rahman reaffirmed the central bank's commitment to ensuring the successful implementation of the projects. He also appreciated the World Bank's continued support for Bangladesh's development initiatives.

The World Bank delegation expressed strong interest in maintaining close cooperation with Bangladesh and highlighted the importance of a constructive partnership in supporting the country's development priorities.

The meeting also included discussions on Bangladesh's overall economic outlook and future development prospects.

Remittance inflows have increased by 35.7% in the first half of March, ahead of Eid, with expatriate Bangladeshis sending $2.20 billion in the first 14 days of the month.

During the same period in 2025, remittances stood at $1.62 billion, confirmed the central bank's spokesperson and Executive Director Arief Hossain Khan today (15 March).

A senior official of a private bank told The Business Standard that the rise in remittances is mainly due to the upcoming Eid festival, as expatriates typically send more money home during this period.

However, he noted that the flow may slow down after Eid, which is a usual trend.

He also warned that the ongoing Iran-Israel conflict could affect remittance inflows from the Middle East after Eid. If migrant workers in the region face disruptions in their jobs due to the conflict, remittance sent through banking channels may decline.

A deputy managing director of another private bank said expatriates were receiving between Tk121.70 and Tk121.75 per dollar today, while LC settlements were made at Tk121.20 per dollar.

The Middle East conflict escalated on 28 February this year when Israel and the United States jointly attacked Iran. In response, Iran has launched a series of missile strikes targeting Israel and countries in the Arab region that host US military bases.

Iran has also restricted vessel movements through the Strait of Hormuz without its approval, contributing to a rise in global fuel prices.

Meanwhile, economists recently held a meeting with newly appointed Bangladesh Bank governor last week. According to sources at the meeting, the central bank signalled that it would try to maintain foreign exchange reserves.

This has created a market signal that prompted banks to buy remittance dollars at higher rates.

A senior official of a private bank said that if new investments increase in the coming months, demand for opening letters of credit (LCs) will rise, which would in turn push up demand for dollars in the banking sector. As a result, banks are currently purchasing remittance dollars at higher rates.

The ongoing Middle East crisis has sharply reduced air cargo export capacity, pushing freight rates to double and in some cases nearly triple over the past two weeks.

In addition to higher costs, flight disruptions have also prolonged delivery times due to a significant capacity crunch, according to industry insiders.

Before the conflict began, airlines charged around $2 to $2.2 per kg for shipments to European destinations. Those rates have now surged to $5.5 to $6 per kg as demand rises amid limited cargo space, according to data from the International Air Express Association of Bangladesh (IAEAB).

Freight rates to the United States have also increased, rising from about $4.50-$5 per kg to roughly $7-$8 per kg, the data shows.

IAEAB President Kabir Ahmed told TBS that cargo operations have dropped significantly due to flight disruptions.

"Normally, around 600-700 tonnes of cargo were handled daily. Now it has fallen to about 300-350 tonnes per day. Previously it took two to three days to move cargo, but now it is taking six to seven days. As a result, cargo is piling up at the airport, creating space constraints," he said.

He added that the high freight rates and capacity shortages may persist for at least the next two weeks. "However, if the conflict prolongs, the impact could become even more severe," he warned.

Typically, about 60% of Bangladesh's air cargo is shipped through Middle Eastern hubs like Dubai and Doha. However, nearly half of the flights to those destinations remain suspended, according to data from the Civil Aviation Authority of Bangladesh (CAAB), leading to reduced cargo export capacity.

Airport sources said flight disruptions on Middle East routes started on 28 February and the total number of cancelled flights had reached 447 as of 13 March.

Major carriers such as Emirates, Etihad, Flydubai, Air Arabia, Qatar Airways, Gulf Air and Saudia Airlines – all based in the Middle East – have suspended many of their flights for days.

Biman Bangladesh Airlines, the national flag carrier that transports a significant portion of cargo, also suspended flights to several Middle Eastern destinations after the conflict began, further worsening the capacity shortage.

Since Bangladesh has no direct flights to the United States or Europe, it is heavily dependent on these transit hubs.

Meanwhile, airlines operating routes to the US and Europe that bypass the Middle East – including Turkish Airlines, Malaysia Airlines, Thai Airways, Cathay Pacific and Singapore Airlines – have raised their freight charges.

Europe accounts for about 56% of Bangladesh's air cargo exports, while roughly 22% goes to the United States.

Nasir Ahmed Khan, a former director of the Bangladesh Freight Forwarders Association, told TBS that the country largely relies on passenger flights to carry cargo.

"Most of our cargo moves through passenger carriers. Dedicated freighter services have also been reduced. Now only one scheduled freighter flight arrives per week. Some non-scheduled freighters are operating, but the numbers are not sufficient," he said.

Bangladesh's exports have already been in negative territory for seven consecutive months, weighed down by weak demand in the United States and the European Union. The Iran conflict now threatens to add further pressure.

Arab countries accounted for nearly $900 million of Bangladesh's exports in FY25, representing around 2% of the country's total exports. However, they remain important markets for certain sectors.

More than 60% of these exports are garments, while the rest mainly consist of vegetables and other agro-products.

Any prolonged disruption in the region could therefore affect both industrial exports and shipments of perishable goods from Bangladesh.

The Economic Partnership Agreement (EPA) signed between Bangladesh and Japan on February 6, in Tokyo is poised to transform the trajectory of bilateral trade between the two countries, said Tareq Rafi Bhuiyan (Jun), president of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI).

In an interview with The Daily Star, Bhuiyan described the agreement as Bangladesh’s first comprehensive EPA and a landmark shift from a unilateral preference-based arrangement to a structured, rules-based bilateral trade framework.

“This is not just about tariff cuts,” he said. “It institutionalises our trade relationship with Japan. It provides predictability, transparency and legal certainty — all of which are essential for sustainable trade growth.”

He said Japan has long been one of Bangladesh’s key trading partners, particularly as a destination for ready-made garments (RMG) and textile products.

However, he said with Bangladesh set to graduate from least developed country (LDC) status in the near future, concerns had emerged over the possible erosion of preferential market access.

He said under the existing Generalized System of Preferences (GSP) schemes, Bangladeshi exports enjoy duty-free or preferential treatment. After graduation, those benefits would no longer automatically apply.

“Without the EPA, our exporters, especially in garments, could have faced tariffs of 8 percent to 15 percent or more in the Japanese market,” Bhuiyan said. “That would have significantly affected our price competitiveness.”

He noted that the EPA secures duty-free or reduced-tariff access for more than 7,300 Bangladeshi products, including RMG, textiles and a wide range of manufactured goods. This ensures continuity in market access and shields exporters from sudden tariff shocks.

“For our bilateral trade, this continuity is critical. It means buyers in Japan can continue sourcing from Bangladesh without disruption, and our exporters can plan long-term investments with confidence,” he added.

While garments dominate Bangladesh’s exports to Japan, Bhuiyan said the EPA opens opportunities to diversify the trade basket.

The agreement includes provisions on customs facilitation, standards, sanitary and phytosanitary measures, intellectual property and digital trade — all of which reduce non-tariff barriers and enhance transparency.

“Many exporters struggle not just with tariffs but with complex procedures and compliance requirements,” he said. “Clearer rules and improved cooperation between customs authorities will lower transaction costs and reduce uncertainty.”

He believes that sectors such as agro-processing, leather goods, light engineering products, plastics and specialised manufacturing can gradually expand their presence in Japan if supported by quality improvements and compliance with Japanese standards.

However, he acknowledged that some leather and footwear products may not receive full duty benefits under the initial framework, which could create competitive pressure in certain segments.

“Industry stakeholders have raised concerns, particularly in leather. While the overall agreement is positive, sectors that do not receive immediate duty-free access will need to focus more on quality, branding and niche positioning,” he said.

On the import side, the EPA grants Japan preferential access to Bangladesh’s expanding domestic market for more than 1,000 products, including steel, machinery, auto parts and electronics. Some tariff reductions will be phased in over periods extending up to 18 years.

Bhuiyan described the phased approach as balanced and pragmatic.

“It allows Bangladesh to liberalise gradually while giving domestic industries time to adjust,” he said. “At the same time, access to high-quality Japanese machinery and intermediate goods will strengthen our industrial capacity.”

He noted that improved access to advanced machinery and components can raise productivity in Bangladesh’s manufacturing sector, which in turn enhances export competitiveness in third-country markets.

“In bilateral trade, imports are not necessarily a threat. Strategic imports — especially capital goods and technology — can support export expansion,” he said.

Bhuiyan emphasised that the EPA has broader implications for supply chain integration between the two countries.

Japan is actively seeking to diversify and strengthen its supply chains in Asia. Bangladesh, with its competitive labour force, growing industrial zones and strategic location, can position itself as a reliable partner.

“The agreement reduces trade risks by establishing clear dispute settlement mechanisms and regulatory transparency,” he said. “This gives Japanese firms greater confidence in sourcing from and investing in Bangladesh.”

He added that improved customs cooperation and streamlined procedures will reduce delays and enhance reliability — a key factor in modern supply chains.

“As supply chains become more integrated, bilateral trade will not only grow in volume but also in sophistication,” he said.

Bhuiyan stressed that small and medium enterprises (SMEs) must be prepared to take advantage of the EPA’s opportunities.

Export-oriented SMEs in garments are already integrated into global value chains, but other sectors may require capacity building.

“Compliance with rules of origin and technical standards will be crucial,” he said. “Government agencies and business associations must work together to ensure that exporters understand and utilise the agreement effectively.”

He also pointed to the importance of upgrading logistics infrastructure, including ports and cold chain facilities, to support higher trade volumes.

“Trade agreements create opportunities, but implementation determines the outcome,” he added,

While the EPA may not result in an immediate surge in trade volumes, Bhuiyan expressed confidence that it will generate steady and sustainable growth in bilateral trade over the medium to long term.

“This agreement marks a transition from a unilateral preference system to a mutually negotiated partnership,” he said. “It creates stability for our exports and enables structured expansion of trade in both directions.”

He emphasised that the success of the EPA will depend on proactive implementation, regulatory strengthening and private sector engagement in both countries.

“The framework is now in place,” Bhuiyan said. “If we utilise it effectively, Bangladesh–Japan bilateral trade can expand in volume, diversify in composition and deepen in value addition.”

Picture this: Dhaka, 9 February 2026. Three days before a national election, in a room sealed from public scrutiny, officials sign the Agreement on Reciprocal Trade (ART) with the United States.

No parliamentary debate. No press conference. No disclosure of terms.

Twenty-four hundred kilometres west, in New Delhi, textile exporters scan the leaked fine prints. Their conclusion: Bangladesh has locked itself into buying expensive American cotton in exchange for tariff access. Production costs will rise. Profit margins will shrink.

But the real story runs deeper.

Article 4.3 contains a sleeper clause: if Bangladesh signs any agreement with a "non-market-based country" — Washington's shorthand for China or Russia — the US can cancel all preferences overnight.

Bangladesh commits to supporting US actions to protect American economic security. Dhaka agrees to restrict the unauthorised exports of US-controlled items and develop export control systems with Washington.

This is not a trade agreement. This is a strategic straitjacket, tailored in the 12 days before an election, while the nation looked away.

The missing filter

Hossain Zillur Rahman's six-point memo to the new government is essential reading — a sharp domestic diagnostic on jobless growth, mesoeconomics, and effective compassion. He is right about the internal fractures. But the world outside has fractured too.

The global economy is no longer neutral. It has become a battlefield. Western economic warfare, supply chain decoupling, and the rise of a multipolar world have transformed every major economic decision into a geopolitical choice. A power plant is not just megawatts. A 5G contract is not just bandwidth. A trade deal is not just tariffs.

Bangladesh needs a seventh signal: a dual-filter framework embedded into governance. Every decision on export diversification, energy security, and digital infrastructure must pass two tests.

First, does it advance domestic economic goals? This is Rahman's framework.

Second, does it increase or decrease our strategic vulnerability in a fracturing world? This is the missing framework, and without it, competence alone will not steer us through the storm.

The 9 February deal through both filters

Apply this dual filter to the US-Bangladesh ART agreement.

Through the first lens, the deal offers duty-free access for approximately 2,500 products. Export volumes to the United States could rise from $8.7 billion to $12 billion within two years. On paper, this deal appears to advance national interests.

The second lens reveals a straitjacket. Tariff-rate quota volumes for apparel will be determined by US textile imports. Garments made using Indian, Brazilian or African cotton may not qualify for preferential access. Bangladesh's entire apparel value chain must pivot toward higher-cost US inputs.

Worse, sovereignty clauses restrict future foreign policy. Sign an agreement with Beijing that Washington deems harmful? The deal terminates. Purchase nuclear reactors from Russia or China? Explicitly prohibited. Pursue digital cooperation with non-Western partners? Restricted.

The agreement also locks Dhaka into purchasing $15 billion of American Liquefied Natural Gas (LNG) over 15 years, plus commitments to buy 14 Boeing aircraft — a $3-4 billion decision made without consulting Biman's technical committee, which was still evaluating competing proposals from Airbus.

This is not economic policy. It is surrendering fiscal sovereignty.

Bangladesh needs a seventh signal: a dual-filter framework embedded into governance. Every decision on export diversification, energy security and digital infrastructure must pass two tests: first, does it advance domestic economic goals, and second, does it increase or decrease our strategic vulnerability in a fracturing world?

Export diversification beyond the cotton trap

Bangladesh's export basket remains heavily concentrated in a few sectors. Ready-made garments account for over 80% of earnings. Four markets — the European Union, the United States, Canada, and Japan — absorb 68% of exports. This is a single point of failure wrapped in cotton.

The Global South offers alternatives without strategic shackles. In January 2026, Bangladesh Bank announced cash incentives for 43 export categories, including light engineering, halal meat, leather goods, pharmaceuticals, and software-enabled services. The halal economy alone is projected to reach $10 trillion by 2030.

Local currency settlement mechanisms are reducing exposure to dollar volatility across Asia. About 90% of commerce among Brics nations is now settled in local currencies, up from roughly 65% two years ago.

The Brics Pay platform, presented at the October 2024 Kazan Summit, connects national payment systems — China's Cross-Border Interbank Payment System (CIPS), India's Unified Payments Interface (UPI), Russia's System for Transfer of Financial Messages (SPFS), and Brazil's instant payment network PIX — enabling local-currency transactions via QR codes without intermediaries.

These are operational frameworks Bangladesh can study and adapt.

Energy security as geopolitical choice

Every power plant tells a story about whose technology a nation trusts. The Rooppur Nuclear Power Plant, built with Russian technology, is expected to begin operations this year.

The Matarbari coal plant, developed with Japanese assistance, represents another model. The LNG terminals supplied by US and Qatari partners represent a third. Each carries different strategic implications and different exposure to sanctions.

Bangladesh must prioritise its energy security. The 9 February deal bars Bangladesh from purchasing nuclear reactors, fuel rods or enriched uranium from any country that 'jeopardises essential US interests', offering exceptions only for existing contracts. This is a pre-emptive strike against future energy choices.

In January 2026, the Ministry of Power submitted a 25-year master plan to Chief Advisor Muhammad Yunus, focusing on offshore gas exploration, LNG supply security, and hydrogen infrastructure. The plan projects electricity demand rising from 17 to 59 gigawatts by 2050, requiring investments exceeding $177 billion. Bangladesh must ensure its energy future remains its own to decide.

Digital infrastructure and data sovereignty

The twenty-first century's most valuable resource is data. The infrastructure that carries it — undersea cables, data centres and cloud platforms — is increasingly contested terrain.

The draft National AI Policy 2026-2030 explicitly emphasises "digital sovereignty", aiming to safeguard critical data and citizens' rights. A cornerstone is the development of a Bangla-based large language model to preserve cultural heritage and protect intellectual property from foreign exploitation.

The policy warns that automation may threaten up to 60.8% of garment sector jobs, affecting around 2.7 million workers.

Yet the 9 February deal commits Bangladesh to "permit the free transfer of data across trusted borders" and support a permanent moratorium on customs duties on electronic transmissions at the World Trade Organisation (WTO). These provisions constrain Dhaka's ability to negotiate different data governance frameworks with other partners.

The emerging cooperation among Asean, China, and Gulf states on digital trade platforms offers an alternative model — built on connectivity rather than control. These frameworks do not require choosing against the West. They require building enough relationships that no single partner can dictate terms.

The seventh signal

Zillur Rahman's six signals provide a strong domestic foundation. But they assume a world that no longer exists. The seventh signal is this: Bangladesh's economic and foreign policy can no longer be separated. Every decision on export markets, energy partners, and digital infrastructure is simultaneously an economic calculation and a geopolitical commitment.

The new government must institutionalise this understanding. Create a National Economic Security Council bringing together trade, finance, energy, and foreign policy officials. Require strategic vulnerability assessments for every major international agreement. Task the central bank with a formal assessment of platforms like Brics Pay — not as alternatives to Western systems, but as complements that ensure the dollar is not the only option.

The choice before the BNP government is not between East and West. The choice is between accepting a straitjacket designed elsewhere and building enough relationships and enough strategic literacy that Bangladesh's future remains Bangladesh's to write.

Hossain Zillur Rahman is right: the start is grounded in optimism. But optimism without strategic clarity is just wishful thinking dressed in the national flag. The seventh signal must come now — before the next agreement is signed in secret, before the next straitjacket is tailored, before the next crossroads becomes a dead end.

Zakir Kibria is a Bangladeshi writer, policy analyst and entrepreneur based in Kathmandu, Nepal.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.

Struggling under heavy classified loan burdens, several non-bank financial institutions (NBFIs) have emerged as top performers in the stock market, posting sharp price increases in February after months of steep declines triggered by liquidation concerns.

According to data from the Dhaka Stock Exchange (DSE), the share prices of eight troubled NBFIs surged between 145% and 224% during the month, even though most of them remain under severe financial distress and face potential liquidation.

The rally came after their share prices had earlier plunged to historic lows amid continuous sell-offs driven by investor fears that shareholders could lose their entire investments if the institutions were wound up.

At one point, the share prices of some NBFIs dropped below Tk1 for the first time in the history of Bangladesh's capital market.

In response, the DSE introduced a new trading rule for such ultra-low-priced stocks. The bourse fixed the minimum price movement (tick size) for shares trading below Tk1 at Tk0.01, while the existing tick size for equities priced above Tk1 remains Tk0.10.

Despite the weak fundamentals, these beaten-down stocks staged an extraordinary rebound in February.

Data show that the share price of Bangladesh Industrial Finance Company soared by 224% during the month to Tk5.50 per share.

Premier Leasing and Finance jumped 216% to Tk1.70 from Tk0.57 at the beginning of February. People's Leasing and Financial Services and FAS Finance and Investment both climbed 174% to Tk1.70 each.

International Leasing and Financial Services rose 171% to Tk1.60, Prime Finance and Investment advanced 167% to Tk4, while Fareast Finance and Investment gained 154% to Tk1.70.

GSP Finance also recorded a sharp increase, rising 145% to Tk4.96 per share.

Market insiders say the rally reflects the long-standing tendency of many investors in Bangladesh's capital market to speculate on junk stocks despite their high risks.

Usually investors here like to bet on weak stocks hoping for quick gains. Sometimes the risk pays off, but often it ends with investors losing their hard-earned money," said market insiders.

They also noted that investor sentiment shifted after the change in the governor of Bangladesh Bank. Many traders appeared to assume that the planned liquidation of troubled NBFIs might not proceed as earlier indicated, prompting renewed speculative buying in these distressed stocks.

Abu Ahmed, chairman of the Investment Corporation of Bangladesh and a capital market analyst, recently told The Business Standard that many investors prefer short-term trading gains rather than long-term.

He said abnormal price surges are often driven by manipulation in junk stocks. Once such stocks start rising sharply, many investors rush to concentrate their investments in them in hopes of quick profits.

The capital market analyst advised investors to focus on fundamentally strong companies instead, although he acknowledged that the number of quality stocks in the market remains limited.

The surge in prices comes against the backdrop of ongoing regulatory actions aimed at reviving or resolving scam-hit NBFIs.

On 5 January, then governor of Bangladesh Bank, Ahsan H Mansur, said at a press briefing that nine NBFIs would be declared non-viable within a week. He also announced that independent auditors would be appointed to assess the actual financial conditions of the institutions.

Following the announcement, panic selling swept through the shares of weak financial institutions as investors feared a complete erosion of shareholder value.

However, many investors were unable to exit their positions because buyers virtually disappeared from the market, leaving large volumes of unexecuted sell orders throughout the trading day.

"The market was flooded with sell orders, but there were practically no buyers," a broker said at the time. "Investors were trying to cut losses, but confidence had completely evaporated."

Later, on 27 January, the central bank decided to liquidate six NBFIs plagued by irregularities, corruption and prolonged mismanagement, while allowing three others an additional three months to improve their financial conditions.

The institutions granted time include Bangladesh Industrial Finance Company, GSP Finance Company and Prime Finance and Investment.

Those set for liquidation include FAS Finance, Premier Leasing, Fareast Finance, Aviva Finance, People's Leasing and International Leasing.

Financial data show that most of these institutions were already in deep distress.

As of September 2025, many had accumulated massive losses and recorded deeply negative net asset values.

International Leasing alone posted accumulated losses exceeding Tk5,100 crore, with its net asset value per share falling to minus Tk219 and a non-performing loan (NPL) ratio approaching 98%.

People's Leasing reported losses of more than Tk4,800 crore with an NPL ratio nearing 99%, while FAS Finance showed an almost 100% NPL ratio along with heavy negative equity.

Similar financial distress is evident at Premier Leasing, Fareast Finance, First Finance, GSP Finance and BIFC, highlighting years of weak governance, reckless lending and capital erosion.

The central bank's decision follows a circular issued on 21 December that brought NBFIs under the Bank Resolution Ordinance 2025, empowering the regulator to take decisive action, including liquidation, against institutions that remain in prolonged distress and fail to protect depositors' funds.

Earlier, on 30 November, the board of Bangladesh Bank had given preliminary approval to liquidate nine NBFIs, including People's Leasing and International Leasing.

Stocks at the Dhaka bourse staged a notable rebound last week as improving investor sentiment and bargain hunting drove the key indices sharply higher amid easing concerns surrounding the ongoing Middle East war and its potential impact on the domestic economy.

The benchmark DSEX index of the Dhaka Stock Exchange surged 127 points, or 2.43%, to close the week at 5,368.

The blue-chip DS30 index also posted a strong gain, advancing 54 points, or 2.72%, to finish at 2,066.

Market breadth remained strongly positive during the week, with 324 issues advancing, 38 declining and 27 remaining unchanged.

Despite the broad-based price appreciation, market activity remained relatively subdued as investors adopted a cautious stance.

Average daily turnover fell by 24% week-on-week to Tk531 crore, reflecting a wait-and-see approach among market participants who preferred to monitor whether the upward momentum would be sustained before making fresh investment decisions.

However, the overall market capitalisation of the Dhaka bourse increased by approximately Tk9,000 crore during the week, indicating a steady return of confidence among investors after the previous week's sharp downturn.

EBL Securities, in its weekly market review, said the capital market experienced a sustained recovery throughout the week, bouncing back from the steepest single-day fall recorded in the past six years during the opening session. The brokerage house noted that the sharp correction at the start of the week created attractive entry points for investors, prompting bargain hunters to accumulate fundamentally strong stocks.

Although the week began under persistent bearish pressure, sentiment gradually improved as signals emerged of a possible de-escalation in the Middle East war.

At the same time, concerns regarding immediate disruptions to the country's fuel supply began to subside, which helped restore confidence among market participants.

A managing director of a leading brokerage firm said the government appeared capable of overcoming any potential fuel shortages stemming from the Middle East tensions.

Bangladesh secured a significant quantity of fuel supplies during the past week, which helped ease investor concerns and contributed to renewed optimism in the stock market.

He also noted that the central bank's recent decision to ease capital repatriation rules for foreign investors was a positive development for the capital market. The move is expected to improve the investment climate and may encourage greater participation from foreign portfolio investors in the coming months.

Additionally, speculation surrounding a possible change in the leadership of the stock market regulator also played a role in drawing investors back to the market, he added.

Sector-wise participation showed that investors were most active in the banking sector, which accounted for 21.3% of total market turnover. The pharmaceutical sector followed with 15.2%, while the textile sector captured 9.5% of the week's trading activity.

Among individual stocks, Islami Bank Bangladesh, LafargeHolcim Cement, City Bank, Square Pharmaceuticals and Beximco Pharmaceuticals were the major contributors to the upward movement of the benchmark index during the week.

In terms of turnover, Orion Infusion emerged as the most traded stock, followed by City Bank, Olympic Industries, BRAC Bank and Robi.

All major sectors posted positive returns during the week. The cement sector led the gains with a 7.6% increase, followed by the information technology sector with 5.3% and life insurance with 4.6%.

Interestingly, many Z-category stocks and loss-making non-bank financial institutions dominated the gainers' list. International Leasing, Peoples Leasing, FAS Finance and Fareast Finance each soared 50%, while Premier Leasing advanced 42.31%.

On the other hand, Saif Powertec was the worst-performing stock of the week, declining 6.94%. It was followed by Green Delta Insurance, Ring Shine Textile, Dula Mia Cotton and Hami Industries, which also posted notable losses.

Foreign investors increased their exposure to several blue-chip stocks in February, particularly in the banking and pharmaceutical sectors, while pulling back from companies including Olympic Industries, Grameenphone (GP) and DBH Finance.

Data from the Dhaka Stock Exchange (DSE) show that foreign portfolio investment rose last month, with overseas investors purchasing shares in a number of top-tier companies led by Square Pharmaceuticals and BRAC Bank.

Square attracted the largest foreign inflow, with overseas investors buying shares worth about Tk160 crore during February. The purchases increased foreign shareholding in the pharmaceutical giant to 15.50% from 14.70% in January.

BRAC Bank ranked second in terms of foreign investment inflow. Foreign investors bought shares worth around Tk110 crore, raising their ownership in the bank to 36.72% from 36.05% a month earlier.

Other companies that recorded smaller increases in foreign investment included United Commercial Bank, Uttara Bank and IDLC Finance.

Overall, foreign investors increased their holdings in 25 listed companies during the month, purchasing shares worth about Tk280 crore. Their stakes also rose in firms such as Marico Bangladesh, Envoy Textiles, Walton Hi-Tech Industries and Unique Hotel and Resorts.

Selling in several large firms

Foreign investors also sold shares in several major companies during the same period, with the biggest outflow recorded in Olympic Industries.

Overseas investors offloaded shares worth about Tk80 crore in Olympic Industries, reducing their stake in the company to 30.26% from 32.83% in January.

Telecom giant Grameenphone also experienced selling, with overseas investors selling shares worth Tk25 crore during the month. Foreign holdings in the company slipped slightly to 0.60% from 0.67%.

Other companies that saw foreign investment outflows included DBH Finance, BSRM Limited and Jamuna Oil Company.

In total, foreign investors reduced their holdings in 16 companies, selling shares worth Tk126.35 crore during February.

Foreign participation still limited

Despite the selective inflows and outflows, foreign participation in Bangladesh's stock market remains relatively limited. According to DSE data, total foreign investment in the market currently stands at around Tk13,000 crore.

Out of roughly 360 listed companies on the Dhaka bourse, only about 132 currently have any level of foreign shareholding, highlighting the narrow base of overseas participation.

Among listed firms, BRAC Bank has the highest level of foreign ownership at around 36%, followed by Olympic Industries with more than 30%.

Other companies with significant foreign shareholding include Beximco Pharmaceuticals, Navana Pharmaceuticals and Renata.

Structural barriers to investment

Market analysts said foreign investors tend to concentrate their investments in a small number of fundamentally strong companies because of the limited availability of high-quality listed firms.

They note that Bangladesh's stock market contains many weak or poorly governed companies, often referred to by investors as "junk stocks", which discourages broader foreign participation.

Analysts also cite several structural barriers that limit overseas investment, including tax complexities such as capital gains tax issues, policy inconsistency and concerns about corporate governance.

Brokerage officials added that a significant portion of the recorded foreign investment actually comes from non-resident Bangladeshis rather than large international funds.

Genuine foreign institutional investors are believed to be actively present in no more than 25 listed companies, primarily large-cap firms with strong financial performance and adequate market liquidity.

Among the global investors active in Bangladesh are institutions linked to Norway's sovereign wealth fund, along with a small number of investment firms based in the United Arab Emirates and Europe, according to market insiders.

A managing director of a leading brokerage firm said foreign investors remain cautious because the market offers limited diversification opportunities.

Bangladesh has a relatively small pool of large-cap stocks that meet the governance, risk and liquidity standards required by global institutional investors, he said.

Policy move to attract foreign funds

In a move aimed at attracting more foreign investment, Bangladesh Bank recently relaxed rules governing capital repatriation by overseas investors.

In a circular issued on 9 March, the central bank raised the threshold for prior approval required for capital repatriation to Tk100 crore from the previous Tk10 crore limit.

The measure is intended to align Bangladesh's regulatory framework with international standards and simplify procedures for foreign investors seeking to repatriate funds.

Oil prices stayed over $100 per barrel Friday while stock markets slid, with no end in sight to disruption in crude supplies as war rages on in the Middle East.

With the conflict heading toward its third week, equity markets continued falling amid investor worries of an extended crisis that could fan inflation and hammer the global economy.

The price of Brent crude, the benchmark international oil contract, dipped below $100 during the day, sending equities briefly higher.

But stocks slid back into the red as Brent climbed back above the $100 mark.

It closed at $103.14 per barrel, and has soared by more than 42 percent since the start of the conflict.

US-Israeli strikes on Iran on February 28 plunged the Middle East into war, sparking a surge in fuel prices as Tehran vowed to choke the Strait of Hormuz -- a critical artery for global energy transport.

"Crude oil is continuing to dictate direction for markets as we head towards the end of a volatile week," said Fawad Razaqzada, market analyst with Forex.com.

"The pressure remains with no end in sight in the Middle East conflict," Razaqzada added.

"Traders are trying to figure out what a fair value for crude oil is right now, given the big release of emergency oil reserves, and the temporary relaxation of sanctions on Russian oil sales that's already at sea," he said.

Iran's threats over the Strait of Hormuz, through which a fifth of global crude oil and liquefied natural gas passes, is causing worries of rising prices rippling through the world economy.

"Fears of a burgeoning energy crisis remain front and center for investors," noted Joshua Mahony, chief market analyst at Scope Markets.

"Inflationary fears are particularly prevalent," Mahony added.

Major central banks, which prior to the war's outbreak were heavily forecast to keep cutting interest rates, are now widely expected next week to freeze borrowing costs or even hike them to keep a lid on inflation.

An unprecedented seven central banks are due to hold meetings on interest rates next week.

Investors also digested updated US economic growth data for the fourth quarter, which was revised down to 0.7 percent from an initial reading of 1.4 percent.

And delayed data showed the US Federal Reserve's preferred inflation gauge had dipped to 2.8 percent in January.

This is still higher than the Fed's two-percent inflation target, and reflects a period before energy prices shot higher.

The US central bank now faces an environment where inflation remains sticky and could soon be boosted by energy prices, while GDP growth and the labor market continue to lose momentum, said eToro US Investment Analyst, Bret Kenwell.

On foreign exchange markets, the dollar held gains against major rivals owing to its safe-haven status and expectations that US interest rates will remain elevated longer than expected.

AJ Bell investment director Russ Mould said next week's central bank meetings "come at a delicate time."

"Markets will be watching closely for any signals on how they plan to deal with surging oil and gas prices and whether they see it as a short-term bump to look through."

A tanker's sudden change of course in early March reflects a shift in Russia's energy fortunes.

From 22 to 26 February, the Hong Kong-flagged tanker Sarah turned off its transponders to load Russian oil from smaller ships off the coast of Oman. It then headed towards Singapore, where the cargo was likely to be transferred to another vessel bound for China.

But on 6 March, a day after the United States issued a 30-day sanctions waiver allowing Indian refiners to buy Russian crude, the tanker changed course. It is now scheduled to arrive at a refinery in western India today (14 March), reports The Economist.

The change reflects a wider shift since the start of the Iran war. The de facto closure of the Strait of Hormuz has trapped around 15% of global oil supply in the Gulf.

Brent crude, the global oil benchmark, fell to $59 a barrel in December amid expectations of oversupply. It is now around $100. Higher prices have made Russian oil more attractive to buyers. On 12 March, the United States extended its waiver to allow countries to purchase Russian oil that had already been loaded onto tankers.

Before the crisis, Russia's oil revenues had been declining. Many refiners in India and China, Russia's largest customers, stopped buying Russian crude around November before US sanctions on Rosneft and Lukoil took effect.

By February, Russia's export volumes had fallen by about a fifth. Together with lower prices, this meant the Kremlin's oil-and-gas revenues were 44% lower than a year earlier. In the first two months of the year, Russia's budget deficit reached 3.4 trillion roubles, about nine-tenths of its target for the whole of 2026.

Higher prices and renewed demand are now helping reduce a backlog of Russian oil shipments at sea. India has increased its purchases by about half, helping cut Russia's floating oil inventory by more than 10% to around 122 million barrels. China's imports have also risen.

Because these shipments had already been sold, the immediate financial benefit goes mainly to traders rather than the Russian government.

The absence of Gulf oil has increased demand for alternative supplies. Russian crude is similar in quality to Middle Eastern oil and easier for many Asian refineries to process. Urals crude delivered to India, which had previously been sold at a discount, is now priced above Brent.

Sergey Vakulenko, a former executive at Gazprom Neft, estimates that every $10 increase in Brent prices over a month raises Russia's energy export revenues by about $2.8 billion, of which roughly $1.6 billion goes to the state.

The crisis has also complicated efforts by Western countries to tighten sanctions on Russia. Before the conflict, the United States had considered tougher measures against Russia's "shadow fleet" of tankers and possible secondary tariffs.

The recent waivers have also widened differences with the European Union. The European Commission had proposed a ban on maritime services for Russian oil exports, but the plan faces opposition from Hungary and Slovakia.

Concerns over energy supply may also lead some European countries to reconsider plans to stop importing Russian liquefied natural gas next year.

China, which receives about one-third of its liquefied natural gas from the Gulf region, is also concerned about supply disruptions. This may increase interest in overland energy supplies from Russia, including the proposed Power of Siberia 2 pipeline, a 2,600-kilometre project that could significantly increase Russian gas exports to China.

Despite higher prices, analysts say Russia's gains may be limited. Ukrainian attacks on oil facilities, sanctions and reduced investment have weakened the industry.

Russia is estimated to have about 300,000 barrels per day of spare production capacity, far below the 10–15 million barrels per day of supply affected by disruptions in the Gulf.

Analysts also say Russia's oil output is likely to decline over time. Higher prices may provide temporary relief, but they are unlikely to reverse the longer-term pressures on Russia's energy sector.

Stocks fell and the US dollar strengthened on Friday as uncertainty over the Iran war continued to disrupt energy supplies, heightening concerns over fuel prices and interest rates.

The price of oil crossed $100 per barrel even as an Indian tanker sailed out of the Strait of Hormuz and the US put forth measures to try to ease supply concerns.

All three major US stock indexes logged daily and weekly declines. The Dow Jones Industrial Average finished Friday down 0.25%, the S&P 500 fell 0.6% and the Nasdaq Composite dropped 0.9%.

European shares extended their declines as well, with Europe's STOXX 600 down 0.5% on Friday. MSCI's gauge of stocks across the globe fell 0.9%.

The dollar has become the safe haven of choice during the tumult, putting most other currencies under pressure. The US currency gained for the second consecutive week, up 0.8% on the day against a basket of currencies.

Oil price driving market

President Donald Trump said the US was going to be hitting Iran "very hard over the next week," shortly after issuing a partial 30-day waiver for purchases of sanctioned Russian oil, hoping to ease prices.

Front-month WTI crude futures settled at $98.71 per barrel, up 3.11%. Brent rose 2.67% to $103.14, settling above $100 per barrel for the first time since August 2022.

Traders are trying to predict how long the disruption to oil supplies will last.

"Headlines are coming at the market like water from a fire hose, which is impacting the price of oil, and consequently, financial markets," said Mitch Reznick, group head of fixed income at Federated Hermes.

With Iran stepping up attacks across the Middle East as its new Supreme Leader Mojtaba Khamenei vowed to keep the Strait of Hormuz shipping lane closed, investors are bracing for a prolonged conflict and higher oil prices.

The spectre of rising inflation has led markets to rapidly reprice what they expect from central banks this year, with traders now anticipating just 20 basis points of easing from the Federal Reserve compared to 50 bps of cuts priced in last month.

Two-year Treasury yields, which typically move in step with Fed interest rate expectations, hit a six-month high on Thursday.

Elsewhere, the Personal Consumption Expenditures index, the Federal Reserve's preferred inflation gauge, rose 0.3% in January on a monthly basis, in line with economists' estimates.

At the same time, US economic growth slowed more sharply than initially thought in the fourth quarter amid downward revisions to consumer spending and business investment, government data showed on Friday.

"With markets laser-focused on oil prices and geopolitics, today's numbers may mostly fly under the radar," Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, said in an email.

"Despite signs of economic softening, more sticky inflation data simply strengthens the idea that the Fed will remain on the sidelines."

Shifting rates outlook

Interest rate futures that had been priced for two quarter-point cuts by the end of the year before the conflict began are now barely pricing in one.

For US government bond trading on Friday, the two-year note yield fell 3.3 bps to 3.73% after hitting its highest level since August 22 on Thursday. US 10-year notes ticked up to 4.283%.

Investor focus will switch to a slate of policy meetings next week, with the Fed, the Bank of Japan, the European Central Bank and the Bank of England all due to meet, with most expected to keep rates unchanged.

In currencies, the euro fell 0.8% to $1.1417, while the yen hit its weakest since July 2024 at 159.66 per US dollar on Friday as Japan warned it was ready to take action to protect against yen declines.

Analysts said the bar for intervention is higher this time around, as any action now could prove futile in the face of relentless dollar buying.

Gold was 1.27% lower at $5,014 per ounce on Friday, capping a drop on the week.

The benchmark index of the Dhaka Stock Exchange (DSEX) rebounded this week, paring some of the previous week's steep losses as bargain hunters returned to scoop up undervalued blue-chip stocks, even though overall sentiment remained cautious amid escalating Middle East conflict.

The week began in turmoil on Sunday, with the DSEX plummeting 232 points, or 4.42 per cent, marking its largest single-day decline in six years. The sharp sell-off was triggered by intensifying conflict in the Middle East.

Despite the bearish start, the market demonstrated resilience over the subsequent four trading sessions of the week. Buoyed by signs of a potential de-escalation in the conflict and easing local concerns regarding immediate fuel shortages in Bangladesh, investor confidence gradually returned.Import/export consultation

At the end of the week, the DSEX had recovered 128 points, or 2.43 percent, to settle at 5,368. This weekly gain provided a partial cushion against the 359-point loss recorded in the previous week.

Market analysts attributed the turnaround to value-seeking behaviour rather than a full restoration of bullish sentiment.

"Many fundamentally strong stocks fell to lucrative price levels after the recent sharp correction, which attracted buyers," said Akramul Alam, head of research at Royal Capital.

He noted that institutional investors also increased exposure to well-performing banking shares as valuations became more attractive.

Market optimism was further bolstered after US President Donald Trump indicated that the conflict involving Iran could be nearing an end, easing fears of potential fuel supply disruptions.

Global oil prices reflected the volatility, with Brent crude falling over 7 per cent to $91.94 per barrel on Tuesday after Monday's three-year peak of $120, before rising again near $100 on Thursday.

Investor confidence also got a boost after Bangladesh Bank raised the prior-approval threshold for foreign capital repatriation from Tk 100 million to Tk 1 billion, aligning rules with international practices and encouraging foreign inflows into undervalued stocks.Import/export consultation

The policy change encouraged foreign investors to channel fresh funds into undervalued stocks, market participants said.

In its weekly market analysis, EBL Securities said, the market witnessed a sustained recovery this week, rebounding from the steepest single-day decline in six years recorded in the opening session, as bargain hunters turned back to accumulate equities at attractive price points amid easing concerns over the potential market impact of the ongoing Middle East conflict.

Still, many investors remained cautious amid geopolitical uncertainty and the absence of a clear ceasefire in the Middle East. Bangladeshi businesses have already expressed deep concerns, saying the intensifying conflict may pose fresh challenges and drive up the cost of doing business.

The blue-chip DS30 index climbed 55 points to close at 2,066, while the Shariah-based DSES index gained 31 points to 1,079.

Price surge of blue-chip stocks, including Islami Bank, LafargeHolcim Bangladesh, City Bank, Square Pharma, Beximco Pharma, Grameenphone and BRAC Bank, largely contributed to the market index surge. These seven stocks accounted for a 54-point gain in the DSEX.

Islami Bank alone accounted for a 16.3 point gain in the DSEX as its share jumped 6.5 per cent after the bank said its board had approved a US firm as a strategic investor in its subsidiary mCash this week.

The proposed strategic investment is expected to strengthen the capital base of mCash and accelerate the expansion of digital financial services under the mobile financial services (MFS) platform, the bank said.

However, market liquidity remained subdued. Total turnover on the DSE dropped to Tk 26.57 billion from Tk 34.82 billion the previous week, with average daily turnover falling 24 per cent to Tk 5.31 billion.

Gainers significantly outnumbered losers, with 324 issues rising, 38 falling and 27 remaining unchanged among the 389 traded securities.

All sectors posted gains, led by cement, which gained 7.6 per cent, followed by telecom, non-bank financial institutions, banking, pharma, power, and engineering.

Orion Infusion was the most-traded stock with Tk 1.43 billion in turnover, followed by City Bank, Olympic Industries, BRAC Bank, and Robi Axiata.

The Chittagong Stock Exchange also rebounded, with the All Shares Price Index (CASPI) rising 155 points to 14,980 and the Selective Categories Index (CSCX) gaining 100 points to 9,160.

The port city bourse traded 43.3 million shares and mutual fund units, with turnover of Tk 1.66 billion.

The Bangladesh Securities and Exchange Commission (BSEC) is working to introduce a comprehensive framework to define and regulate public interest companies (PICs), aiming to restore regulatory control over capital issuance and prevent misuse in the securities market.

The draft rules, which will be published soon for public opinion, seek to repeal a 2019 exemption that allowed non-listed companies to raise capital without prior BSEC approval.

Under Section 8(1) of the Securities and Exchange Commission Act 1993, the BSEC is tasked with ensuring proper issuance of securities, protecting investor interests, and developing the securities market. But the exemption granted in 2019 removed the need for non-listed companies to seek commission permission for capital raising, a senior BSEC official told The FE.

As a result, the regulator lost oversight over a large segment of capital issuance.

Currently, companies only submit a return of allotment to the Registrar of Joint Stock Companies and Firms (RJSC), which records the filing without examining or regulating the issuance.

According to the official, the absence of regulatory scrutiny created opportunities for misuse. In some cases, companies allegedly inflated their capital structure without adequate asset backing and later entered the market through initial public offerings (IPOs).

Proposed definition of public interest companies

Under the draft framework currently being finalised, the BSEC has outlined specific conditions for classifying companies as PICs and regulating their capital-raising activities.

According to the proposed structure, entities dealing directly with public funds or securities -- such as banks, financial institutions, insurance companies, stockbrokers, stock dealers and merchant banks -- would automatically fall under the PIC category regardless of capital size.

All listed companies would also be classified as PICs.

Financial thresholds for PIC classification

Companies meeting any of the following financial criteria may also be classified as PICs:

- Public limited companies with paid-up capital exceeding Tk 50 million.

- Private limited companies with capital above Tk 150 million.

- Companies with annual revenue exceeding Tk 1 billion.

- Companies borrowing Tk 200 million or more from banks or other public sources

Even privately held companies meeting these thresholds would be considered PICs due to their involvement with public money or stakeholders.

Capital raising rules under consideration

The draft framework introduces specific conditions linking company size with fundraising methods:

-- Companies with capital exceeding around Tk 500 million may be required to raise funds through an IPO, sharing ownership with the public.

-- Firms with capital between Tk 50 million and Tk 500 million could use qualified investor offers.

-- Private placements to outsiders would be limited to a maximum of 20 investors to prevent informal conversion of private offers into public fundraising.

Disclosure and Compliance Requirements

PICs would face mandatory public disclosures even if they do not raise capital via the regulator.

The disclosure standards include maintaining a functional website with details on the company, directors, audited financial statements, annual reports, and contact information.

The website may also be linked with the RJSC database for enhanced transparency.

Digital Approval System

To streamline the process, the commission is also exploring the introduction of a digital platform that would allow companies to apply for capital issuance approvals online.

"This will ensure that companies can apply from anywhere and receive approvals online, making the process faster and more efficient," said the official.

The Commission plans to finalise the proposals after further consultations and the draft rules will be placed for public opinion before implementation.

When asked, Md Abul Kalam, Director and Spokesperson at BSEC, confirmed that the commission is working on the draft rules and will publish them for public feedback.

The Dhaka Stock Exchange (DSE) has granted FIX certification to 11 more brokerage houses, allowing them to launch their own Order Management Systems (OMS) through API connectivity.

The firms receiving certification are NF Management Company, Akij Capital Management, Amar Securities, Commerce Bank Securities and Investment, Mona Financial Consultancy and Securities, Premier Bank Securities, Prilink Securities, Pubali Bank Securities, Remons Investment and Securities, Skyline Securities and United Securities.

Certificates were handed over at a ceremony at the DSE Tower on 11 March, where DSE Managing Director Nuzhat Anwar presented the FIX certifications to representatives of the brokerage houses.

Speaking at the event, Nuzhat said the DSE began efforts in 2020 to introduce an API (Application Programming Interface)-based Brokerage House Order Management System (BHOMS).

The system enables brokerage firms to connect directly to the exchange's Nasdaq-powered matching engine through APIs and operate their own order management platforms.

Under the initiative, 76 brokerage houses applied to the DSE seeking API connectivity to conduct trading through proprietary OMS platforms integrated with the Nasdaq matching engine.

With the addition of the latest 11 firms, the DSE has now granted FIX certification to 58 brokerage houses in total. Of them, 44 have already launched their own OMS using API connectivity, allowing client orders to be routed directly to the exchange's trading engine.

Market officials say the adoption of API-based trading infrastructure is expected to improve efficiency, transparency and technological capacity in the country's capital market. By allowing brokerage firms to use their own OMS platforms, the system facilitates faster order execution, improved risk management and smoother integration with trading systems.

The move is also part of broader efforts by the DSE to modernise market infrastructure following the introduction of the Nasdaq trading platform.