Food vendors across Asia who rely on plastics for everything from bags to cups and containers are grappling with their rising costs, the result of the energy crisis sparked by the Middle East war.

While the United States and Iran have reached a deal to halt the conflict, it will take time for markets to recover and supply flows to return to normal, with persistent concerns over traffic through the economically vital Strait of Hormuz.
At Taipei’s Songjiang market, chicken vendor Li Yu-ping, 52, said in early June that the price of plastic bags had jumped nearly 60 percent, while the cost of plastic trays had risen by a third.“We use them everywhere,” she said of the bags. “Our food containers are also plastic, all disposable.”

Wary of hiking prices, “all of this has become a cost for the vendors”, she said.A key raw material for many of these plastic goods is ethylene, which is derived from naphtha, an oil by-product. Around 60 percent of the naphtha imported to Asia comes from the Gulf.

Faced with tight supply and soaring prices due to the monthslong closure of the Strait of Hormuz, petrochemical companies mainly in South Korea and Japan have scaled back production capacity, sending the cost of basic goods such as plastic bags surging.In Bangkok, Nikorn Sai-inthara, a 60-year-old selling vegetables from a street cart, estimated his operating costs had risen by 30 percent.“I rely on plastic bags for my work because I sell vegetables on the go to busy people and office workers,” said Nikorn, who wraps individual portions in plastic and secures them with a rubber band.“Ever since the fighting started in the Middle East, my profits have fallen, but I don’t dare raise prices for my customers,” he told AFP. Several vendors across the region told AFP they do not have a practical alternative to the plastic products they use on a daily basis.“We have no choice. If you don’t give customers plastic bags, they complain,” said Chang Chiu-hsiang, a 78-year-old grocer in Taipei.

“I think you can’t really avoid using them,” added Li, the chicken vendor, noting however that some customers have started to use reusable bags.

Somsak Jaidee, 62, who sells rice porridge in bags secured with rubber bands at a Bangkok market, said that while “everything is more expensive... I have to endure it.”

“I can’t think of anything else that offers the same convenience for my customers as plastic bags.”

A cautious reopening of the Strait of Hormuz since the US-Iran deal was signed last week has yet to fully impact naphtha prices, which have dipped only slightly.

And manufacturers continue to process naphtha purchased when prices were higher.

In early June, Taiwanese manufacturer Formosa Petrochemical reported cutting the utilisation rate of its ethylene steam cracker to 35 percent, down from 53 percent in March at the very start of the war.

“At this point, the situation is not entirely due to lack of feedstock. The bigger issue now is that the feedstock has become extremely expensive, and some of our customers simply can’t bear the higher prices,” Formosa’s president, Lin Keh-yen, told AFP.

In South Korea, supply tensions remained acute in early June.

“Normally, if we order 10,000 plastic bags, they arrive within about a week. Now suppliers are telling us that we may have to wait more than a month” with prices 30-percent higher, said a shop employee in Seoul.

A nearby dry cleaner said the price of plastic garment covers had more than doubled, while a cafe owner noted a 50-percent increase in the cost of plastic cups.

South Korea’s plastics industry association said the Middle East war had forced manufacturers to hike prices, although “alternative” supply routes have helped stabilise the situation.

Fajar Budiyono, secretary-general of the Association of Olefin, Aromatic, Plastic and Chemical Industries in Indonesia, said a shift to suppliers in places like China and Africa has helped keep prices at bay.

In the Philippines, meanwhile, manufacturers said they had absorbed some of the additional costs.

“Our profits got squeezed. We could not simply raise prices as we would be swamped by imports,” said Steve Tavera, a member of the Philippine Plastics Industry Association.

As a result, price hikes have so far been “conservative”, he said.

Bangladesh is pursuing a dual-track strategy to retain duty-free access to the European Union after graduating from the least developed country (LDC) category, negotiating a free trade agreement (FTA) with the bloc while also seeking to qualify for its GSP Plus trade preference scheme.

With the clock ticking towards the end of its LDC trade privileges, businesses say that failing to secure an alternative arrangement could dent the country’s export competitiveness in its largest overseas market and hurt the overall economy.

The stakes are high as nearly half of Bangladesh’s merchandise exports are shipped to the EU. To the European market, they currently enjoy duty-free and quota-free access under the Everything But Arms (EBA) scheme for least developed countries.

The pressure is greater because the two biggest competitors of Bangladesh in the apparel market, India and Vietnam, already have trade agreements with the EU. Once Bangladesh loses its LDC preferences, exporters fear the market peers will gain a further competitive edge.

Bangladesh is scheduled to graduate from LDC status in November this year. The government has, however, sought a three-year postponement, and officials say the response from the relevant UN body has so far been positive.

Even if the graduation goes ahead as scheduled, the EU has agreed to continue its trade preferences for Bangladesh for another three years. That means regular tariffs will come into effect from 2029 under the current timeline.

Studies have estimated that Bangladesh could lose exports worth as much as $17.5 billion a year after graduation, as around 73 percent of the country’s exports currently benefit from LDC-related preferences.

“Eventually, we are heading towards signing an FTA with the EU, but it may take a long time because of the negotiations by both parties,” Commerce Minister Khandakar Abdul Muktadir told The Daily Star over the phone.

Negotiating an FTA, however, is rarely a quick process. India, for example, took around two decades to conclude its trade agreement with the EU.
Referring to the lengthy process, the commerce minister said, “But at the same time, we should not keep the EU market as a vacuum as it is the largest export destination for Bangladesh.”

That is why Bangladesh is pursuing both options at the same time, while giving priority to concluding an FTA as early as possible, Muktadir said.

FTA or GSP Plus?

Bangladesh has been negotiating with major trading partners to secure duty-free market access after LDC graduation, either through free trade agreements or preferential trading arrangements such as GSP Plus.

With the EU, discussions are at an early stage. Both sides have been exchanging letters to prepare the ground for formal negotiations, whether for an Economic Partnership Agreement (EPA), a conventional FTA or a Comprehensive Economic Partnership Agreement (CEPA).

Recently, the European Commission replied to a commerce ministry letter sent last October, saying it was carrying out an internal assessment before deciding whether to launch formal negotiations with Bangladesh.

At the same time, Dhaka is continuing its efforts to qualify for GSP Plus, which offers tariff preferences to developing countries that meet a series of international standards on labour rights, human rights, environmental protection and good governance.

Speaking on condition of anonymity, a senior commerce ministry official said Bangladesh has already fulfilled most of the requirements under the 32 international conventions linked to GSP Plus eligibility.

The official said recent labour reforms have strengthened Bangladesh’s position.

Parliament amended the labour law last year in line with recommendations from the International Labour Organisation (ILO). Bangladesh has also ratified three ILO conventions covering occupational safety, workplace health and protection from violence and harassment.

“We are continuing negotiations with the EU for both GSP Plus status and FTA signing as we know the importance of the EU markets,” the official said.

The ministry is also closely watching the outcome of Bangladesh’s request to defer its LDC graduation. The proposal is expected to go before the UN General Assembly in September after a recommendation from the UN Economic and Social Council (UN ECOSOC).

Officials believe that if Bangladesh’s graduation is postponed, the EU grace period could also be extended.

‘FTA OFFERS MORE DURABLE SOLUTION’

Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), said Bangladesh’s progress on labour reforms would support both GSP Plus and FTA negotiations.

However, he said the government should focus more on securing an FTA because it offers a more durable solution for retaining preferential access to the European market.

Razzaque also questioned how much Bangladesh would ultimately gain from GSP Plus.

Under the EU GSP rules for 2024-34, clothing exports from a GSP Plus beneficiary country would lose preferential treatment if they exceed 6 percent import thresholds.

Bangladesh already accounts for nearly 20 percent of the relevant clothing imports into the EU, well above the threshold.

The EU GSP rules also mention that clothing imports from a GSP Plus beneficiary should not account for more than 37 percent of all GSP-covered clothing imports into the EU. Bangladesh’s current share is close to 50 percent, raising questions over how much of its apparel exports would actually qualify for zero-duty treatment even if it secures GSP Plus.

Bangladesh has been a member of the World Trade Organization (WTO) since 1995 and currently enjoys duty-free, quota-free access to the EU market under the Everything But Arms (EBA) arrangement, which covers all products except arms and ammunition.

THE TRADE PICTURE

The EU began enhanced engagement with Bangladesh under the EBA arrangement in 2017 to monitor compliance with international conventions on labour rights and human rights.

In 2025, Bangladesh was the EU’s 35th largest trading partner, accounting for 0.5 percent of the bloc’s total goods trade. For Bangladesh, however, the EU was its largest trading partner, representing 21.5 percent of the country’s total export.

Trade in goods between Bangladesh and the EU reached €23.3 billion in 2025, with the EU running a trade deficit of €19.1 billion.

Textiles dominated Bangladesh’s exports, accounting for almost 94 percent of EU imports from the country. EU exports to Bangladesh were led by machinery and appliances, which made up 36 percent of shipments, followed by chemical products at 24 percent.

Trade in services stood at €1.5 billion in 2024, while total trade in goods and services reached €23.8 billion.

Bangladesh is the largest beneficiary of the EU Everything But Arms scheme. In 2024, exports worth €19 billion entered the bloc under the arrangement, with a utilisation rate of 96 percent.

EU’s foreign direct investment stock in Bangladesh stood at €2.5 billion in 2024, while Bangladesh’s investment stock in the EU totalled €86 million, according to the European Commission.

Faisal Samad, a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said exporters are concerned about retaining duty-free access to their largest market after LDC graduation.

“We are also working with the government by giving recommendations for retaining the zero-duty market access to the EU in the post-LDC period,” Faisal Samad told The Daily Star over the phone.

“But at the same time, we should keep open all of the avenues of negotiation with the EU so that we do not miss any opportunities,” he said.

The European Union (EU) is moving ahead with plans to roll out its Global Green Bond Initiative (GGBI) in Bangladesh, a move expected to mobilise up to 20 billion euro in private capital and significantly strengthen the country's access to sustainable development finance, officials said.

In a recent letter addressed to Nazma Mobarek, secretary of the Financial Institutions Division (FID) under the Ministry of Finance, the EU proposed a strategic partnership with the Bangladesh government to implement the initiative and initiate discussions on deploying the large-scale public-private investment mechanism.Finance

Launched in April 2026 by the EU and a consortium of development finance institutions, the GGBI is designed to channel up to 20 billion euro in private investment into sustainable infrastructure projects in low- and middle-income countries, including Bangladesh.

The initiative comes at a critical time as Bangladesh approaches graduation from the Least Developed Country (LDC) category, a transition that is expected to reduce access to concessional financing and increase the need to attract private investment for climate resilience and infrastructure development.

Officials and experts say Bangladesh will require billions of dollars annually to implement its climate adaptation agenda, including the Climate Prosperity Plan and renewable energy transition targets.

Against this backdrop, the EU-backed initiative is expected to create significant financing opportunities across several strategic sectors.

Under the proposal, the GGBI will provide technical and regulatory assistance to the Bangladesh Securities and Exchange Commission (BSEC), Bangladesh Bank (BB) and the Dhaka Stock Exchange (DSE) to strengthen the country's green bond framework and broader sustainable finance ecosystem.

The initiative may also offer transaction and issuer support to banks, corporates, state-owned enterprises and, potentially, sovereign green bond issuances, enabling local institutions to tap international climate finance and green capital markets.

In addition, it plans to deploy blended finance instruments to reduce borrowing costs, extend financing tenures and attract a wider pool of foreign investors to Bangladesh's green finance sector.Economics

Sector-specific support is expected for areas facing substantial financing gaps, including renewable energy, climate-resilient infrastructure, water and waste management, and sustainable transport.

When contacted, a senior FID official said, "The EU Delegation has expressed interest in holding discussions with the government between June 27 and July 2, 2026, to explore possible pathways for implementing the initiative in Bangladesh and identify areas for continued cooperation."

According to the official, the proposed meetings will focus on identifying priority sectors and mechanisms for long-term collaboration. However, securing a substantial share of the potential 20-billion-euro investment will depend largely on Bangladesh's ability to develop a robust pipeline of bankable green projects and align its regulatory framework with internationally recognised green bond standards.

According to the European Union's Global Gateway programme, the GGBI Fund is one of the three pillars of the EU's Global Green Bond Initiative.

It invests primarily in primary-market green bonds, with priority given to first-time issuers, including governments, local authorities and businesses. At least 20 per cent of the fund's investments will be allocated to least developed countries, supporting both local currency and euro-denominated bonds.

The initiative also seeks to deepen local capital markets, promote the international use of the euro and encourage the adoption of high environmental standards through EU best practices.

The World Bank has approved a $250 million project to help Bangladesh strengthen key public institutions through digital transformation, improved governance and greater transparency.

Approved on 12 June 2025, the Strengthening Institutions for Transparency and Accountability (SITA) project will support reforms in five major government institutions to improve public financial management, domestic revenue mobilisation, procurement, data systems and auditing, according to a World Bank factsheet.

The project aims to modernise the Bangladesh Bureau of Statistics (BBS), the National Board of Revenue (NBR), the Planning Division, the Bangladesh Public Procurement Authority (BPPA) and the Office of the Comptroller and Auditor General (OCAG).

According to the World Bank, stronger public institutions are essential for sustaining Bangladesh's economic growth, creating jobs and achieving long-term development goals.

The project will support the BBS in developing an integrated national data ecosystem to improve the production and use of high-quality data for evidence-based policymaking.

For the NBR, the initiative will focus on modernising tax administration through automation, e-invoicing and integrated digital systems to improve tax compliance and boost domestic revenue collection.

The Planning Division will receive support to strengthen public investment management through digital platforms, artificial intelligence-enabled analytics and real-time monitoring tools.

Meanwhile, the BPPA will enhance its electronic government procurement system with advanced digital features to improve efficiency, transparency and value for money.

The project will also help digitise audit processes at the Office of the Comptroller and Auditor General, with the goal of reducing audit reporting time from 72 months to nine months.

State Minister for Finance and Planning Zonayed Saki said the government remains committed to strengthening public institutions and improving governance to better serve citizens.

"By modernising systems and enhancing transparency in procurement, data quality, domestic resource mobilisation, public financial management and project implementation, the project is expected to build a stronger foundation for effective service delivery," he said.

He added that the initiative would also help increase public trust in government institutions and improve accountability.

Jean Pesme, the World Bank's Divisional Director for Bangladesh and Bhutan, said Bangladesh's next phase of economic growth would depend on strong and transparent institutions.

"The SITA project will help modernise core government systems while strengthening data quality, so decisions are better informed, results are tracked more effectively and accountability is reinforced," he said.

Consumers will have to pay more for officially imported smartphones from 1 July, as a temporary import duty concession has not been extended in the proposed FY27 budget.

The government cut customs duty on imported mobile phones and equipment from 25% to 10% in January to narrow the price gap between officially imported and grey-market devices. The concession, valid until 30 June, reduced the effective tax burden on imported handsets to about 43.43% from over 64%.

As the National Board of Revenue (NBR) has not extended the measure, the effective tax burden will return to 64.25% from 1 July. Industry leaders estimate official smartphone prices could rise by 20-25%.

The Mobile Phone Industry Owners Association of Bangladesh (MIOB) warned the move would raise retail prices. "Our production costs are already rising as prices of memory chips, processors, motherboards and batteries continue to increase globally," said MIOB President Zakaria Shahid.
Infograph: TBS
Infograph: TBS

"If duties return to previous levels, smartphone prices will inevitably rise further, and many consumers may return to the grey market," he added.

An NBR customs official, requesting anonymity, said the concession was withdrawn because it failed to achieve its objectives. "The incentive was introduced to encourage legal imports and local manufacturing. But neither official imports nor domestic production increased as expected," the official said.

Bangladesh has developed a sizeable phone assembly industry producing mainly entry-level and mid-range devices. However, premium smartphones from brands such as Apple, Google, Huawei, Motorola, Samsung and Xiaomi remain commercially unviable to assemble locally, leaving Bangladesh dependent on imports for flagship models.

Higher taxes may strengthen grey market

Bangladesh's smartphone market remains split between official and grey-market imports. The wide price gap has made unofficial devices attractive despite their lack of an official warranty and after-sales support.

Although the Bangladesh Telecommunication Regulatory Commission launched the National Equipment Identity Register (NEIR) earlier this year to identify and eventually block unregistered devices, grey-market phones remain widely available.

Technology entrepreneur Fahim Mashroor said higher smartphone prices would hurt consumers at a time when smartphones have become essential for education, employment, digital financial services and e-commerce.

"A smartphone is no longer a luxury. It is part of the country's digital infrastructure, and the tax burden should be reduced," he said.

Industry sources said several brands had already increased handset prices by Tk500-Tk5,000 before the January duty cut took effect, citing higher global component costs, while unofficial imports continued unabated.

With the effective tax burden returning to more than 64%, industry players fear the price gap between official and grey-market devices will widen further, discouraging legal imports and potentially reducing long-term government revenue.

The broad index of the Dhaka Stock Exchange (DSE) crossed the 5,700-point mark on Sunday for the first time in nearly 22 months, as investors poured in fresh capital ahead of the fiscal year-end to take advantage of tax benefits.

The market opened the day's session on a positive note and the DSE broad index DSEX continued its upward trend till closure as investors remained buoyant. At the end of the session, the DSEX closed at 5,719 points, 1.18 per cent or 66.94 points up from the previous session. The DSE rose for four consecutive sessions, adding 165 points to the broad index.

S M Galibur Rahman, head of research and strategic planning at Shanta Securities, said the number of sellers declined significantly as the majority of investors were taking fresh positions. Many of them wanted to avail themselves of tax rebates by investing in listed securities. As investments must be made by June 30 for tax rebates, the market has persistently witnessed high turnover - above Tk 10 billion in recent sessions.

"Investors' intention to get a tax waiver was the main driver of the recent market rally," said Mr Rahman.

The companies that played a significant role in pulling the broad index include BRAC Bank, Pubali Bank, Square Pharmaceuticals, Beximco Pharmaceuticals, and Grameenphone.

Of them, BRAC Bank alone added 6.8 points to the broad index.

Meanwhile, BEXIMCO on Sunday emerged as the top gainer while also topping the chart of turnover leaders.

The company posted a turnover of Tk 1.05 billion while its stock price advanced 9.86 per cent to close at Tk 31.20 per share.

Insiders said the resumption of trading of Beximco Pharmaceuticals shares on the London Stock Exchange played a supportive role in the robust performance of BEXIMCO on the trading floor of the DSE.

Of the 394 issues traded, 213 advanced, 133 declined and 48 were unchanged, and the DSE posted a turnover of Tk 13.71 billion, 23.43 per cent up from the previous session.

All of the blue-chip stocks included in the DS30 index closed in the green and the index advanced 1.47 per cent or 31.41 points to 2,162.56 points. Market operators said a positive macroeconomic outlook helped restore investor confidence, which was reflected in the vibrant equity market.

Mr Rahman said fuel prices had almost returned to the pre-Iran war level, which would benefit the economy. Treasury rates also declined gradually. Subsequently, interest rates would fall, allowing breathing space for consumers.

"These factors jointly supported the equity market."

Investor participation concentrated mainly on the banking sector, which witnessed transactions of shares worth Tk 2.23 billion, constituting 16.3 per cent of the market turnover.

Daffodil Computers was the worst loser on Sunday after declining 4.25 per cent to close at Tk 146.40 per share on the DSE.

Popular Life Insurance, a listed insurer, has recommended a 20% cash dividend for its shareholders for 2025.

Despite a 42% decline in its earnings per share (EPS) compared to the previous year, the company recommended the same dividend it had paid earlier, according to data published today (28 June) on the stock exchange's website.

Following the dividend declaration, its shares price declined by 1.12% to close at Tk61.60 each at the Dhaka Stock Exchange (DSE).

Calculating its outstanding shares with the EPS, Popular Life Insurance profit stood at Tk8.88 crore, a significantly down from Tk15.32 crore in 2024.

According to disclosure, the net asset value per share of Popular Life Insurance stood at Tk78.10 at the end of 2025, and its net operating cash flow per share stood at negative at Tk18.86.

In 2025, its net asset value declined while its net cash negative widened significantly, the disclosure showed.

At the end of 2024, its net asset value was Tk89.01, and cash flow was negative at Tk3.45.

To secure the shareholders nod on the recommended dividend, the insurer scheduled an annual general meeting on 22 September through the virtually digital platform.

To identify its shareholders, the record date has been fixed on 20 August.

On 21 May, the insurer informed its board that it had decided to construct a joint venture multi-storied building on the company's own land located in the capital's Badda area on 115.56 decimal land. Popular Life Insurance got listed on the bourse in 2005.

As of May, out of its total shares, sponsor-directors held 23.70% stake, while institutional investors 24.57% and general public held 51.73% stake.

Bangladesh Bank (BB) has formally launched a Tk 100 billion special refinancing scheme to boost agricultural production and ensure food security, while revising key provisions from its initial proposal.

The new directive replaces the plan to use foreign currency reserves with domestic bank surplus liquidity and reduces the scheme’s duration from five years to three.

Through an Agriculture Credit Department (ACD) circular, issued today (Sunday) and sent to the Managing Directors/Chief Executives Officers of all banks, the central bank provided a comprehensive set of revised operating guidelines for the scheme. This follow-up circular replaces critical parameters previously outlined in the June 8, 2026.

A fundamental shift in policy has occurred regarding the source of funding. According to today’s circular, the Tk 100 billion scheme is no longer dependent on using foreign currency reserves. Instead, it will be constituted from the surplus liquidity of scheduled banks operating under the management of Bangladesh Bank. This change ensures the program operates strictly with domestic funds, preserving external reserves.

The duration of the scheme has also been adjusted. The central bank specified that the new refinancing tenor is now fixed at three (3) years from the date of the new circular issuance, down from the original five-year proposal.

All other instructions and provisions of the June 8, 2026, circular that were not specifically amended remain unchanged. Bangladesh Bank stated that these new guidelines are effective immediately.

This revised approach by the central bank appears intended to streamline the refinancing process by leveraging domestic banking liquidity while supporting the crucial agriculture sector—responsible for rural employment and national food security—in a sustainable and less reserve-dependent manner.

The government, for the first time in Bangladesh, has announced tax rates for five years to provide businesses with greater policy certainty and help create jobs, said Rashed Al Mahmud Titumir, the prime minister’s adviser on planning and economic affairs.

Businesses need stable tax policies to plan investments, and the announcement of tax rates for five years in advance will be instrumental in this regard, he said yesterday.

Speaking at a discussion titled “Youth in National Budget 2026-27: Education, Employment and Entrepreneurship” at Dhaka University, he said the budget seeks to build a state centred on public welfare and democracy.

To help reduce borrowing costs and encourage entrepreneurship, the government is working to lower lending rates, Titumir said.

“We are ensuring liquidity at a 3 percent rate so that entrepreneurs can get loans at interest rates of 5 to 7 percent,” he said.

“Our manifesto clearly states that socioeconomic development and sustainable state capability must be achieved,” he said.

The PM’s adviser said the government has given priority to energy, education, health and social protection in the budget for the next fiscal year.

The government has set a target of generating 20 percent of the country’s energy from renewable sources and plans to establish emergency energy reserves, he said.

Titumir said the government aims to increase public investment in education.

He said hospitals established during the tenures of former president Ziaur Rahman and former prime minister Khaleda Zia would be expanded to 101 beds.

Kidney dialysis centres and coronary care units will also be established in every district.

On social protection, he said the government was replacing what he described as a politically biased welfare system with a “lifecycle-based” approach to support citizens at different stages of life, including children, older people, widows and people with disabilities.

At the event, DU Treasurer Prof M Jahangir Alam criticised the budgetary allocation for university research.

He said the University Grants Commission has taken full control of research funding, leaving Dhaka University with no independent research allocation.

“With a 2 percent allocation, can one become a research university?” he said, questioning how the government’s vision of building an innovation-driven economy could be achieved without allowing the country’s leading university to manage its own research funds.

Crude prices fell by more than 3 percent on Friday, on course for steep weekly losses, as oil tankers kept exiting the Strait of Hormuz, easing supply concerns the day after a cargo vessel was hit near Oman.

Brent crude futures settled at $71.99 a barrel, down $3.27, or 4.34 percent. US West Texas Intermediate finished at $69.23 a barrel, down $2.69 or 3.74 percent.

Since the market closed last Thursday, the Brent benchmark fell 10.86 percent, while WTI fell 9.62 percent for the week. The market closed for a public holiday last Friday.

“There is a growing sense that oil is going to keep moving through the Strait of Hormuz,” said Phil Flynn, senior analyst with Price Futures Group. Prior to the agreement on 60-day ceasefire, markets worried supplies would fall short of demand, but those fears seem to be passing.

“The predominant view, it appears, remains one of imminent oversupply,” said PVM analyst Tamas Varga. “We’re going to get a flood of oil,” Flynn said. “I think we’re going to see a huge flood of products.”

Oil giant Saudi Aramco resumed oil loading on Friday at its Ras Tanura terminal in the Gulf after a nearly four-month halt, shipping data from LSEG showed.

Two very large crude carriers (VLCCs), which can load cargoes of 2 million barrels, took on crude at the terminal while another waited nearby, the data showed.

“There is a general selloff as the market reacts to the increased flows exiting the Strait of Hormuz and China not yet picking up crude demand,” said June Goh, senior oil market analyst at Sparta Commodities.

UNKNOWN PROJECTILE HITS VESSEL

On Thursday, both benchmark contracts jumped more than 2% after a cargo vessel was hit by an unknown projectile near Oman, prompting the U.N.’s shipping agency to suspend its voluntary evacuation scheme. Two US officials told Reuters that Iran fired on the cargo ship as it attempted to pass through the strait.

Iranian authorities said the security of vessels passing outside designated Hormuz routes is not guaranteed. On Friday, Iran reasserted its right to control shipping through the Strait of Hormuz and warned Gulf states against siding with the US.

Data on Thursday showed that crude shipments through the strait rose this week to their highest since the US-Israeli conflict with Iran began at the end of February. Despite the ceasefire deal that reopened the waterway, overall traffic is far below the pre-war daily average.

Meanwhile, Russian authorities are considering a diesel export ban for several months, state news agency TASS said on Friday. Russia, a major diesel exporter, faces fuel supply issues after Ukrainian drone attacks extensively damaged its oil refineries and other energy infrastructure.

Bangladesh’s first-ever short-term shariah-based sukuk drew overwhelming interest from individuals and institutions at its debut auction yesterday.

Investors submitted bids worth Tk 56,607 crore for the 273-day sukuk, more than 10 times the issuance target of Tk 5,500 crore.

The shariah-based bond, issued by the government to finance the Important Rural Infrastructure Development Project-2 (IRIDP-2), carries an annual rental rate of 9.36 percent. The Bangladesh Bank (BB) held the auction in Dhaka on behalf of the government.

Shariah-based banks and financial institutions, Islamic banking branches and windows of conventional banks, institutional investors, and individual investors participated in the auction, the BB said in a statement. Given the overwhelming demand, the sukuk was allotted to investors on a pro-rata basis.

Interest in shariah-compliant instruments has been rising since their launch in December 2020. With yesterday’s auction, the total amount raised by the government through sukuk has exceeded Tk 53,000 crore.

The BB said the introduction of a short-term sukuk, alongside existing long-term Islamic securities, would strengthen liquidity management for shariah-based banks and financial institutions. The central bank plans to issue more sukuk bonds in days to come.

In this regard, Istequemal Hussain, director of the Debt Management Department at BB, told The Daily Star that they plan to raise Tk 30,000 crore in the next fiscal year through the issuance of various sukuk bonds, which will be open to individual investors.

The BB said the issuance expands shariah-compliant investment opportunities for Islamic financial institutions and individual investors.

The short-term sukuk will qualify as a Statutory Liquidity Reserve (SLR) asset for eligible banks and financial institutions, while Islamic banks will be able to use it as collateral to access the central bank’s Islamic Banks Liquidity Facility (IBLF).

Trading of the sukuk in the secondary market will begin today, allowing banks, financial institutions, insurance companies, provident and mutual funds, and individual investors to buy and sell the instrument. According to the BB, 727 successful bids from individual investors, provident funds, mutual funds, and deposit insurance entities were allotted sukuk worth around Tk 87.37 crore.

Bangladesh's gross national savings (GNS) are projected to decline to 26.93 per cent of gross domestic product (GDP) in the outgoing fiscal year-hitting a five-year low,Demographics

The latest savings figure collated by Bangladesh Bureau of Statistics (BBS) marks a decline of 0.74-percentage points from the estimated 27.67 per cent recorded in the past FY2024-25, extending a downward trend that began after the post-pandemic peak.

Economists attribute the fall in national savings to mounting pressure on household finances amid persistently high inflation, slower income growth and subdued private-sector investment.

The country's GNS stood at 29.25 per cent of GDP in FY2021-22 before rising to a five-year-high 29.95 per cent in FY2022-23.

Since then, it has steadily declined to 28.42 per cent in FY2023-24, 27.67 per cent in FY2024-25 and an estimated 26.93 per cent in FY2025-26.

In terms of volume, gross national savings are estimated at Tk 15.26 trillion in the current fiscal year.

Gross national savings measure the portion of national disposable income that remains after total consumption expenditure is deducted.

It is a key indicator of an economy's capacity to finance investment from domestic resources without relying excessively on external borrowing.

Economists say the dip in savings reflects deeper structural challenges facing the economy.Economics

"Households are increasingly spending a larger share of their income on essential goods and services because of prolonged inflationary pressure," Dr Zahid Hussain, former lead economist at the World Bank's Dhaka office, told The Financial Express.

"When inflation remains elevated for a prolonged period, particularly since the outbreak of the Ukraine war, families dip into their savings to maintain consumption. As a result, aggregate national savings tend to decline."

Bangladesh has experienced inflation above the government's comfort range for several years. Rising food, transport and utility costs have significantly eroded purchasing power, particularly among low- and middle-income households.

Weak private investment has also contributed to the decline in savings.

Economists note that savings and investment are closely linked. Lower profitability, an uncertain business environment, foreign-exchange constraints and higher borrowing costs have discouraged fresh private investment, reducing incentives for businesses and households to save.

Dr Mohammad Yunus, research director at Bangladesh Institute of Development Studies (BIDS), told the FE that actual household savings could be much lower as a significant share of national savings comes from corporate entities and autonomous and semi-autonomous government organisations.Business News

He says the decline in savings should serve as a warning for policymakers.

"A sustained decline in national savings reduces the pool of domestic resources available for investment. If investment demand recovers while savings remain weak, the economy may become increasingly dependent on foreign borrowing," he notes.

The latest figures also highlight a widening gap between Bangladesh's long-term development ambitions and current macroeconomic realities.

Historically, high domestic savings have been a key driver of rapid economic growth across Asia. Countries such as China, South Korea and Vietnam maintained high savings rates during their industrialisation, enabling them to finance large-scale investment programmes.

Although Bangladesh's savings rate remains comparatively strong by regional standards, the recent decline suggests growing stress in the economy.

Dr M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, thinks restoring macroeconomic stability would be crucial to reversing the trend.Demographics

"Bringing inflation under control, improving investor confidence, ensuring stable energy supplies and strengthening financial-sector governance are among the measures needed to improve the situation," he suggests.

He adds that there is a direct relationship between macroeconomic stability and household saving behaviour.

"When people are confident about future income prospects and inflation is moderate, they are more likely to save. Conversely, prolonged uncertainty discourages savings and long-term investment decisions."

The government and Bangladesh Bank have recently adopted tighter monetary and fiscal measures aimed at containing inflation and stabilising the external sector.

Dr Md Ezazul Islam, director-general of Bangladesh Institute of Bank Management (BIBM), says inflation could have been much higher without the central bank's tight policy stance.

"We believe these tighter policy measures will help ease inflationary pressures in the coming months."Economics

For now, however, the provisional BBS estimates suggest Bangladesh's domestic savings base is under increasing pressure, stoking concerns about the economy's ability to sustain investment-led growth without greater reliance on external financing.

Micro, small and medium enterprises (MSMEs) account for nearly 99 percent of Bangladesh’s 1.17 crore industrial establishments and employ more than three crore people, underlining their crucial role in the country’s economy.

The sector contributes around 30 percent to the economy and provides nearly 85 percent of industrial employment, according to the SME Foundation’s analysis of the Bangladesh Bureau of Statistics’ Economic Census 2024. The analysis was released on the occasion of International MSME Day.

The SME Foundation said the cottage, micro, small and medium enterprise sector remains a key driver of employment and socio-economic development, particularly in a country with a large population and limited resources.

Since its establishment under the industries ministry in 2006, the foundation has supported about 22 lakh small and medium entrepreneurs through various programmes, with women accounting for 60 percent of the beneficiaries.

FY27 budget prioritises MSME development with SME Foundation service platforms, cluster mapping updates, YESS programme, and broad support including mentorship, training, credit access, exports, branding, and market expansion for entrepreneurs
Speaking at a programme marking International MSME Day at the Bangladesh Investment Development Authority auditorium in Agargaon yesterday, Industries, Commerce, and Textiles and Jute Minister Khandakar Abdul Muktadir said Bangladesh still lags behind many regional countries in terms of MSMEs’ contribution to GDP.

“In countries like Vietnam, Cambodia, and even India and Pakistan, MSMEs contribute much more to GDP than they do in Bangladesh. We want to raise their contribution,” he added.

Muktadir said the rate of new entrepreneur creation had declined sharply over the past 12 to 15 years, contributing to rising income inequality.

“Those who already owned industries and factories became bigger, while fewer new entrepreneurs were able to emerge. One of the main reasons was the shortage of gas,” he added. He also said economic opportunities had become concentrated in the hands of a small group.

“This has kept economic activity concentrated among a few people. It is one of the main causes of rising inequality, and unfortunately, we followed that path. As a result, income inequality is much higher today than it was 15 to 20 years ago,” he added.

The minister stressed that strengthening the MSME sector is essential for keeping the economy dynamic and inclusive.

To promote entrepreneurship, the government is preparing a comprehensive plan to support new entrepreneurs through development and mentorship programmes, he added.

The government is also launching mentorship programmes and has started initiatives to establish new industrial parks through the Bangladesh Small and Cottage Industries Corporation in Pabna, Sylhet and Saidpur in Nilphamari.

It also plans feasibility studies for additional industrial parks where existing ones are fully occupied. Addressing the gas crisis, Muktadir said the government would prioritise industries with lower energy consumption while continuing efforts to ease gas shortages affecting factories.

He added that the national budget for FY27 gives special importance to MSME development and creating new entrepreneurs.

The budget includes plans to establish service platforms through the SME Foundation, update SME cluster mapping, and implement the Youth Entrepreneurship & Startups for Students (YESS) programme.

It also includes targeted support for new entrepreneurs through mentorship, technical training, database development, demand-based credit, export support, branding and design assistance, and improved access to local and international markets.

WOMEN REMAIN UNDERREPRESENTED

Nasreen Fatema Awal, president of the Women Entrepreneurs Association of Bangladesh, highlighted the wide gender gap in entrepreneurship.

She said Bangladesh has around one crore male entrepreneurs, compared with only about 7 lakh women entrepreneurs.

“This gap is not just a statistic; it reflects the untapped potential of our economy,” she added.

Nasreen also said that increasing the number of women entrepreneurs would create more jobs, raise household incomes, improve children’s education and healthcare, and make economic growth more inclusive.

Anwar Hossain Chowdhury, managing director of SME Foundation, said more than 250,000 entrepreneurs have received direct assistance from the organisation since its inception.

Since 2009, the foundation has disbursed around Tk 1,300 crore in loans to nearly 15,000 entrepreneurs through its credit wholesaling programme. At least 25 percent of the recipients are women.

He said the foundation continues to promote entrepreneurship, strengthen business capacity, encourage technology adoption, expand market access, and advocate policy reforms to make Bangladesh’s MSME sector more competitive.

There has been a serious concern about economic growth because of the liquidity crisis, huge volumes of bad and doubtful loans, inadequate revenue collection, pressure on foreign debt repayments, declining remittances from non-resident Bangladeshis and uncertainty over export growth. Some of these challenges are beyond our control, while others, including revenue collection, debt recovery and liquidity management, can certainly be addressed through appropriate policy measures.

Bad and doubtful loans reported so far need to be categorised in a dispassionate and objective manner. A large portion of these outstanding loans resulted from fraudulent lending, with funds siphoned out of the financial sector. These are criminal offences and should be dealt with through legal action. Some loans have become bad because of adverse economic conditions, including slower imports caused by the foreign currency crisis, the wars in the Middle East and Ukraine, inadequate power supply to industrial units, rising fuel prices and production costs, weaker exports and other related factors. There is also another category comprising wilful and habitual defaulters. Even in these difficult circumstances, many borrowers continue to repay their loans regularly, demonstrating their commitment and honest intention.

Loans that have become bad because of economic factors beyond borrowers’ control warrant rehabilitation schemes in both the short and long term. Such support should follow careful review on a case-by-case basis, taking industry-specific issues into account. Working capital financing is another critical requirement for boosting production and, where applicable, increasing exports.

Unfortunately, since independence, Bangladesh has seen the persistent presence of habitual and wilful defaulters, with or without political patronage. This has seriously undermined the repayment culture, encouraged corruption and ultimately weakened economic growth. This issue should be addressed firmly, with no further incentives or concessions for wilful defaulters. Strict measures could include restrictions on business expansion, overseas travel by family members, children’s overseas education, infrastructure development and donations to institutions used to fulfil political ambitions. It is unfortunate that many wilful defaulters have never been brought to account, while a large number have escaped responsibility one way or another. This should not be allowed to continue.

Where appropriate, legal action should be initiated without further delay. Inter-company loans are another important area requiring close review. It is necessary to determine whether such funds have been extended to subsidiaries and associated entities and whether those entities have the capacity to repay them on time. It is well established that borrowers often overstate the value of their personal assets when securing loans. Subsequently, those assets may be diverted or disposed of, with or without the knowledge of banks or financial institutions. As a result, loans become effectively unsecured, exposing banks to greater risks in recovering overdue advances.

Increasing revenue collection is equally important. For many years, Bangladesh has failed to raise revenue to the expected level, leaving its tax-to-GDP ratio below that of neighbouring countries and comparable economies. Weak measures by the National Board of Revenue (NBR), inadequate digitalisation and corruption remain major obstacles. Required tax payments cannot be expected solely on a voluntary basis. Greater emphasis should be placed on credible financial statements, effective tax audits as practised in many countries, third-party verification of key financial information, adoption of a faceless assessment system and stronger action against corruption. Good governance is equally important, as poor governance encourages corruption, which ultimately undermines economic growth.

Bangladesh must overcome these challenges. Otherwise, economic growth will be seriously affected at a time when the world is already facing severe pressures from wars and continuing economic uncertainty.

US President Donald Trump on Friday threatened to slap a 100 percent tariff on European countries that impose a digital services tax, adding that existing trade deals would be scrapped.

“Any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America,” Trump said in a post on his Truth Social platform.

He added that “this TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not.”

The move comes just a day after EU countries gave the green light to a trade agreement negotiated last year with the United States, which caps taxes on European imports at 15 percent.

Reacting to Trump’s fresh threats, the European Union on Friday vowed to “respond swiftly and decisively to defend its rights and regulatory autonomy,” according to a European Commission spokesman.

Trump has repeatedly made it clear he wants to tackle so-called non-tariff barriers to trade -- and strict European regulations on technology and environment are in his crosshairs.

With most tech giants based in the United States, Trump views digital taxes as a hindrance to US exports.

Earlier this month, Trump threatened to impose a 100 percent tariff on French wine and champagne unless Paris removed its digital services tax on technology firms.

France imposed in 2019 a three-percent levy on the revenues earned by technology firms, including US giants Facebook, Amazon, Apple and Google’s parent Alphabet, within the country’s borders.

South Korea’s Samsung Electronics is expected to announce a record domestic investment plan next week, according to local media reports, in a massive bet on AI-driven semiconductor demand.

The 1,000 trillion won ($650 billion) package, to be announced by the chip giant and the government, is in line with President Lee Jae Myung’s agenda for development in regions outside of the capital Seoul.
Lee will host a “National Mega Project” briefing on Monday, where Samsung will unveil major long-term investment plans, the reports said.Rival chipmaker SK hynix is also expected to announce spending plans at the same event. Both companies are top producers of advanced memory chips used in the data centres that train and run artificial intelligence tools like chatbots and image generators.The AI boom has sent the firms’ profits and share prices skyrocketing, with Samsung recently agreeing a bonus deal with its workers’ union to avert a major strike.

The Samsung investment package is expected to include about 300 trillion won for a new semiconductor complex in southwest South Korea -- one of the regions that has fallen behind the capital in tech investment.

Some 60 trillion won would likely be earmarked for six chip manufacturing plants at Yongin in the south, and more than 350 trillion won for AI infrastructure including data centres, according to Maeil Business Newspaper.

The proposed 10-year spending package would be the largest investment commitment ever announced by a South Korean company.

Lee met Samsung chairman Lee Jae-yong in Seoul this week to discuss semiconductor investments, according to news reports.

The president also reportedly met SK Group Chairman Chey Tae-won last week.

Samsung Electronics last year posted an operating profit of 43.6 trillion won -- a 33 percent increase year-on-year.

The company is projected to achieve an operating profit in the mid-to-high 300 trillion won range this year, and 550 trillion won next year.

Kim Yong-beom, the presidential chief of staff for policy, said Wednesday that discussions on the planned semiconductor project in Yongin were in their final stages.

“Once everything is confirmed, we plan to bring together the companies and relevant ministries to explain the plan to the public at once,” Kim said.

Gold rose on Friday as the dollar weakened and expectations of US interest rate hikes eased slightly following inflation data, though prices were still on track for a fourth consecutive weekly decline.

Spot gold was up 1.3 percent at $4,077.64 per ounce by 1:35 p.m. EDT (1735 GMT).

US gold futures for August delivery settled 1.2 percent higher at $4,096.30 per ounce. The US dollar eased from recent highs after the release of the Fed’s preferred inflation gauge on Thursday.

The US Personal Consumption Expenditures Price Index surged 4.1 percent in the 12 months through May, matching economists’ forecasts in a Reuters poll. Traders are pricing in about a 59 percent chance of a US rate hike in September, lower than an earlier expectation of 64 percent, according to CME Group’s FedWatch Tool.

Gold is seeing a modest rebound after coming under selling pressure earlier this week, said Jim Wyckoff, a market analyst at American Gold Exchange.

Higher interest rates and tighter monetary policy reduce the appeal of non-yielding bullion, as they tend to boost bond yields and increase returns on interest-bearing assets.

Spot gold hit more than a seven-month low earlier this week and prices were down 2.1 percent for the week. TD Securities said in a note that given gold’s inverse relationship with both higher oil prices and a stronger US dollar, sustained strength in energy markets could put further downward pressure on the precious metal in the months ahead.

Gold started trading at a premium in India this week for the first time in a month and a half, as a price correction lifted buying, while demand stayed subdued in China, the top consumer.

Bangladesh's gross foreign-exchange reserves crossed US$36-billion mark Wednesday with an aid dollop of nearly $320 million from Japan International Cooperation Agency (JICA).Bangladesh Market Analysis
FE

The country's gross forex reserves rose to $36.10 billion on the day from $35.80 billion of the previous day with disbursement of the funds by JICA, officials said.

JICA is a government agency responsible for delivering the bulk of Japan's Official Development Assistance (ODA).

As per the International Monetary Fund (IMF)'s Balance of Payments International Investment Poisson Manual-six edition, generally known as BMP6, the reserves in US dollar rose to $31.55 billion during the period under review from $31.24 billion, according to the central bank's latest data.

"Our gross forex reserves may touch $37 billion by the end of June if the government secures more funds from overseas sources," a top central banker told The Financial Express (FE) while replying to a query.

More foreign funds are expected to be included in the country's forex reserves shortly, the central banker hints.

Meanwhile, the World Bank has already approved $450 million worth of loan to help Bangladesh strengthen the foundations for a stronger banking sector for the revival of the economic growth and job creation.

Earlier, on June 14, the Asian Development Bank (ADB) disbursed more than $1.0 billion in budget support to Bangladesh.

Central bank officials, however, say stronger remittance inflows and lower import-payment obligations have also contributed to the improvement in the country's foreign-exchange-reserves position.

The purchasing of US dollars from commercial banks by the central bank has also helped push up the forex reserves recently, they add.

The central bank of Bangladesh has so far bought $6.42 billion from banks directly since July 13 last under the prevailing free-floating exchange-rate arrangement.

The government is likely to raise the tax-free income threshold to Tk 4 lakh over the next two fiscal years, FY2026-27 and FY2027-28, to ease the tax burden on lower-income earners.

The threshold could then increase to Tk 4.5 lakh in FY2028-29 and FY2029-30 before reaching Tk 5 lakh in FY2030-31, according to sources familiar with the matter.
The changes are expected to be incorporated into the Finance Bill 2026 before it is passed by parliament, a senior finance ministry official said.Finance Minister Amir Khosru Mahmud Chowdhury placed the bill in parliament on June 11 while presenting his first national budget for FY2026-27.The proposed budget set the tax-free income threshold at Tk 3.75 lakh for FY2026-27 and FY2027-28. At present, individuals can earn up to Tk 3.5 lakh a year without paying income tax.The official also said the government is likely to drop the proposed requirement for a Taxpayer Identification Number (TIN) to open a bank account.

The budget proposed making TIN mandatory for opening bank accounts, but the measure drew opposition from various stakeholders, who argued that it could discourage financial inclusion.

The advance income tax (AIT) on business-to-business (B2B) transactions, which was proposed to be at 0.2 percent in the budget, is likely to remain unchanged, the official said.The government is also planning to cut the capital gains tax on gold to 5 percent from the current 15 percent.In the proposed Finance Bill, profits from the sale or transfer of gold, silver, jewellery, precious stones, diamonds, coins, digital currencies, artworks, antiques and club memberships declared in a taxpayer return would be treated as capital gains and taxed at 15 percent.

Capital gains from securities would also be taxed at 15 percent, including treasury bills, bonds, savings instruments, debentures, sukuk and other shariah-based securities, as well as shares and stocks issued by companies and other entities.

The proposal to tax gains from gold and jewellery comes at a time when gold prices have risen sharply in recent years.

In another planned change, the corporate tax rate for private universities is likely to be cut to 5 percent from 10 percent.

The 10 percent rate currently applies to private universities, medical colleges, dental colleges, engineering colleges and institutions dedicated solely to ICT education.

No changes are being considered for real estate developers, the official added.

The National Board of Revenue (NBR) has set a target to raise the country's revenue-to-GDP ratio to 10.7% by the fiscal year (FY) 2028-29 to strengthen domestic resource mobilisation and sustain economic development, according to the government's Medium-Term Macroeconomic Policy Statement (2026-27 to 2028-29).

The policy statement identifies increasing the revenue-to-GDP ratio as a key prerequisite for maintaining development momentum and addressing structural weaknesses in the economy, noting that Bangladesh's revenue-to-GDP ratio remains among the lowest among comparable economies.

According to the document, the overall revenue-to-GDP ratio stood at 8.3% in FY 2023-24, before declining to 8.0% in FY 2024-25 due to structural weaknesses in tax administration, tax exemptions on essential commodities aimed at containing inflation, and lower import-related revenue amid global economic uncertainties.

The government projects the ratio to increase to 10.2% in FY 2026-27, 10.5% in FY 2027-28, and 10.7% in FY 2028-29.

NBR tax revenue, which accounted for 6.7% of GDP in FY 2024-25, is projected to rise to 8.8% in FY 2026-27, 9.1% in FY 2027-28, and 9.3% in FY 2028-29.

The policy statement notes that total revenue figures include foreign grants, while non-NBR tax revenue is expected to remain between 0.3% and 0.4% of GDP during the period.

In his budget speech for FY 2026-27, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said the government's medium-term objective is to raise the country's tax-to-GDP ratio to 10%, with a long-term target of 15% by 2035.

He said the government aims to establish a fair, technology-based, universal and predictable tax system while creating a stronger economic cycle driven by investment, production, employment, consumption and improved revenue collection.

To achieve the targets, the NBR plans to implement wide-ranging reforms, including the full digitisation of tax administration, strengthening transparency and accountability to encourage voluntary compliance, broadening the tax base through increased economic activity, and establishing a more predictable revenue framework.

The policy statement says higher domestic revenue mobilisation will reduce dependence on deficit financing and bank borrowing, complement the government's contractionary monetary policy in controlling inflation, and strengthen the economy's resilience against domestic and external shocks.