Bangladesh’s digital transactions grew 13 percent year-on-year in both volume and value in 2025, with the identical growth rate across both metrics pointing to a balanced and sustainable expansion of the country’s payment ecosystem.

According to Bangladesh Bank’s Payment Systems Report 2025, digital transaction volume rose from 482.7 crore in 2024 to 546.3 crore in 2025, while transaction value climbed from Tk 90.38 lakh crore to Tk 102.24 lakh crore over the same period.

The central bank said the symmetrical growth indicates that users are no longer confining digital payments to small transactions such as mobile recharges but are now using these channels for larger commitments, including utility bill payments, tuition fees, and high-value e-commerce purchases.

“Digital is no longer an experiment; it is a habit,” the report said.

BB said the 13 percent alignment between volume and value signals that digital infrastructure has become reliable enough to handle both frequency and magnitude – the hallmark of a mature transition in which digital rails are carrying not just more transactions but also greater economic weight.

Non-digital transactions recorded the sharpest growth in volume, rising 25 percent to 539.5 crore.

However, the value of transactions through these channels fell 7 percent year-on-year to Tk 209.48 lakh crore.

The report said the paradox resolves itself as people are transacting more often through non-digital channels but moving less money each time, with high-value settlements migrating to digital infrastructure.

Total transaction volume across both categories rose 19 percent to 1,085.9 crore, while total transaction value edged down 1 percent to Tk 311.72 lakh crore.

Bangladesh is planning to establish its first free trade zones (FTZs), with the government positioning the initiative as a transformative trade strategy that could slash export lead times, attract foreign suppliers and turn the country into a regional logistics hub.

The Cabinet Committee on Economic Affairs yesterday gave in-principle approval to the establishment of FTZs near the Matarbari deep-sea port in Cox’s Bazar and in Anwara, near Chattogram Port, Cabinet Secretary Md Nasimul Gani said.

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According to officials familiar with the matter, the zones will cover around 600 acres. Development of the Anwara zone is expected to begin this year. The Matarbari FTZ is slated for 2030–2033, alongside expansion of the deep-sea port.

Gani said the FTZs are expected to facilitate trade, logistics and manufacturing, attract investment and strengthen Bangladesh’s position as a regional trade hub. He added that the initiative was part of a long-term policy effort.

“This is the most successful (trade zone) model yet,” said Ashik Chowdhury, executive chairman of the Bangladesh Investment Development Authority (Bida). “Nearly 37 percent of Dubai’s trade comes from FTZs. Given our country’s geopolitical position, it has become critical for us.”

Unlike conventional economic zones or export processing zones (EPZs), the proposed FTZs will allow both local and foreign investors to engage in a broader range of trading, logistics and manufacturing activities.

Chowdhury described the FTZ as an “EPZ++” -- a more advanced evolution of the EPZ model introduced in the 1980s. “Global trade has evolved a lot since then. Under the current global trade structure, FTZs give you a very different proposition,” he said, adding that EPZs would continue to operate alongside the new zones.

The core proposition of the FTZ model is that the zones will function outside Bangladesh’s customs territory. Investors can import raw materials and machinery duty-free, undertake value addition and re-export finished goods. Products may also enter the domestic market upon payment of applicable duties.

“You have to think of it as not part of Bangladesh. It is an overseas system,” Chowdhury said.

Warehousing is expected to be the primary revenue driver. Foreign suppliers will be able to stock raw materials inside the zones and supply both Bangladeshi exporters and buyers across the region on demand. Under the current system, importers pay duties upfront and seek refunds later, a process long criticised as cumbersome.

“If we have raw materials in a warehouse near to us, it will reduce lead times for our exports,” Chowdhury said. “We can also start tapping exporters from neighbouring countries. The ambition is that big suppliers can use our zones as a secondary location to supply materials across the region.”

The model follows the blueprint of globally successful hubs including Dubai’s Jebel Ali Free Zone, and mirrors systems already in place in Vietnam and Thailand -- countries Chowdhury acknowledged as competitors Bangladesh has been slow to match. “We are a bit late on this,” he said.

The initiative follows recommendations by a Bangladesh Economic Zones Authority (Beza) committee that reviewed international FTZ models. Officials expect the zones to attract light manufacturing, logistics operators, warehousing businesses, regional distribution centres and multinational firms seeking supply-chain bases in South Asia.

Moinul Islam, former economics professor at the University of Chittagong, said the proposal had been under discussion for over two decades. “The FTZs would not only attract fresh investment but also create a platform where suppliers and agents of industrial raw materials could stock and trade their products closer to export-oriented manufacturers.”

Economists view the Matarbari FTZ as potentially the more transformative of the two. As Bangladesh’s first deep-sea port capable of handling large-draft vessels, Matarbari is expected to cut shipping costs, shorten transit times and improve connectivity with global shipping routes.

“These are exactly the factors multinational investors consider when selecting production and distribution locations,” said M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.

He added that the Anwara site’s proximity to Chattogram port, the Karnaphuli Tunnel, Shah Amanat International Airport and three existing EPZs made it an equally strong draw for foreign investors.

Business leaders have also welcomed the move as an opportunity to diversify investment beyond garments.

Mohammed Amirul Haque, president of the Chittagong Chamber of Commerce and Industry, said the zones could attract electronics, light engineering, consumer goods, packaging and regional distribution operations.

However, he cautioned that infrastructure must keep pace, calling for an urgent upgrade of the Dhaka-Chattogram highway from four to ten lanes.

Bida’s Chowdhury said the government was working to amend seven provisions of law and regulation to operationalise the zones. “We will try to start one of the zones by next year. It will depend on how fast we can change the laws.”

Public investment and policy support for the agriculture sector have increased over the years, but the benefits of budgetary allocations have yet to adequately reach smallholder and marginal farmers, experts said today.

At a discussion, experts discussed how proposed budget allocations, policy priorities, and strategic interventions for fiscal year 2026-27 can be translated into tangible benefits for farmers and contribute to the long-term transformation of the agriculture sector..

The observations came at a roundtable, titled "National Budget FY2026-27: Strategic Discussion on Crop Agriculture", jointly organised by LightCastle Partners and the Sustainable Agriculture Foundation (SAF) Bangladesh, at a hotel in Dhaka.

Bangladesh's crop agriculture sector remains crucial for ensuring food security, supporting rural livelihoods, driving agro-industrial growth, and generating export earnings. Between 1999 and 2019, the value of agricultural production grew at an average annual rate of 3.54 percent.

However, the sector continues to grapple with climate vulnerability, increasing dependence on agricultural inputs, and inefficiencies in post-harvest management.

Farmers continue to face mounting challenges, including rising input costs, post-harvest losses, climate-related risks, limited market access, and weak implementation of development programmes, the experts said.

Agriculture's contribution to Bangladesh's gross domestic product (GDP) has declined from nearly 38 percent in the 1970s to 11.2 percent at present.

At today's event, Zeeshan Abedin, social research and impact adviser at LightCastle Partners, presented a keynote analysis of the proposed agriculture budget.

According to the presentation, the proposed FY2026-27 budget allocates Tk 28,881 crore to the Ministry of Agriculture, including Tk 7,946 crore for development expenditure, up from Tk 27,224 crore in the original FY2025-26 budget.

The budget also proposes Tk 17,001 crore for agricultural subsidies, including fertiliser support and related activities.

The presentation highlighted that agriculture's allocation under the development budget has doubled to Tk 7,945 crore. However, the proposed subsidy allocation has declined by 1.4 percent, while support for industry players has shifted towards input tax reductions.

A notable feature of the proposed FY2026-27 budget is its greater emphasis on water management and irrigation, post-harvest management, and agricultural assistance through the Farmer Card programme.

However, concerns were raised over the utilisation of allocated funds. While Annual Development Programme (ADP) implementation reached 93 percent in FY2022-23 and 95 percent in FY2023-24, the rates fell to 60 percent in FY2024-25 and 62 percent in FY2025-26.

MA Sattar Mandal, emeritus professor at Bangladesh Agricultural University in Mymensingh and professorial fellow at the Bangladesh Institute of Development Studies, moderated the session.

Zahedul Amin, co-founder and managing director of LightCastle Partners; Md Farhad Zamil, executive director of SAF Bangladesh; Anwar Faruque, board director of Bangladesh Krishi Bank and former secretary of the Ministry of Agriculture; and Md Habibullah, director of the Administration and Finance Wing of the Department of Agricultural Extension, also spoke at the event.
FARMERS

Foreign Minister Khalilur Rahman today (17 June) said the reciprocal tariff agreement with the United States will help attract foreign investment, strengthen energy security, and further reinforce Bangladesh's position in global supply chains.

He told parliament this while responding to a question from Gazipur-5 MP AKM Fazlul Haque Milon, who asked whether diplomatic efforts had been intensified to attract new export markets and international investment.

In his reply, the foreign minister highlighted various trade agreements with different countries, expanded business engagement initiatives, and the organisation of international business conferences as part of the government's efforts.

Khalilur Rahman said through the recently signed Agreement on Reciprocal Trade (ART) with the United States, Bangladesh had secured duty-free access for ready-made garments produced using American cotton.

He expressed hope that the agreement would play a positive role in attracting foreign investment, strengthening energy security, and enhancing Bangladesh's position within global supply chains.

The then interim government signed the agreement with the United States on 9 February, three days before the national parliamentary election.

According to business leaders and experts, the agreement creates obligations for Bangladesh to import various products from the United States, including cotton, energy products, soybeans, wheat and aircraft.

Diversification key to Bangladesh's foreign policy

Meanwhile, responding to another question from Netrakona-3 MP Rafiqul Islam Hilaly today, Khalilur Rahman told parliament that Bangladesh's foreign policy prioritises the diversification of diplomatic relations and the maintenance of strategic balance.

He said Bangladesh is strengthening ties with traditional partners such as the US, EU, UK, Japan, South Korea, China, Middle Eastern countries, Canada and Australia, while expanding cooperation with emerging economies in Asean, East and Central Asia, Africa and Latin America.

He said global shifts, including conflicts, trade realignment, energy and food security concerns, technological competition, climate change and migration, are reshaping international relations, requiring a flexible and interest-driven foreign policy.

The minister emphasized Bangladesh's approach is guided by mutual respect, sovereignty, non-interference and cooperation, aligned with national interest and the "Bangladesh First" vision.

On regional relations, he said Bangladesh is pursuing constructive engagement with India on unresolved issues such as water sharing, border management, connectivity, energy cooperation and trade barriers. Efforts are also ongoing with Myanmar, particularly on resolving the Rohingya crisis.

The minister added that Bangladesh is working to revitalise Saarc and strengthen Bimstec to enhance regional cooperation.

The government is also expanding partnerships in emerging sectors including AI, digital economy, semiconductors, renewable energy, R&D and the blue economy, while identifying new export markets in the Middle East, Africa, East and Central Asia and Latin America, Khalilur said.

"Labour market diversification is also a priority, with efforts to expand skilled worker migration beyond traditional Middle Eastern and European destinations to Japan, South Korea, South America and Eastern Europe," he added.

Bangladesh is set to introduce free trade zones (FTZs) for the first time under a proposed customs framework, marking a major shift in its export strategy, industrial development and investment facilitation efforts.

Under the proposed framework, businesses will be allowed to import raw materials, components and goods into designated FTZs without paying duties. Companies will be able to store, process, assemble, repackage, relabel and re-export products from these zones. Goods may also be supplied to the domestic market after payment of applicable duties and taxes.

The initiative is expected to help reduce supply chain delays, lower production costs and strengthen Bangladesh's position as a regional trade and logistics hub as the country prepares for graduation from least developed country (LDC) status.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Finance Minister Amir Khosru Mahmud Chowdhury, yesterday approved a proposal to establish the country's first free trade zone in Anwara, Chattogram, aimed at boosting trade, investment, and export capacity.

Industry leaders say the move could address one of the biggest challenges facing Bangladesh's manufacturing sector: long lead times in sourcing imported inputs.

Currently, export-oriented manufacturers often require 20 to 30 days to receive imported raw materials due to procedures involving letters of credit, shipping, customs clearance, and inland transportation.

Businesses believe FTZs will allow companies to maintain inventories closer to production facilities, enabling manufacturers to access imported inputs quickly when export orders arrive.

MA Jabbar, managing director of DBL Group and President of Bangladesh Economic Zone Investor Association, said the introduction of FTZs would mark a major shift in Bangladesh's trade and investment landscape.

"Bangladesh's export basket is still highly concentrated. Free trade zones can create opportunities for new sectors to integrate into global supply chains and help generate momentum beyond the RMG industry. This initiative can play a significant role in attracting new investment and diversifying our export base," he said.

SMEs likely to be major beneficiaries

Small and medium enterprises (SMEs) are expected to gain significantly from the proposed system as many currently struggle to import raw materials due to limited access to trade finance, import facilities, and economies of scale.

Under the FTZ model, large operators could import materials in bulk and store them in designated zones, while smaller manufacturers would be able to purchase supplies according to their requirements.

Taskin Ahmed, president of the Dhaka Chamber of Commerce and Industry, said reducing lead time is one of the biggest priorities for Bangladesh's industrial sector.

"Even large manufacturers face losses because of delays in opening LCs and transporting goods. SMEs are even more disadvantaged as many cannot directly import raw materials," he said.

He added that global buyers are increasingly demanding faster delivery, and Bangladesh often loses business opportunities to competing countries because manufacturers cannot arrange inputs quickly enough.

"An FTZ system can substantially reduce that disadvantage," he said.

Anwara in Chattogram to host first FTZ

The Bangladesh Economic Zones Authority (Beza) has been working towards establishing a modern free trade zone in Chatogram's Anwara, in line with international standards.

The establishment of Bangladesh's first Free Trade Zone is being regarded as a landmark step towards the country's economic transformation, enhanced global trade connectivity, and improved regional competitiveness. It is expected to position Bangladesh as a key trade and logistics hub in South and Southeast Asia, said the press release issued by the Cabinet Committee on Economic Affairs.

To that end, a high-level committee comprising 10 relevant agencies including the commerce, industries, and shipping ministries, Finance Division, and National Board of Revenue (NBR), conducted a comprehensive review of FTZ management systems, laws, policies, incentive frameworks, and operational models from countries around the world, culminating in a detailed report.

Based on the committee's recommendations, the Anwara area along the banks of the Karnaphuli river in Chattogram was selected as the most suitable location for the country's first FTZ, taking into account its infrastructure advantages, international trade connectivity, logistics capacity, and potential for future expansion.

Learning from global models

FTZs and free trade warehousing zones have become important tools for trade facilitation and investment attraction in several economies, including the Shanghai Free Trade Zone, India's Free Trade Warehousing Zone (FTWZ) model, the industrial and trade zones of Vietnam, the Jebel Ali Free Zone in the UAE and Singapore's globally recognised trade hub model.

Experts believe Bangladesh could use a similar model to attract investment in sectors beyond garments, including electronics, automotive components, medical devices, agro-processing and light engineering.

"This is a transformative initiative," said Snehasish Barua, director of SMAC Advisory Services and partner at Snehasish Mahmud & Co.

"Currently, companies often wait weeks to receive imported raw materials. FTZs will allow manufacturers to source inputs much faster," he said.

He added that larger companies could import materials in bulk and distribute them among smaller businesses, reducing procurement and logistics costs.

However, Snehasish warned that effective monitoring would be critical.

"If duty-free goods enter the domestic market without proper controls, local industries could face unfair competition," he said.

More than a warehouse system

NBR officials insist that the initiative should not be viewed merely as another warehousing arrangement.

"Bangladesh already has a bonded warehouse system, but it primarily serves specific export-oriented industries," a senior NBR official told TBS on condition of anonymity.

"Free trade zones will be a broader and more modern customs framework that can accommodate a wider range of businesses," he added.

According to the official, the initiative presents an opportunity to position Bangladesh as a regional trade and logistics hub.

To prevent misuse, the government is planning to introduce digital tracking systems, inventory monitoring and regular customs audits.

NBR officials said the FTZ concept should not be viewed simply as an extension of the existing bonded warehouse system.

Economists believe FTZs could help diversify exports, improve manufacturing competitiveness and attract both domestic and foreign investment.

"Logistics inefficiencies and complicated import-export procedures account for a significant share of business costs in Bangladesh," said Dr Masrur Reaz, chairman of Policy Exchange Bangladesh.

"If managed properly, free trade zones can play an important role in reducing those costs," he said.

He added that port efficiency, customs automation, transport infrastructure and policy stability must improve alongside the FTZ initiative.

Steel manufacturers today urged the government to withdraw proposed hikes in value-added tax (VAT) and duties in the national budget for 2026-27, warning that the measures could increase costs by up to Tk 12,000 per tonne as most mills operate below half their capacity.

At a press conference at the National Press Club, Bangladesh Steel Manufacturers Association (BSMA) President Mohammed Jahangir Alam said the industry was already struggling with rising electricity tariffs, port charges, river dues, transportation expenses, and other operating costs.

The recent hike in electricity prices alone has increased production costs by Tk 1,800-2,000 per tonne, while higher logistics and operational expenses have added another Tk 3,000-3,500 per tonne, he said.

The proposed budget measures—including higher VAT at the sales stage, increased VAT on locally sourced scrap, and additional duties on ferro-alloys, refractory materials, and spare parts—would add a further Tk 2,000-2,500 per tonne to production costs.

"As a result, direct production costs could increase by Tk 5,000-6,000 per tonne," Alam said.

Weak demand has compounded the pressure on manufacturers. According to the BSMA, most steel mills are operating at less than 50 percent of their installed capacity, pushing up overhead, financing, and other fixed costs.

This has created an additional indirect cost burden of Tk 5,000-6,000 per tonne, bringing the combined impact of higher taxes and underutilised capacity to Tk 11,000-12,000 per tonne.

Bangladesh's annual steel demand stands at around 5 million tonnes, while the industry's installed production capacity exceeds 10 million tonnes, leaving many producers with significant idle capacity, Alam said.

He welcomed several business-friendly provisions in the proposed budget, including the repeal of certain minimum tax provisions, lower advance tax requirements for appeals and references, a reduction in withholding tax on interest payments for foreign loans from 20 percent to 10 percent, and a cut in tax deducted at source on electricity bills.

However, he said those benefits would be outweighed by the proposed increases in taxes and duties on steel-related inputs.

The BSMA president argued that increasing industrial output and accelerating the implementation of public infrastructure projects would be a more effective way to boost government revenue than imposing additional taxes on industries facing subdued demand.

He said faster execution of roads, bridges, flyovers, railways, ports, airports, economic zones, housing projects, and power plants would stimulate steel consumption and help manufacturers utilise more of their installed capacity.

BSMA Secretary General Sumon Chowdhury said industries need policy support to expand production and create jobs.

"If factories operate at only 50 percent capacity, government revenue will not increase," he said, adding that higher industrial output would generate more revenue even with a lower tax burden.

He also warned that weak industrial growth could limit employment opportunities for the growing number of graduates entering the job market each year.

The association urged the government to withdraw the proposed additional VAT, duties, and taxes on steel-related inputs; retain the existing VAT structure on local scrap and sales; restore the turnover tax rate to 0.6 percent from the proposed 1 percent; and speed up the implementation of development projects.

Economists and researchers have said the proposed FY 2026-27 budget highlights a significant mismatch between the current fiscal year's economic reality, the government's ambitious targets, and the country's limited implementation capacity.

They said projected targets for GDP growth, inflation control, revenue collection, foreign investment and budget deficit management are not fully aligned with present economic conditions.

The observations were shared at a national seminar titled "Proposed National Budget: From the Perspective of Development and Political Economy," held in the city today (17 June), organised by the Economic Reporters Forum (ERF). One Initiative Research and Development (OIRD) organised the seminar.

Economist and Associate Professor Zubair Ahmed of the Bangladesh Institute of Governance and Management (BIGM) presented the keynote paper.

He noted that although GDP growth stood at 4.14% in the current fiscal year, the upcoming budget has set a 6.5% target, which he described as overly ambitious and misaligned with prevailing economic reality.

He also pointed out structural constraints, saying export earnings remain 82% dependent on the ready-made garment sector, making diversification difficult. While foreign direct investment (FDI) is typically around 0.4–0.5% of GDP, the budget target has been set at 2.7%, which he termed unrealistic.

He further said the attempt to raise growth to 6.5% while reducing inflation from 8–10% to 7.5% appears contradictory. He warned that allocating Tk40,000 crore to the banking sector and increasing social safety net spending could add further pressure on the market.

Despite long-standing gaps between National Board of Revenue (NBR) targets and actual collection, he said the new revenue targets also appear unrealistic.

Zubair Ahmed added that although allocations in some sectors of the Annual Development Programme (ADP) have been reduced, spending has increased in education, health and agriculture. He stressed aligning revenue targets with NBR capacity, ensuring sectoral balance, and strengthening oversight of public expenditure for stability.

Professor A K M Waresul Karim, Dean of the School of Business and Economics at North South University, said Bangladesh's budget has expanded more than 120 times over time but does not always reflect the country's actual economic capacity.

He said a larger budget does not necessarily mean a better one, as it increases pressure on borrowing, taxation and money supply to finance deficits. He also said a significant share of the budget is spent on administrative costs, limiting the effectiveness of social protection and development spending.

He further said combined direct and indirect taxes impose a tax burden of around 45–60% on the public, which may negatively affect investment and employment.

Mohammad Mizanur Rahman, executive director of the Centre for Strategic and Peace Studies, said Tk40,000-42,000 crore has been allocated to the defence sector, much of which is spent on salaries, allowances and administrative expenses, leaving limited scope for modern equipment procurement and creating capacity gaps.

He also expressed concern over agriculture, noting that only 5-6% of the national budget is allocated to the sector. He alleged that a large portion of agricultural subsidies goes to intermediaries rather than farmers.

Criticising the increase in the personal income tax exemption limit, he said inflation-adjusted relief for the public would remain limited, while changes in the tax structure could increase pressure on taxpayers.

Chapainawabganj-3 MP Md Nurul Islam Bulbul said the large budget deficit will increase reliance on borrowing, posing risks to the economy. He said achieving targets for revenue collection, inflation control, growth and investment would be difficult, citing weaknesses in the banking sector, absence of a clear employment plan.

AB Party General Secretary Barrister Mohammad Asaduzzaman Bhuiyan said budget implementation and accountability are more important than its size. He alleged that the lack of transparent evaluation of implementation creates scope for corruption and waste.

The government’s proposed tax incentives and duty cuts for electric vehicles (EVs) in the fiscal year 2026-27 budget are expected to give a significant boost to Bangladesh’s nascent EV market, industry insiders said.

The measures signal official recognition of electric mobility and could accelerate the country’s shift towards cleaner transport. However, some business leaders warn that the incentives may favour imports over domestic manufacturing.

In the proposed budget, the government has extended tax incentives for electric buses and trucks until June 30, 2030, to reduce pollution and strengthen energy security.

It has also proposed substantial tax cuts on imported EVs. The total tax burden on electric cars valued at up to $25,000 will fall to 64 percent from 93 percent, while EVs priced at up to $50,000 will face an 80 percent tax burden.

To support charging infrastructure, all customs duties and taxes on imported EV chargers and charging stations will be removed from the current 39.75 percent rate. Tax concessions have also been extended

To support charging infrastructure, all customs duties and taxes on imported EV chargers and charging stations will be removed from the current 39.75 percent rate. Tax concessions have also been extended to EV manufacturing, battery production, and commercial electric buses and trucks.

According to the Bangladesh Road Transport Authority (BRTA), 669 EVs had been registered in the country as of May 14, 2026.

Formal EV registration began only in September 2022, after the authority introduced guidelines allowing battery-powered vehicles to be registered for the first time. Registrations have risen steadily since then, driven by changing consumer preferences, higher fuel prices and growing awareness of alternative transport options.

At the same time, the government is raising taxes on conventional vehicles. The total tax burden on imported petrol and diesel cars with engine capacities between 1,200cc and 1,600cc is proposed to increase to 155.88 percent from 132.36 percent.

Plug-in hybrid electric vehicles (PHEVs) will also receive tax relief. The total tax burden on PHEVs of up to 1,800cc will fall to 73.44 percent from 93.16 percent, while those of up to 2,000cc will see taxes reduced to 96.10 percent from 132.36 percent.

Business leaders have welcomed the government’s push towards electric mobility but voiced concerns about its implications for local industry.

Hafizur Rahman, chairman of Runner Group, the Bangladesh distributor of Chinese EV maker BYD, said the proposed duty cuts would primarily benefit higher-income consumers purchasing relatively expensive EVs, while offering limited advantages to buyers of lower-priced models.

He also questioned the decision to allow duty-free imports of completely built-up (CBU) electric trucks, arguing that it would do little to create jobs.

Duty-free imports of truck chassis, by contrast, would support local body-building companies, he said. At least 20 such firms have already been established in Bangladesh and could generate employment if given greater opportunities.

“The government should prioritise industrial development and job creation when formulating fiscal policies,” he said.

Rahman argued that the proposed budget offers stronger incentives for trading than for manufacturing and industrial expansion.

Despite these concerns, companies investing in local EV production welcomed the measures.

Mir Masud Kabir, managing director of Bangladesh Auto Industries Limited, which is establishing the country’s first EV manufacturing plant at Bangabandhu Sheikh Mujib Shilpa Nagar, described the duty concessions as an important acknowledgement of the sector’s potential.

He said the measures reflect the government’s commitment to cleaner transport while strengthening confidence among consumers and investors.

According to Kabir, the incentives could help lay the foundations for a domestic EV ecosystem. However, he cautioned that low-duty imports could intensify competition in the commercial EV segment.

Some Chinese manufacturers, he said, can export EVs at prices below production costs, giving them a significant competitive advantage. Without adequate policy support, local manufacturers may struggle to compete with imported vehicles, Kabir added.

He stressed the need for a balanced policy framework that promotes EV adoption while supporting domestic manufacturing, technology transfer, industrial development and employment.

The government’s decision to cut duties on EVs while raising taxes on petrol and diesel vehicles with engine capacities between 1,200cc and 1,600cc is likely to increase vehicle prices for middle-income consumers and affect the reconditioned car market, according to BARVIDA President Abdul Haque.

Haque said Bangladesh’s automotive sector, including its servicing and technical infrastructure, remains largely geared towards conventional and hybrid vehicles.

He also questioned the revised engine-capacity bands, noting that the market has traditionally been structured around 1,000cc, 1,300cc and 1,500cc categories. The changes, he said, could create uncertainty for importers and buyers.

An entrepot is poised to emerge along the coast of the Bay of Bengal for duty-free trading by foreign and local entrepreneurs as the government approves building two free-trade zones near Chittagong seaport and beside Matarbari deep-sea port.

An entrepot is a trading centre, port, or warehouse where goods are imported, stored, and then re-exported to other countries. These goods are typically exempt from import and export duties.

Such trade zoning, which exists in some other countries, is first of its kind in Bangladesh, officials said after the approval given Wednesday in principle.Regional business directory

The approval was given by the Cabinet Committee on Economic Affairs (CCEA) in a meeting chaired by Finance and Planning Minister Amir Khosru Mahmud Chowdhury at Bangladesh Secretariat in the capital.

Briefing newsmen after the meeting, Cabinet Secretary Nasimul Ghani said the setting up of the free-trade zones still remained at concept stage but got the approval at the meeting. "Detailed plan, investment structure, and management method of the zones will be finalised later."

He informs that each free-trade zone will be established in 300 acres of land aiming to boost the country's economy, expand international trade, attract foreign investment, and increase port-based economic activities.

Mr Ghani notes that in the free-trade zones many customs and tax-related rules and regulations remain relaxed or absent in conducting international commercial activities where both foreign and local traders and investors can conduct business easily.

He also says ships coming from abroad will have the opportunity to unload, sell or re-export goods in these areas. At the same time, Bangladeshi entrepreneurs will also be able to easily supply products to the international market from here.Personal finance e-book

According to him, the setting up of such a zone will significantly increase the overall economic activity of the country.

The government hopes the volume of economic activity will increase, country's gross domestic product (GDP) will see a positive impact, port utilisation and shipping traffic will increase, and rapid transfer of goods and services will be possible once the free-trade zones are established.

Mr Ghani mentions that such free-trade zones are being operated in different countries, including the United Arab Emirates. "Though Dubai has limited natural resources, huge investments have come there due to the free economic zone and commercial facilities and it has developed into one of the centres of international trade. Bangladesh is also trying to create such an environment."

Both domestic and foreign investors will be able to invest in the free-trade zones. Manufacturing-oriented industries, warehousing, logistics, commercial services, and even tourism-based activities can be developed there.

Also, the cabinet committee approved in principle the formation of a special-purpose company and related development and land-lease agreements to establish a Chinese Economic and Industrial Zone (CEIZ) in Anwara Upazila of Chittagong.

This initiative will play an important role in further strengthening economic and trade relations between Bangladesh and China. "Establishment of an integrated Chinese industrial zone will make it easier for Chinese investors to invest in Bangladesh," the official says about the government view.Global economy podcast

However, he says, the amount of investment, infrastructure development and project- implementation schedule have not yet been determined.

Also, the meeting approved in principle import of urea fertiliser from Russia under direct- purchase method.

The Appellate Division's Chamber Court has stayed a High Court order that had blocked the conversion or liquidation of closed-end mutual funds, effectively clearing the legal path for the process to move forward.

With the stay now in place, trustees of the affected funds may proceed with conversion or liquidation activities, according to lawyers involved in the matter.

The order was issued today (17 June) by Justice Farah Mahbub's Chamber Court on an application filed by the Bangladesh Securities and Exchange Commission (BSEC). The court has also scheduled a hearing for June 22, when the appeal will be taken up before the full Appellate Division bench under the Chief Justice.

Meanwhile, a lawyer representing Bangladesh RACE Asset Management told The Business Standard that the company had also filed a writ petition on the issue. The matter is also scheduled to be heard on 22 June. Although it was listed for hearing today, no proceedings took place.

On 9 June, BSEC issued a fresh directive instructing trustees to move forward with the conversion or liquidation process. The order placed trustees in a difficult position, caught between the regulator's directive and the High Court's status quo order.

Later, on 11 June, the commission issued another letter directing trustees to continue the process excluding the interests of unit holders who had filed the writ petitions. However, the existing court order continued to create uncertainty among trustees.

Many feared that complying with BSEC's directive could be interpreted as a violation of the court order. As a result, the Investment Corporation of Bangladesh (ICB) sought clarification from the regulator and decided not to take any action until the legal uncertainty was resolved.

Following Wednesday's Chamber Court order, BSEC Executive Director and spokesperson Abul Kalam told TBS, "Some unit holders had obtained a status quo order from the court regarding the conversion or liquidation of closed-end mutual funds. BSEC has now secured a stay on that order. Therefore, there is no longer any obstacle for trustees to proceed with the conversion or liquidation process."

In May 2026, BSEC introduced a regulation requiring any closed-end mutual fund trading at a discount of 25% or more to its Net Asset Value (NAV) to either convert into an open-end fund or undergo liquidation.

As part of the initiative, the commission instructed trustees on 7 May to begin preparations for conversion or liquidation from 12 May onward. However, unit holder Rashidul Islam challenged the directive in the High Court, arguing that BSEC lacked the authority to alter the tenure of existing funds.

On 24 May, the High Court issued a two-month status quo order and asked the finance secretary, BSEC chairman, managing directors of the stock exchanges, ICB and other respondents to explain why the directive should not be declared unlawful.

The court also questioned whether BSEC had the authority to compel the conversion or liquidation of funds whose tenures had previously been extended through a 2018 government notification.

Currently, 22 of the 36 listed closed-end mutual funds are trading at discounts of 25% or more to their NAV, making them subject to the new regulation.

Under BSEC's proposed framework, conversion or liquidation requires approval from at least 75% of unit holders

Spain wants to finance the implementation of development projects in various sectors of Bangladesh. To that end, the European country has proposed signing a protocol agreement to strengthen mutual cooperation in the economic and financial sectors.

Under the proposed agreement, Spain would provide commercial loans, technical assistance, feasibility studies and financing for similar activities in Bangladesh, modelled on frameworks used by the Organisation for Economic Co-operation and Development (OECD).

It has proposed that Spanish companies be allowed to participate in projects financed under its credit line.

It has also requested that Spanish goods and services be given preference in those projects.

Spain recently submitted the proposal to the government, which has responded positively. Following this, the Economic Relations Division (ERD) prepared a draft agreement. Opinions are now being sought from all ministries and divisions.

A finance ministry official, speaking on condition of anonymity, said Bangladesh already has similar agreements with China, India, Japan and South Korea. Although Türkiye has also proposed such an agreement; Bangladesh has yet to consent.

The official said the arrangement could open a new financing window for Bangladesh's development projects, especially as major development partners such as the World Bank, the Asian Development Bank (ADB) and the Japan International Cooperation Agency (Jica) have recently been proposing financing at commercial interest rates.

Sources said the framework protocol has been designed to support financing in transport infrastructure, renewable energy and other energy infrastructure, information and communications technology, cybersecurity in the telecommunications sector, water and solid waste management, agri-food industries, innovation, digitalisation, education and healthcare.

Spain would also be able to finance projects in any other sector if both countries agree. Particular emphasis would be placed on small and medium-sized enterprises and projects aimed at addressing the impacts of climate change.

The official said Bangladesh has substantial financing needs in these sectors, making the agreement beneficial for both countries. Bangladesh would gain easier access to funding for economic and social development, while Spanish companies would benefit from greater internationalisation.
Infograph: TBS
Infograph: TBS

He added that Spain first proposed a similar agreement to the then Awami League government in 2024. Discussions stalled after the change of government but have now resumed following the proposal's resubmission to the new administration.

The draft agreement also calls for the establishment of a bilateral working group, which would meet annually or at the request of either signatory. Experts from both countries would be able to participate in the meetings.

Under the agreement, loan proceeds could not be used by Bangladesh to pay customs duties, taxes or other levies on goods and services related to projects. The loans would be sovereign-guaranteed, with both parties remaining subject to their respective national laws.

Both countries would also reaffirm their commitment to combating corruption. In particular, no third party could be directly or indirectly involved in international transactions under the agreement. If evidence of corruption, misconduct or unlawful benefit is found, the Spanish government would have the authority to suspend financing, withdraw funding or demand early repayment of loans.

A former finance secretary said that while the tied-loan nature of the arrangement would create some dependence on Spanish products, it would also help Bangladesh strengthen its capabilities in areas such as advanced European technology and cybersecurity.

He, however, cautioned that Bangladesh would need to be careful during project selection and negotiations to ensure that interest rates and conditions do not place undue pressure on the country's macroeconomic stability.

According to data from the Export Promotion Bureau (EPB), Bangladesh exported goods worth $2.84 billion to Spain during the first nine months (July-March) of FY2025-26. Major exports included knitwear, woven garments, home textiles and leather products.

Meanwhile, Bangladesh Bank data show that Bangladeshi businesses and investors imported goods worth $147 million from Spain during FY2024-25. Major imports included capital machinery, olive oil, chemicals and industrial raw materials.

In one of its publications, the Dhaka Chamber of Commerce and Industry stated that Spanish public and private sector investments abroad amount to approximately $50 billion. Of that amount, only $8.35 million in foreign direct investment came to Bangladesh between 2001 and June 2024, a very small share of Spain's global investment outflows.

In 2021, a Bangladeshi delegation led by then railways minister Nurul Islam Sujan visited Spain at the invitation of the country's minister for transport, mobility and urban agenda. During the visit, Nurul Islam Sujan held a meeting with Spanish Transport Minister Raquel Sánchez Jiménez, who expressed interest in investing in Bangladesh Railways.

Bangladesh has taken a landmark step toward reshaping its trade landscape, with the Cabinet Committee on Economic Affairs (CCEA) approving the establishment of the country's first-ever Free Trade Zone (FTZ) in Anowara, Chattogram.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Finance Minister Amir Khosru Mahmud Chowdhury, today (17 June) approved such a milestone proposal to establish the country's first Free Trade Zone (FTZ) aimed at boosting trade, investment, and export capacity.

The government hopes the initiative will position Bangladesh as a key player in international trade, supply chain management, and regional logistics. Aimed at boosting trade, investment, and export capacity, the Bangladesh Economic Zones Authority (Beza) has been working for years toward establishing a modern free trade zone in line with international standards.

The establishment of Bangladesh's first Free Trade Zone is being regarded as a landmark step toward the country's economic transformation, enhanced global trade connectivity, and improved regional competitiveness. It is expected to position Bangladesh as a key trade and logistics hub in South and Southeast Asia, according to the press release issued by CCEA.

To that end, a high-level committee comprising ten relevant agencies including the Ministry of Commerce, Ministry of Industries, Finance Division, National Board of Revenue (NBR), and the Ministry of Shipping conducted a comprehensive review of FTZ management systems, laws, policies, incentive frameworks, and operational models from countries around the world, culminating in a detailed report, said the press release.

Based on the committee's recommendations, the Anwara area along the banks of the Karnaphuli river in Chattogram was selected as the most suitable location for the country's first FTZ, taking into account its infrastructure advantages, international trade connectivity, logistics capacity, and potential for future expansion.

The proposed FTZ is expected to open new horizons in international trade and supply chain management for Bangladesh. It is also anticipated to play a significant role in attracting foreign investment, diversifying exports, developing an international logistics hub, and generating employment.

Notably, the establishment of the FTZ had earlier received approval at the 9th meeting of Beza's Governing Board on January 26, 2026.

Reform of the necessary laws and policies is already underway as Beza is currently reviewing and updating a range of legislation, including the Bangladesh Economic Zones Authority Act 2010, Customs Act 2023, Warehouse Licensing Rules 2024, Import Policy Order 2021–2024, Export Policy Order 2024–2027, Foreign Exchange Management Guidelines, National Industrial Policy 2022, and the National Logistics Policy 2024, according to the press release.

Beza believes the FTZ will open new horizons in international trade and supply chain management for Bangladesh, while also attracting foreign investment, diversifying exports, developing an international logistics hub, and generating employment.

It also hoped that the establishment of Bangladesh's first FTZ would be a transformative milestone for the country's economic development, global trade integration, and regional competitiveness helping cement Bangladesh's position as a vital trade and logistics hub in South and Southeast Asia.

Bida and Beza Executive Chairman Ashik Chowdhury said Bangladesh is at the right moment to transition to a free trade zone model.

"The country's growing logistics capacity has created an opportunity to position Bangladesh as a regional warehouse and commercial hub," he said.

He added that exports are being treated as a primary driver of the economy, making the FTZ a natural next step. "This model has been successfully implemented in Dubai, China, and across Southeast Asia — Bangladesh wants to follow that path," he said.

Chowdhury also noted that some budget amendments and changes to the Import Policy Order have already been made in preparation for the FTZ, though further revisions to several laws and regulations remain necessary.

The central bank yesterday issued a clarification saying that non-performing loans (NPLs) in the banking sector stood at 30.60 percent at the end of last year.

The Bangladesh Bank (BB) statement came after several media outlets reported that distressed loans in the banking sector ranged between 45 percent and 60 percent at the end of 2025. Those reports were based on the Financial Stability Report 2025 recently published by the BB.

The central bank said media outlets had made their “own calculations” in arriving at those higher figures.

It added that there is no universally accepted definition of distressed loans among international banking policy-making organisations.

According to the BB, loans that do not generate income or where borrowers fail to pay instalments are generally treated as distressed. However, it said rescheduled loans that remain unclassified should not be included in that category, as borrowers continue to make repayments under revised terms.

The central bank also said written-off loans should not be counted as distressed loans, as they are no longer part of a bank’s balance sheet under international best practice.

The BB said that, based on its definition, NPLs in the banking sector stood at 30.60 percent as of 2025.

It mentioned that including rescheduled loans, written-off loans and other categories alongside classified loans could create a misleading picture of the banking sector. Such reporting could send an incorrect message both at home and abroad.

It urged media outlets to report on the issue responsibly, with due regard to objectivity, sensitivity and national interest.

The market valuation of Beximco Limited has witnessed a catastrophic decline, losing around Tk4,860 crore in just six trading sessions following the withdrawal of its floor price.

The flagship company of the Beximco Group saw its share price plunge 47% to Tk58.60 by Tuesday from the floor price of Tk110.10, which had remained in place for more than two years.

The free-fall began after the Bangladesh Securities and Exchange Commission (BSEC) lifted the trading restriction on 9 June to restore market-based price discovery for major stocks, including Beximco and Islami Bank Bangladesh PLC.

Unlike Islami Bank, which recovered after a central bank-led board restructuring, Beximco has continued to hit the lower circuit breaker with virtually no buying interest.

Market data reveals an extreme lack of liquidity for the scrip, as buyers have almost entirely shunned the stock. Despite crores of shares being placed for sale by panicked investors, only a meagre 77,327 shares changed hands during these six days.

Market analysts attribute the collapse in investor confidence to the severe crisis facing the group following the imprisonment of its vice chairman, Salman F Rahman, after the change in the Awami League-led government.

Industry sources suggest that the company's vast industrial operations have ground to a near halt, while several banks have initiated legal proceedings over massive loan defaults.

The company's outlook has been further clouded by regulatory and legal challenges. In late 2024, the BSEC appointed independent directors to Beximco Limited, Beximco Pharmaceuticals and Shinepukur Ceramics on instructions from the Financial Institutions Division. The move was challenged in the High Court, where the case remains pending.

Beximco has also failed to approve or publish financial statements since December 2024, raising concerns over transparency. Its latest available report for the first half of FY25 showed a loss per share of Tk3.78.

Meanwhile, the company remains under pressure from a court-backed move to place Beximco Group firms under receivership. Acting on a writ petition filed in September 2024, the High Court directed Bangladesh Bank to appoint a receiver and attach the group's assets.

The Appellate Division largely upheld the order in November 2024, exempting only Beximco Pharmaceuticals, to prevent asset dissipation and facilitate the recovery of allegedly laundered funds.

As of May 2026, general and institutional investors collectively hold more than 66% of the company's shares. With no financial updates, no dividends since a minor stock payout in 2024, and a share price that continues to hit the lower circuit breaker daily, investors see little hope for a near-term recovery.

Analysts warn that as long as the operational paralysis and legal disputes regarding the group's massive liabilities remain unresolved, Beximco Limited will continue to weigh heavily on the market's total capitalisation.

Despite efforts by Bangladesh Bank to promote a cashless economy, cash remained the country's preferred payment method in 2025, accounting for 67.2% of total transaction value, according to the central bank's latest annual report.

Central bank data show that digital channels made up the remaining 32.8% of transaction value, highlighting the slow pace of the transition towards digital payments.

Informal economy a major hurdle

Experts say the persistence of cash reflects the size of the informal economy, where a significant portion of transactions remains outside the formal banking system.Although mobile financial services, digital banking and QR-based payment solutions have expanded rapidly, many businesses and individuals continue to prefer cash for convenience and to avoid greater financial scrutiny.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, said, "The country's informal sector remains outside the banking system. A large share of economic transactions takes place there in cash, and we have not yet been able to bring these activities into formal financial channels."
Cash still accounts for 67.2% of transactions in Bangladesh despite cashless push

Zahid Hussain, former World Bank lead economist in Dhaka, said building a cashless society will remain difficult unless the informal sector is brought under the formal financial system.

"Large businesses in transport, agriculture and wholesale-retail trade continue to operate outside banking channels. Many of them are reluctant to join the formal system because doing so would expose them to taxation and regulatory oversight," he added.

Infrastructure, trust challenges

Bankers also point to infrastructure constraints as a major barrier to digital adoption.Many consumers still lack access to smartphones, reliable internet connections or the digital skills needed to use electronic payment systems.Small merchants and rural businesses often lack the infrastructure required to accept digital payments.

Mutual Trust Bank CEO Mahbubur said policy support alone will not be enough to accelerate the shift.

"Digital payment systems must become easier, more accessible and more convenient if we want people to adopt them on a larger scale," he added.

Md Touhidul Alam Khan, managing director and CEO of NRBC Bank, said banks face a dual challenge of ensuring security while making digital services simple enough for users with limited digital literacy.

He warned that fraud incidents, failed transactions and complicated interfaces may erode trust and push users back toward cash.

The banker also stressed the need for an inclusive transition, saying the objective should be to expand consumer choice rather than eliminate cash.

Digital payment adoption remains sluggish even as the country continues to bear the substantial costs of a cash-driven economy.

According to banking sector estimates, Bangladesh spends between Tk20,000 crore and Tk22,000 crore annually on printing currency notes.

The Japan-Bangladesh Chamber of Commerce and Industry (JBCCI) has welcomed the proposed national budget for the fiscal year 2026-27, saying it reflects the government’s efforts to maintain macroeconomic stability, control inflation, and create a more investment-friendly environment despite ongoing global economic uncertainty.

In a statement, the chamber said the budget’s focus on education, healthcare, social protection and employment generation demonstrates a commitment to inclusive and sustainable growth. These priorities, it noted, are crucial for developing the skilled workforce needed to support Bangladesh’s economic transformation.

JBCCI also appreciated the government’s emphasis on the private sector as a key driver of growth. Measures aimed at improving the business climate, encouraging industrial diversification, boosting exports and attracting foreign direct investment were described as positive signals for the international business community.

The chamber particularly welcomed initiatives to digitalise tax and customs administration, including automated VAT registration, expanded online compliance systems, recognition of ERP-based documentation and more structured audit procedures. It said these measures could improve transparency, reduce administrative burdens and make business operations more predictable.

Reforms related to customs modernisation, bonded warehouse operations, logistics and free trade zones were also praised.

According to JBCCI, efficient customs procedures and modern logistics infrastructure are among the most important factors considered by Japanese manufacturers and global supply chain operators when selecting investment destinations.

The chamber further welcomed incentives for emerging sectors such as electric vehicles, battery technology, semiconductors, advanced electronics and medical devices, saying they could help attract quality investment, encourage technology transfer and create skilled jobs.

JBCCI noted that the budget comes at a significant moment in Bangladesh-Japan economic relations as the two countries prepare to implement the Bangladesh-Japan Economic Partnership Agreement (EPA).

The agreement, combined with ongoing domestic reforms, could strengthen bilateral trade and investment while deepening Bangladesh’s integration into global supply chains.

While expressing support for the budget’s overall direction, the chamber stressed that effective implementation remains critical.

It said timely issuance of rules, clear operational guidelines and consistent interpretation by authorities will be essential to ensure the intended benefits reach businesses.

The chamber also called for greater regulatory predictability, reliable digital systems and continued efforts to reduce the cost of doing business through improvements in logistics, energy supply and administrative processes.

It emphasised the need for continued investment in trade infrastructure and stronger collaboration between industry, universities and technical institutions to develop skills in advanced manufacturing and technology sectors.

Although a Bangladeshi team is not taking part in the FIFA World Cup 2026, products “made in Bangladesh” have still made their way to football’s biggest stage.

Jerseys manufactured in Bangladesh were worn by the Cape Verde national team during their World Cup debut match against Spain in Atlanta on Monday night, a game that ended in a draw.

The jerseys were produced by Garments Manufacturing and Assembling Ltd (GMA), a factory located in Dhaka’s Turag area. The company supplied 5,000 player jerseys through New York-based sportswear company Capelli Sport.

“Not only the 5,000 jerseys for the players, but also 13,000 fan jerseys of different countries were exported through Capelli Sport,” GMA Manager Showmik Barmon told The Daily Star over the phone.

Fan jerseys are sold to supporters in stadiums, while player jerseys are worn directly by national team players at the World Cup.

GMA, established in 2019, has been producing sports garments and supplying them to Capelli Sport from the beginning, Barmon said.

Capelli Sport placed the order in January this year, and GMA delivered the jerseys to Cape Verde in March. Each player’s jersey was sold at $8, he added.

Barmon also said that making football jerseys requires Coolmax fabric, which is made from special yarn designed to reduce sweating during matches.

Another local garment giant, Youngone Corporation, supplied the fabric to GMA after importing the special yarn.

Although GMA has produced sports garments since its inception, this is the first time it has supplied player jerseys for a FIFA World Cup, he added.

Bangladesh supplies jerseys for major global sporting events, including football and cricket World Cups and other international tournaments, and has built a strong position in the global garment industry with high production capacity, becoming one of the world’s leading apparel suppliers after China.

Its garments have also become popular among European football fans, especially young supporters who travel to stadiums to watch club football and cricket matches.

“It is true that during the FIFA World Cup, jersey exports increase every four years, but Bangladesh exports jerseys and sports garments every day,” said Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

He added that Bangladesh is a preferred destination for all types of garment products, as local manufacturers have the capacity to produce high-end, value-added items with their existing production facilities.

Myanmar’s inflation spiked to nearly 25 percent as shocks from the Middle East conflict compounded the effects of the country’s civil war, the World Bank said Tuesday.

The Bank also slashed its growth forecast for the financial year that started in April, citing “a less favorable external environment”.

Myanmar has been mired in civil war since the military snatched power in a 2021 coup, plunging it into a half-decade of instability and a backslide into poverty for many of its more than 50 million citizens.

The country also imports 90 percent of its fuel oil, according to official figures, leaving it highly exposed to closure of the Strait of Hormuz since the US-Iran war started on February 28.

That sent inflation to as high as 24.6 percent on-year in April, according to the Bank’s biannual Myanmar Economic Monitor report, which also saw officials cut their 2026-27 economic growth outlook to two percent, from three percent previously estimated.

Myanmar’s economy is “stabilising at low levels” the World Bank said, but “a renewed fuel shock magnifies longstanding structural weaknesses and leaves the outlook highly vulnerable to further disruption”.

“The fuel shock has reignited inflation pressures,” senior economist Kemoh Mansaray told reporters.

“What this means is household purchasing power has gone down, and these households were already facing very thin buffers with high poverty levels.”

Inflation for the 12 months to the end of March came in at 21.1 percent.

The Bank’s report also said 2025 poverty levels hit 29.9 percent -- “still far above pre-2021 trends”.

“Because we’re struggling just to afford food, there are children we can’t send to school,” said one 28-year-old father in Yangon, speaking on condition of anonymity for security reasons.

“We have three school-age children at home,” he said.

A female Yangon shopkeeper -- also speaking anonymously -- complained soaring prices had crippled her business and family.

“Our income and expenses don’t match. We just manage day by day,” added the 45-year-old.

“Prices only go up, they never go down,” she said. “Now no matter how much we earn, it’s still not enough.”

The closure of the Strait of Hormuz has been particularly damaging to Asia, where 80 percent of oil transiting the seaway is bound, according to the International Energy Agency.

US President Donald Trump said Monday ships were again sailing through the strait after Washington and Tehran announced a deal to end the war, and claimed the oil route would be “completely open” by Friday.

However analysts warn economic recovery from the conflict will be a long process.

Oil prices slid to fresh three-month lows on Tuesday as markets weighed prospects for a resumption of supplies through the Strait of Hormuz alongside weaker physical demand and scant details on a preliminary deal to end the Iran war.

Brent crude futures were down $1.44, or 1.7 percent, at $81.73 a barrel, the lowest since March 10, at 0906 GMT.

US West Texas Intermediate was down $1.55, or 1.9 percent, at $79.20 a barrel, also the lowest since March 10. Oil prices had already dropped nearly 5 percent on Monday to their lowest close since March 4 after US President Donald Trump said a memorandum of understanding had been signed to end the US-Israeli war with Iran, though full details have not been released. Iranian Foreign Minister Abbas Araghchi said on Tuesday Iran and the US would start a new round of talks in Switzerland on Friday to reach a final agreement after the start of an interim deal. He warned that any Israeli attack on Lebanon or continued presence on Lebanese territory would breach the interim agreement.

INVESTORS EYE STRAIT REOPENING

The conflict led to the closure of the Strait of Hormuz, which typically carries about one-fifth of global oil supplies. Some analysts expect flows through the strait to resume soon, adding to downward pressure from already soft physical markets. Goldman Sachs lowered its fourth-quarter Brent forecast to $80 a barrel from $90 and cut its 2027 average estimate to $75 from $80, saying it now assumes Gulf exports return to pre-war levels by the end of July rather than late August. A range of indicators has pointed to weakening physical oil markets in recent weeks, Morgan Stanley analysts said in a client note. China’s crude imports slumped 29 percent in May to their lowest in eight years, extending a sharp decline for the world’s largest importer, with shipments of Saudi crude also expected to fall in July. Early indications suggest the US-Iran deal would reopen the blockaded Strait of Hormuz and extend a ceasefire for 60 days, buying time for negotiations on issues including Iran’s nuclear programme.

But with details still unclear and a permanent truce yet to be secured, analysts say volatility risks remain. Suvro Sarkar, the head of DBS Bank’s energy research, said the deal’s first phase - encompassing the Geneva signing of the ceasefire extension - was easy. The second phase - the reopening of the Strait of Hormuz and winding down the US naval blockade on Iranian ports and vessels - would be watched closely by markets, he added. “Anything other than a clean simultaneous unlock will mean renewed volatility in oil prices,” Sarkar said. “Given the trust deficit so far, it will be interesting to see how this plays out over the next couple of weeks.”

With over 33,000 tax cases clogging appellate forums and tying up more than Tk1.10 lakh crore, the government has finally moved towards regional standards by cutting income tax and VAT appeal deposit requirements down to as low as 14% and 4%, respectively.

Businesses have welcomed the government's aggressive cuts to tax and VAT appeal deposits in the fiscal 2026-27 budget as it will boost their much-needed cash flow. However, fiscal experts cautioned that significantly lower deposits could inadvertently trigger a wave of prolonged litigation.

In 2018, the National Board of Revenue accused a company of evading Tk925 crore in VAT after auditing four years of its financial records. The company disputed the claim and challenged it before the VAT Appellate Tribunal and later in court, arguing that the audit was flawed. However, before its appeal could be heard, the company was required to deposit nearly Tk200 crore in two instalments.

Eight years later, the dispute remains unresolved. While the company has yet to be found guilty of tax evasion, the capital tied up in the legal process has doubled to nearly Tk400 crore when financing costs and interest expenses are considered.

"We had to borrow from banks to make the deposits. The case is still pending and we don't know when it will be resolved. Meanwhile, a significant amount of capital remains locked up, creating cash-flow pressures," a senior company official told The Business Standard.

Business leaders say the move could unlock crores of taka in working capital, reduce litigation costs and improve Bangladesh's investment climate.

Under the proposed Finance Bill, the cumulative deposit required for income tax appeals from the Commissioner (Appeals) to the High Court has been reduced from 35% of the disputed tax amount to 14%.

Infograph: TBS
Infograph: TBS

For VAT and customs disputes, the total deposit requirement has been reduced even more sharply from 20%-30% to only 4%.

At the tax tribunal stage, the deposit requirement has been cut from 10% to 2%, while High Court appeals will require significantly lower deposits than before.

The reforms are part of a broader government initiative to simplify tax administration, reduce the discretionary powers of tax officials and improve the ease of doing business.

In his budget speech, Finance Minister Amir Khosru Mahmud Chowdhury said the government is undertaking major reforms in the VAT system to make services more accessible to taxpayers and increase transparency in tax administration.

"Reducing the complexity and cost of tax dispute resolution will lessen financial and psychological burdens on businesses, which will ultimately support investment, production and employment generation," he said.

Businesses welcome long-awaited reform

Business chambers and foreign investors have long argued that Bangladesh's appeal deposit requirements were among the highest in the region and often discouraged taxpayers from pursuing legitimate appeals.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce and Industry, described the reform as a long-awaited breakthrough.

"This has been one of the most consistent demands from the business community. Companies were forced to keep large amounts of capital tied up for years while cases remained unresolved. The reduction in deposit requirements will significantly improve cash flow and investor confidence," he said.

Md Rezwan Bin Rafique, head of taxation and fiscal compliance at Grameenphone, welcomed the reduction in the statutory appeal deposit requirement under both the income tax and VAT laws.

He said, "In Bangladesh, tax and VAT disputes often remain pending in the legal forum for several years. The previous appeal deposit requirements were creating significant cash flow pressures for taxpayers while disputes were under adjudication.

"The proposed reduction is a positive policy measure that will improve access to the appeal process, facilitate taxpayers' ability to exercise their legal right to appeal, and contribute to a more balanced and efficient dispute resolution framework."

Tax experts have broadly welcomed the reforms but warned that lower deposits could encourage some businesses to prolong disputes unnecessarily.

"Reducing the complexity and cost of tax dispute resolution will lessen financial and psychological burdens on businesses, which will ultimately support investment, production and employment generation."

Snehasish Barua, partner at Snehasish Mahmud & Co, said the success of the reforms would depend on taxpayer behaviour and faster case resolution.

"There is a possibility that some taxpayers may use the lower deposit requirements to keep disputes alive for longer periods. Businesses should not view the reform as an opportunity to delay legitimate tax payments," he said.

"What is equally important is ensuring that appeal cases are resolved within a reasonable timeframe."

Tax practitioners estimate that some cases currently remain pending for seven to 15 years before reaching final resolution.

Taskin Ahmed, president of the Dhaka Chamber of Commerce and Industry, said the proposed changes address a longstanding concern of businesses.

"Capital is the lifeblood of business. When a company has to lock up large sums of money for years before its case is heard, that capital cannot be used for expansion, innovation or job creation. Reducing appeal deposits is a positive step toward building a more investment-friendly tax system," he said.

According to Taskin, the reform aligns with broader efforts to improve Bangladesh's competitiveness as it prepares for LDC graduation and seeks to attract more foreign direct investment.

In many developed economies, including the United Kingdom, Australia and Singapore, taxpayers can challenge tax assessments without making large upfront deposits. Instead, authorities rely on risk-based enforcement, penalties for non-compliance and efficient dispute resolution systems.

According to tax policy experts, modern tax systems increasingly focus on quick dispute resolution rather than using high deposits as a deterrent against appeals.

Senior officials at the NBR say the reform is intended to ensure access to justice without compromising revenue interests.

"The objective is to create a fairer appeals process. Taxpayers should have the opportunity to challenge assessments without facing excessive financial burdens. At the same time, safeguards remain in place to prevent frivolous appeals," an official said.

Digitalisation and reduced discretionary powers

Beyond appeal reforms, the proposed budget introduces several measures aimed at modernising tax administration and reducing discretionary power.

Beginning in FY27, electronic VAT return submission will become mandatory, similar to income tax returns.

The government has also proposed simplified VAT return forms for small taxpayers, allowing them to file returns online using limited information.

At the same time, provisions have been included to reduce discretionary powers previously exercised by tax officials and commissioners.

Business leaders say these reforms could help reduce compliance costs, improve predictability and minimise taxpayer harassment.

NBR officials said reducing discretionary powers of tax officials would improve transparency and reduce opportunities for inconsistent decision-making.