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

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

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

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

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

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

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

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

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

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

Panda bond financing

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

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

Bida meeting with Chinese delegation tomorrow

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW BANGLADESH COMPARES WITH ITS PEERS

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

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

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

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

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

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

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

HIGH TAX RATES, WEAK RETURNS

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

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

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

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

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

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

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

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

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

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

BROADENING TAX NET THE KEY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bangladesh’s air conditioner market is experiencing a subdued summer season this year. Frequent rainfall in April and May, coupled with fewer heatwaves than in previous years, has weakened demand for cooling appliances, according to industry stakeholders.

Sales remained below expectations during what is traditionally the peak period for AC purchases.

While demand persists, lower-priced brands have outperformed premium models as inflation continues to squeeze household budgets, market insiders said.

Nearly half of all annual sales are typically generated during the April-May period. Among household buyers, 1.5-tonne inverter AC units remain the most sought-after models
Demand rose modestly ahead of Eid-ul-Azha at the end of May, but the increase was insufficient to significantly lift overall market activity. Rising prices of essential goods have prompted consumers to curb discretionary spending on products such as air conditioners, they added.

According to Md Bazlur Rashid, a meteorologist at the Bangladesh Meteorological Department (BMD), temperatures during April and May remained below seasonal norms, while rainfall in April was more than 76 percent above the historical average.

However, he noted that elevated humidity levels made conditions feel considerably hotter.

Average temperatures this season ranged between 34°C and 35°C, the meteorologist said, which is not unusually high except in the Rajshahi region.

Frequent rainfall helped prevent widespread heatwave conditions, although temperatures have risen slightly over the past week. BMD officials also forecast 8 to 10 heatwaves over the next three months through August.

Industry estimates put annual AC demand at 550,000 to 600,000 units, with nearly half of total sales typically generated between April and May. Among household buyers, 1.5-ton inverter ACs remain the most popular choice, followed by 2-ton units.

“AC sales have fallen by around 30 percent this season compared with the same period last year due to unfavourable weather conditions and persistently high inflation,” said Md Nurul Afser, deputy managing director of Electromart.

Traditionally, AC sales surge between March and June, accounting for nearly half of annual demand, he said. However, frequent rainfall in April and May significantly dampened sales, particularly among first-time buyers.

Afser added that rising prices of essential goods have eroded the purchasing power of middle-income households, affecting discretionary spending.

Despite keeping prices unchanged from last year and offering discounts, sales have yet to meet expectations.

“If the monsoon is delayed, the market could still recover some lost sales this year. Otherwise, prospects for the industry will remain weak,” he said.

Mahmudul Islam Raz, brand manager at Rangs eMart, said sales increased slightly ahead of Eid-ul-Azha, but overall demand remained largely unchanged throughout April and May.

“Consumers are prioritising essential spending over discretionary purchases. If people struggle to meet daily expenses, they are unlikely to spend on products such as ACs,” said Salim Ullah Salim, director (marketing) of Jamuna Electronics & Automobiles Ltd.

Md Rashedul Islam, head of business at Transcom Digital, said AC sales during April and May exceeded 2025 levels but remained below those recorded in 2024.

Transcom sold around 4,500 units during the period, compared with 4,000 units a year earlier and 7,000 units in 2024. He attributed the improvement primarily to operational efficiencies rather than stronger underlying demand.

Inflation continues to weigh on consumer spending, while demand for lower-priced Chinese brands has outpaced that for premium Japanese brands as buyers become increasingly price-sensitive, he said.

According to him, many consumers who would normally consider premium brands are now opting for more affordable alternatives to manage household expenses.

Walton, however, reported a different trend.

“Demand for air conditioners has increased in recent weeks as temperatures have risen across the country,” said Md Tanvir Rahman, chief business officer of Walton Air Conditioner.

He said showroom footfall, online enquiries and orders have increased compared with the same period last year. Growth has been particularly noticeable among middle-income households, while instalment facilities have encouraged more consumers to make purchases despite broader economic pressures.

Rahman said flexible financing options have become an increasingly important factor in purchasing decisions, allowing customers to spread payments over several months.

As temperatures continue to rise, he expects demand to remain strong in the weeks ahead.

ChatGPT maker OpenAI confidentially filed for a US initial public offering recently, the company said on Monday, joining rival Anthropic in a push towards the stock market as investors seek exposure to the artificial intelligence boom.

OpenAI did not disclose the size or terms of the offering, and said a timeline has not yet been determined. "It may be a while because there are things we want to do that are likely easier as a private company," it said in a statement.

Reuters had reported that the AI giant is targeting a valuation of up to $1 trillion in a stock market debut that could come as early as September.

At that valuation, OpenAI would set the stage for a trio of trillion-dollar-valuation companies debuting rapidly, which together are seen as the most consequential test of investor appetite for high-growth technology stocks in the last 10 years.

Elon Musk's SpaceX was the first off the block, filing for an IPO that would rank as the largest in history if completed, with the company pursuing a $75 billion offering at a $1.75 trillion valuation.

Anthropic, the company behind the viral coding assistant Claude Code, said on 1 June it had confidentially filed for a US initial public offering, weeks after raising $65 billion in a funding round that valued it at $965 billion.

"OpenAI is keeping options open as Anthropic edged ahead with its filing after a monster funding round," said Michael Ashley Schulman, a partner at Cerity Partners.

On prediction markets, where traders wager on the outcome of future events, most participants had expected OpenAI to file for an IPO before Anthropic.

The AI era

The IPOs of Anthropic and OpenAI would crystallise a transformative period for the technology industry and global markets, with artificial intelligence rapidly emerging as the defining investment theme of the decade.

OpenAI said earlier this year that it was raising $110 billion at an $840 billion valuation from a roster of heavyweight backers including SoftBank, Amazon and Nvidia.

At the time, it also disclosed that ChatGPT had more than 900 million weekly active users and over 50 million consumer subscribers.

The IPO filing follows OpenAI renegotiating its partnership with Microsoft, one of its earliest investors, which allowed the AI pioneer to forge new partnerships with firms such as Amazon.com and Alphabet's Google.

The Windows maker's early investment, totalling $13 billion since 2019, helped pave the way for OpenAI's rapid rise and powered growth at Microsoft's Azure cloud-computing business.

In March, OpenAI said it was generating $2 billion in monthly revenue and growing roughly four times faster than companies that defined the internet and mobile eras, including Alphabet and Meta.

That compares with about $1 billion in quarterly revenue at the end of 2024.

OpenAI told investors during its most recent fundraising round that it did not expect to be profitable until 2030, according to a source familiar with the matter.

Challengers gain momentum

Yet the industry OpenAI launched has quickly become crowded and investors are scrutinising whether the AI sector's meteoric rise can be sustained.

Anthropic has emerged as one of the biggest rivals, with soaring demand for its Claude AI from software developers to handle their computer programming, and some firms deploying its top-shelf model Mythos to unearth vulnerabilities in their code.

While the blockbuster offerings could inject fresh momentum into the US IPO market, some bankers warn they might also soak up capital that could otherwise flow to smaller deals.

"What OpenAI does not want is for the public market capital to exhaust itself," said Gil Luria, managing director of D.A. Davidson. "Not only are SpaceX and Anthropic ahead of it in line to IPO, large public competitors could also raise tens of billions of dollars each in public market secondary issuances, as Google just completed last week."

Musk-led SpaceX goes public this week.

Nonprofit roots spark legal dispute

OpenAI was founded in 2015 as a research-focused nonprofit, but created a for-profit arm four years later to help fund the soaring costs of developing artificial intelligence systems.

Its unusual structure, which gave the nonprofit control over the for-profit entity, came under intense scrutiny in late 2023 when CEO Sam Altman was briefly ousted before returning days later after employees revolted.

In December 2024, OpenAI unveiled plans to overhaul its structure by creating a public benefit corporation, saying the move would help it raise far more capital while easing restrictions imposed by its nonprofit parent.

OpenAI's overhaul quickly became controversial after sharp criticism from its early backer, Musk, who later sued OpenAI and accused Altman and other executives of turning the nonprofit into a vehicle for private enrichment.

A US jury in May ruled against Musk in his lawsuit, finding the AI company not liable to the world's richest person for having allegedly strayed from its original mission to benefit humanity.

The unanimous verdict removed a key overhang on the IPO, with analysts saying it cleared a major legal hurdle.

Japan will provide Bangladesh a concessional loan of around $312 million to help bolster energy security and economic resilience as the conflict in the Middle East places growing strain on the country’s finances.

To that end, officials from both sides signed the “Emergency Support Loan for Enhancing Economic Resilience and Stable Energy Supply” agreement in Dhaka yesterday, according to a press statement.

Md Shahriar Kader Siddiky, secretary of the Economic Relations Division (ERD), and Takahashi Junko, chief representative of the Japan International Cooperation Agency (Jica) Bangladesh Office, signed the documents on behalf of their respective sides at the ERD in Sher-e-Bangla Nagar.

The loan -- equivalent to 50 billion yen and to be co-financed by the Asian Development Bank (ADB) -- is intended to help Bangladesh address socio-economic pressures stemming from higher energy prices and supply uncertainties linked to the Middle East conflict involving the US, Israel and Iran.

The signing comes as Bangladesh faces mounting fiscal pressure from the conflict. Finance Minister Amir Khosru Mahmud Chowdhury told parliament yesterday that preliminary estimates suggest the country will require an additional Tk 42,600 crore in subsidies for the oil, gas, electricity and fertiliser sectors by June of FY2025-26.

Preliminary estimates suggest the country will require an additional Tk 42,600 crore in subsidies for oil, gas, electricity and fertiliser sectors by June, finance minister said in parliament yesterday
He said the conflict has already affected fuel and fertiliser prices, import and transport costs, inflation, foreign exchange management, remittances and overseas employment. The Middle East also remains a key destination for Bangladeshi migrant workers, the minister noted, warning that prolonged instability could threaten remittance inflows and job opportunities abroad.

The Japanese loan is part of a broader push for external budget support.

The Daily Star reported on May 3 that Bangladesh expects around $3 billion from five multilateral and bilateral lenders by mid-June, including $500 million from Jica. The effort followed a government assessment estimating that an additional $4 billion in emergency budget support would be needed between May and June to offset higher fuel and fertiliser import costs resulting from the conflict.

The loan also marks the first Japanese official development assistance (ODA) project under POWERR Asia, a regional initiative launched by Japanese Prime Minister Takaichi Sanae in April. The initiative aims to strengthen energy and resource resilience across the region through emergency support and longer-term cooperation in energy procurement, supply-chain stability, diversification and industrial resilience.

According to the Japanese Embassy, the financing will also support the government’s efforts to strengthen fiscal management, improve the investment climate and maintain a stable energy supply -- areas considered critical to sustaining economic stability and long-term growth.

Speaking at yesterday’s signing ceremony, Japanese Ambassador Saida Shinichi, who exchanged notes for the loan with Siddiky, described the agreement as a reflection of Japan’s enduring commitment to Bangladesh at a critical juncture.

He called Bangladesh an important strategic partner and reaffirmed Japan’s support for the country’s stability, prosperity and sustainable development.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Every successful creative economy is ultimately built on intellectual property.

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

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

Piracy directly undermines this model.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW LONG CAN STOCKS GO?

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

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

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

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

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

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

THE CHINESE ENIGMA

Another key unknown is China.

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

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

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

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

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

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

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

THE INVISIBLE BALANCING FORCE

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

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

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

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

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

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

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

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

That is a precarious foundation.

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

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

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

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

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

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

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

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

Locally manufactured AC, refrigerator prices may decline

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

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

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

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

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

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

Gold, mobile phones, healthcare items may get cheaper

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

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

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

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

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

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

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

Items that may become more expensive

Some products may see higher taxes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bangladesh could face a potential loss of $17.5 billion in exports after graduating from the least developed country category due to the loss of preferential market access in developed economies, Commerce Minister Khandakar Abdul Muktadir told parliament today (8 June).

Replying to a question from Chattogram-11 lawmaker Jasim Uddin Ahmed during the second day of the second session and first budget session of the 13th Jatiya Sangsad, the minister said the government had already launched a series of trade and market diversification initiatives to address the challenges arising from the country's transition to developing nation status.

"Bangladesh will soon graduate from the LDC category. As a result, the country will lose preferential market facilities currently available under various trading schemes offered by developed countries, which may adversely affect exports worth around $17.5 billion," he said.

To mitigate the impact, Bangladesh has already concluded an Economic Partnership Agreement with Japan, while negotiations for a Comprehensive Economic Partnership Agreement with South Korea are underway, the minister said.

He said that the government has also initiated efforts to sign EPA, CEPA or Free Trade Agreements with the European Union, the Regional Comprehensive Economic Partnership, the United Arab Emirates, Singapore, Indonesia, China and other potential export destinations.

The minister attributed the country's widening trade deficit partly to policy failures of the previous government and partly to global economic factors, including the energy crisis, the Russia-Ukraine war, rising commodity prices, dollar shortages and adverse international market conditions.

He said that higher import costs for fuel, food and industrial raw materials, coupled with slower export growth, had contributed significantly to the trade imbalance.

According to data presented in the JS, Bangladesh's trade deficit widened to $24.16 billion in the financial year 2024-25 from $21.50 billion in FY2023-24.

Exports stood at $55.19 billion against imports worth $79.35 billion during the period.

The minister said that despite exporting goods to 202 countries and territories in FY2024-25, the readymade garment sector still accounted for 84 per cent of the country's export earnings.

He said that to reduce dependence on a single sector, the government has undertaken initiatives to extend facilities similar to those enjoyed by the garment industry to other promising export sectors.

Partial exporters in eight sectors, leather and leather goods, jute and jute products, agricultural products, pharmaceuticals, ICT and software services, light engineering products, frozen foods and fish, and plastic products, have already been granted bonded warehouse facilities against bank guarantees, the minister said.

Muktadir said that the government was also supporting entrepreneurs in eight priority sectors through the Business Promotion Council and had formulated the Export Policy 2024-2027 to strengthen Bangladesh's position in global trade through sustainable export growth.

To expand market access and remove trade barriers, Bangladesh is continuing engagement through various bilateral platforms, including trade and investment arrangements with Australia, the United Kingdom, Vietnam, Thailand, Uzbekistan, Belarus and Canada, he said.

The minister said that efforts were also underway to explore new export markets in Latin America, Africa and the Commonwealth of Independent States through trade missions comprising government and private sector representatives.

Other measures include strengthening economic diplomacy through Bangladesh missions abroad, providing foreign currency loans from the Export Development Fund for raw material imports, and creating a Tk5,000 crore low-interest pre-shipment loan fund for export-oriented industries through Bangladesh Bank.

commerce minister said that the government had declared paper and packaging products as the Product of the Year 2026 in a bid to diversify exports, create employment and promote women's economic empowerment, he added.

Replying to a separate question from Bagerhat-4 lawmaker Abdul Alim, the minister outlined Bangladesh's ongoing efforts to strengthen trade ties within South Asia.

He said Bangladesh and Bhutan signed a PTA in December 2020, under which 100 Bangladeshi products and 34 Bhutanese products enjoy duty-free market access.

Negotiations on PTAs with Nepal and Sri Lanka are progressing, while Bangladesh is also preparing for further negotiations with India on a proposed Comprehensive Economic Partnership Agreement.

Muktadir said Bangladesh was prioritising bilateral, regional and multilateral trade agreements with key economic blocs and countries in Asia, Europe, Africa and the Middle East to strengthen export competitiveness and attract investment after LDC graduation.

In response to another question from reserved-seat lawmaker Selina Sultana, the minister said that Bangladesh continued to face trade deficits with several SAARC countries, particularly India.

In the FY2024-25, Bangladesh recorded a trade deficit of $7.86 billion with India, the largest among SAARC member states.

The country also posted trade deficits with Afghanistan, Bhutan and Sri Lanka.

China's e-commerce export engine is faltering as surging jet fuel costs and weak demand from lower-income consumers in the West linked to the Iran war threaten profits for big online platforms like Temu, Shein and AliExpress.

The business models, based on flying $5 dresses from Chinese factories to shoppers around the world, were already under pressure after US President Donald Trump introduced tariffs and axed customs waivers on low-value parcels last year.

Soaring logistics costs stemming from the Middle East conflict are adding to the strain, data shows and industry insiders say, with shippers like DHL Express imposing hefty fuel surcharges.

China's low-cost e-commerce exports, which have surged over the past six years, fell 10.9% in April to $9.81 billion, the fifth consecutive month of declines compared to a year ago, according to an analysis of Chinese customs data by Luxembourg-based consultancy Trade and Transport Group.

Passing on costs to consumers

Diana Qiao, a Shenzhen-based seller of women's clothing on Temu, said she had raised her selling prices by $2 because her shipping cost per garment had increased on average by $1.

"The final burden is ultimately borne by consumers," said Qiao, adding that the increase was needed to protect her profit margins, and sales have declined slightly but she does not so far see a need to change her shipping arrangements.

Falling export values are an indication not just of the cost squeeze, but also that the era of hyper-growth for the large low-cost shopping platforms may be over, analysts and industry insiders say.

They are likely moving more products in bulk into warehouses to dispatch locally rather than flying everything direct from China, said Frederic Horst, Trade and Transport Group's managing director.

"It would make sense given the air freight cost relative to the value of the product," he said. "If you're buying a top that is 300-400 grams you're getting to the stage where air freight is 60% of the cost."

Shein has been expanding its warehouse capacity in Europe, last month opening its third warehouse in Cannock, near Birmingham in Britain.

A spokesperson at AliExpress owner Alibaba told Reuters it remained focused on "maintaining value-for-money pricing for consumers and providing a stable environment for sellers and consumers despite the volatility in global transportation costs".

Shein and Temu did not respond to questions about the effect of air freight costs on their businesses.

Platforms face weaker demand as business matures

To be sure, exports are still much higher than they were two years ago, and the start of 2025 was marked by significant frontloading ahead of US tariffs.

But returning to the growth of the past few years will be harder as Shein and Temu have already gained significant market share and surging petrol prices are hurting household budgets in the US and Europe. The European Union is also set to impose a €3 fee on low-value e-commerce parcels from 1 July.

Air freight costs have an impact but the platforms are also in a slower-growth phase and consumption overseas is decreasing because of inflation, said a China-based freight forwarding executive who declined to be named because he is not authorised to speak to the media.

Air freight rates are likely to stay high because of jet fuel prices and will take time to fall even if the Iran conflict ends, said Judah Levine, freight platform Freightos' head of research.

"If the costs stay very high, or even increase further, companies may switch to other modes of transport or hold back some of their shipments," said Martin Habisreitinger, Hellmann Worldwide Logistics' chief operating officer of airfreight.

The government is set to make it mandatory for businesses to have a Business Identification Number (BIN) to open merchant accounts with mobile financial services (MFS) providers in the fiscal year 2026-27 national budget.

Under the proposed measure, businesses seeking to open merchant accounts with any MFS provider will be required to submit either a valid BIN or proof of enrolment.

Merchant accounts allow businesses to receive digital payments from customers through platforms such as bKash, Nagad, Rocket and Upay.

“A provision will be incorporated into the Finance Bill 2026 to expandthe value-added tax (VAT) base,” said a finance ministry official familiar with the matter, requesting anonymity.

The proposal is part of a broader set of provisions that would make BINs or enrolment certificates mandatory for a range of business-related services, as an effort to strengthen VAT compliance, expand the formal tax net and improve monitoring of business transactions conducted through digital financial platforms.

Finance Minister Amir Khosru Mahmud Chowdhury is expected to formally propose the measure while presenting the national budget in parliament on June 11.

Officials said the proposal has already received in-principle approval from Prime Minister Tarique Rahman at a high-level meeting.

However, industry insiders criticised the move, warning that it could discourage small businesses from adopting digital payments and slow the country’s transition towards a cashless economy.

“This move may set back the journey towards a cashless society. Many small vendors and marginal merchants are reluctant to enter the formal sector because they fear additional compliance requirements and administrative hassles,” said a market insider, requesting anonymity.

The insider added that making BINs mandatory for merchant accounts could discourage some businesses from using digital payment platforms altogether.

There are currently nearly 10 lakh merchant account holders across the country, according to industry sources.

The finance ministry official said the government may also make BIN registration mandatory in several other areas, including opening and operating current or short-term deposit accounts with banks and non-bank financial institutions, obtaining loans, renewing trade licences, securing memberships in trade bodies, obtaining electricity and gas connections, and registering vehicles in the name of a business.

Officials familiar with the proposal said the requirement is intended to bring more businesses into the formal economy and improve the government’s ability to track commercial activities that currently take place outside the tax system.

OPEC+ agreed on Sunday a fourth increase in its oil output targets in as many months, even though the US war with Iran is still preventing several of the group's members from pumping more.

The war has cut oil flows via the Strait of Hormuz, creating the world's biggest-ever supply crisis as key OPEC+ members including Saudi Arabia have been unable to supply customers in full since the end of February. The crisis for OPEC+ deepened when the United Arab Emirates left the Organization of the Petroleum Exporting Countries after almost 60 years.

Seven core members of OPEC+, which groups OPEC and allied producers including Russia, have increased their output quotas from April to June by almost 600,000 barrels per day.

In reality, the group's production has collapsed due to export cuts by Gulf members, averaging 33.19 million bpd in April compared with 42.77 million in February, according to OPEC figures.

Impact of production target increase

On Sunday, the seven members decided to increase targets by 188,000 bpd from July, OPEC said in a statement. This is the same as the June hike, which was adjusted down from monthly increases of 206,000 bpd in May and April to take into account the UAE exit.

Iraq's oil output quota will increase by 26,000 bpd from July under the agreement, an oil ministry spokesperson told Iraq's state news agency.

"An OPEC+ production increase means very little while the Strait of Hormuz remains closed," said Jorge Leon, an analyst at Rystad and a former OPEC official.

"When the Strait of Hormuz reopens, the market could move very quickly from fear of shortage to fear of surplus."

On Friday, oil prices fell to around $93 a barrel as traders gained confidence that renewed conflict between the US and Iran was growing less likely. Prices were close to $72 before the war began.

OPEC+ almost done with unwinding 2023 output cut

The seven countries are increasing production as part of the gradual unwinding of a 1.65 million bpd production cut that the group, which at the time included UAE, agreed in 2023.

From July, the seven have about 567,000 bpd of the original cut to return to the market, taking into account the UAE exit from 1 May, according to Reuters calculations.

That would mean the rest of the cut will be unwound by the end of September should OPEC+ stick to monthly hikes of about 188,000 bpd for August and September.

The seven of 21 OPEC+ members who met on Sunday are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia and Oman. In recent years, only the seven plus the UAE - when it was a member - have been involved in the group's output policy decisions.

In a separate meeting on Sunday of all OPEC+ members, the ministers made no change to group-wide output policy that is in place until the end of 2026, OPEC+ said in another statement.

OPEC+ is carrying out a review of its members' oil production capacity to be used as a reference for 2027 production baselines, from which quotas are set. The group on Sunday affirmed the importance of completing the assessment, the statement said.

Asian stocks plunged on Monday as investors rushed out of the hottest AI-linked shares on fears the bull run has gone too far, too fast and as fresh hostilities in Iran pushed up oil prices.

The twin triggers for a rout that is highlighting a fragile market mood were last week's disappointing outlook at chipmaker Broadcom and a surprisingly strong US jobs report on Friday that has traders pricing a rate hike this year.

Korea's chip-heavy KOSPI, the world's best-performing market this year, led losses in Asia with a 5% slide that has the benchmark down 13% from last week's record high.

Japan's Nikkei fell almost 4% with market darlings across the computer-chip production supply chain falling furthest, while Taiwan's benchmark sank 3.9%.

Nasdaq futures were attempting a recovery following a sharp selloff on Friday and European futures fell 1%.

The Nasdaq dropped 4.2% on Friday.

"The move looks more like a positioning and momentum unwind than a reassessment of the long-term AI story," said Marc Velan, head of investments at Lucerne Asset Management in Singapore.

"Korean technology names have been among the strongest performers globally and were heavily owned, so when rate expectations shifted after the jobs report, they became a natural source of liquidity."

In bonds, 2-year Treasury yields rose more than 11 basis points on Friday and were up 1.6 bps on Monday to 4.1782%.

"The AI-drives-everything narrative frayed last week," said Bob Savage, head of markets macro strategy at BNY.

"Whether this is a healthy pause in the nine-week equity rally or a top remains the key question. The IPO focus on SpaceX and Anthropic is part of the pause – whether to make room for the new market cap or to rethink value."

Inflation and ECB ahead

The Middle East situation also remains delicate and Brent crude futures were up about 3.5% to $96.45 a barrel on Monday after Israel said it struck military targets in western and central Iran.

The week ahead is headlined by the giant SpaceX listing, expected to price on Thursday and trade on Friday, but inflation will also be in focus with US consumer price data due on Wednesday and central bank meetings in Canada and Europe.

Last week, bitcoin notched its heaviest weekly drop since the collapse of crypto exchange FTX in late 2022, falling about 16%. It was hovering just shy of $63,000 on Monday.

SpaceX's debut is expected to be followed by other major IPOs in the coming months from Anthropic and OpenAI, raising so much money that brokers are nervous it could draw down other assets.

"The market regime has potentially shifted from moderate inflation and rate cuts to potential 'overheating' contributing to higher Treasury yields, a higher path of short-term interest rates and tighter liquidity," said Nick Ferres, CIO of Vantage Point Asset Management in Singapore.

OPEC+ on Sunday agreed to the fourth increase in its oil output targets in as many months.

In currency trading, the dollar was firm and holding above 160 yen and it pushed the Australian dollar to $0.7055. The euro hovered at $1.1531.

The benchmark index of the Dhaka Stock Exchange (DSE) ended its impressive 10-session winning streak today (8 June) as investors moved to lock in gains following the market's recent rally.

The DSEX shed 33 points, or 0.61%, to close at 5,482, as market participants adopted a cautious stance ahead of the upcoming national budget, market insiders said.

The market remained under pressure from the opening bell, extending the corrective trend that emerged during the latter part of the previous session. Persistent selling across a wide range of stocks kept all major indices in negative territory throughout the day.

The blue-chip DS30 index also declined, losing 18 points to settle at 2,069.

Market breadth strongly favoured the bears, with 247 issues declining against 102 gainers, while 44 stocks remained unchanged on the DSE trading floor.

The broad-based sell-off wiped out nearly Tk1,600 crore from the market capitalisation of the country's premier bourse in a single session.

Investor participation also weakened significantly. Turnover on the DSE fell by 30% to Tk1,072 crore, suggesting that many investors preferred to stay on the sidelines while awaiting potential policy signals from the national budget.

According to EBL Securities' daily market review, concerns surrounding the upcoming budget played a key role in cooling the market's recent bullish momentum.

Several heavyweight stocks exerted downward pressure on the benchmark index, including Square Pharmaceuticals, Beximco Pharmaceuticals, BRAC Bank, LafargeHolcim Bangladesh and British American Tobacco Bangladesh.

Sector-wise, general insurance led trading activity, accounting for 19.2% of total turnover, followed by engineering and pharmaceutical stocks.

Most sectors closed lower, with services, cement and financial institutions posting notable declines. However, general insurance, paper and tannery shares bucked the trend and recorded modest gains.

Among individual stocks, Anwar Galvanizing emerged as the day's top gainer, advancing nearly 10%. Shyampur Sugar Mills and Zeal Bangla Sugar Mills also hit their upper circuit limits.

On the losing side, Nahee Aluminum topped the decliners' list, falling more than 6%, followed by Fareast Finance and SS Steel.

Dominage Steel, Genex Infosys and NCC Bank featured among the most actively traded stocks during the session.

The bearish sentiment was also reflected at the Chittagong Stock Exchange (CSE), where the CASPI index dropped 84 points to close at 15,314. Turnover at the port-city bourse declined 24% to Tk43 crore.

Russian Foreign Minister Sergey Lavrov yesterday (8 June) said Russia will welcome Bangladesh as a candidate for the BRICS membership once the process resumes, stressing that advantages from the BRICS membership are obvious.

"As for BRICS, the ten members currently comprising the group have agreed to put the admission of new members on hold for the time being, because just two years ago the number of BRICS members doubled overnight, and we need a little time to adjust to the new lineup," he said after his bilateral talks with Foreign Minister Khalilur Rahman in Moscow.

"But our stance on Bangladesh's candidature when this pause is over is as follows: we will welcome the candidature of this large and important Asian nation," Lavrov added.

BRICS brings together eleven major emerging markets and developing countries of the world: Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, Saudi Arabia, South Africa and United Arab Emirates.

It serves as a useful platform for consultation and cooperation on contemporary issues having global as well as regional significance and issues of global political and economic governance.

According to the top Russian diplomat, advantages from the BRICS membership are obvious.

That is why "a big number of countries, more than the current number of BRICS members, want to join for these advantages," he said.

"We fully understand the aspirations of the applicants, including our friends from Bangladesh, who are already members and shareholders of the New Development Bank and are very pleased with such participation," said the Russian Foreign Minister.

Bangladesh and Russia have broad opportunities to scale up bilateral trade volumes, Foreign Minister Khalilur Rahman said at a joint press conference with Russian Foreign Minister Sergey Lavrov.

He said they discussed the need for further expanding our ties in different fields; there is ample scope for substantially increasing our trade volumes in both ways.

"We discussed the ways in which we could accomplish this and will continue to have some of the ideas on the table, like the possibility of granting duty-and quota-free treatment, and to assist us to complete a preferential agreement with Eurasian Economic Union," Khalilur said.

The vast potential for cooperation exists also in the labor resources sphere, he added.