Bangladesh's listed banks came under mounting pressure in their core banking operations in the first half of 2026, as sluggish private sector credit growth and rising deposit costs squeezed earnings from traditional lending.

Although many lenders posted higher overall profits, the gains were largely driven by investment income from government securities rather than their core business of mobilising deposits and extending loans.

An analysis of the half-year financial statements of 27 listed banks shows a widening gap between core banking performance and bottom-line profitability. Eight banks posted negative net interest income (NII), 13 reported lower NII, and only six increased their core interest earnings during the January-June period.

AB Bank, SBAC Bank, Standard Bank and ICB Islamic Bank have yet to publish their half-year financial statements.

Net interest income, the key measure of a bank's core business, is the difference between interest earned on loans and interest paid on deposits. A decline in NII indicates lending income is failing to keep pace with funding costs.

National Bank posted the largest negative NII at Tk2,034 crore, followed by IFIC Bank (Tk1,542 crore) and Rupali Bank (Tk1,345 crore). Islami Bank reported a negative NII of Tk330 crore, while Premier Bank, Bank Asia, Southeast Bank and NRB Bank also slipped into negative territory.

Another 13 banks recorded sharp declines in NII. NRBC Bank saw the steepest fall, with NII plunging 95% year-on-year, followed by Trust Bank (90%), Prime Bank (82%), Mutual Trust Bank (72%) and Mercantile Bank (69%). United Commercial Bank, Eastern Bank, Dhaka Bank, Midland Bank, NCC Bank, One Bank, Dutch-Bangla Bank and Pubali Bank also reported lower NII.

Only six banks posted growth in core interest income. BRAC Bank led with a 29% rise in NII to Tk1,057 crore, followed by City Bank, Al-Arafah Islami Bank, Jamuna Bank, Shahjalal Islami Bank and Uttara Bank.

Treasury income cushions profits as banks turn cautious

Despite weaker lending income, many banks reported strong profit growth by capitalising on high-yield government securities.

Bangladesh Bank's tight monetary policy has pushed Treasury bill and bond yields into double digits over the past year, encouraging banks to park surplus liquidity in risk-free government instruments instead of expanding private sector lending.

BRAC Bank earned Tk2,656 crore from treasury investments in the first half, followed by Pubali Bank (Tk2,093 crore) and City Bank (Tk1,910 crore). Dutch-Bangla Bank, Rupali Bank, Bank Asia, Eastern Bank, Prime Bank, United Commercial Bank and Mutual Trust Bank also reported substantial income from government securities.

For several banks, treasury income exceeded earnings from traditional lending, highlighting their growing dependence on investment income to sustain profitability.

Industry insiders attribute the pressure on core banking to weak private sector credit demand amid slower economic activity, higher deposit costs, and banks' increasing caution in extending fresh loans because of rising credit risks and growing non-performing loans.

A chief financial officer (CFO) of a private commercial bank, requesting anonymity, said describing banks' core business as weakening could be misleading.

"The banking sector cannot lend out all deposits because of regulatory limits on the Advance Deposit Ratio (ADR). Any idle funds have to be invested somewhere, and government securities provide a safe avenue while still generating returns for depositors," he told The Business Standard.

Under Bangladesh Bank regulations, conventional banks can maintain an Advance Deposit Ratio of up to 87%, while Islamic banks operate under an Investment Deposit Ratio ceiling of 92%.

The CFO also said international accounting standards generally present lending and investment income together as interest income.

The Dhaka Stock Exchange (DSE) ended lower today (3 August), with the benchmark index slipping below the psychological 5,900-point mark as persistent gas supply shortages, escalating tensions in the Middle East and uncertainty over the draft margin loan rules dampened investor sentiment.

After moving in a narrow range for most of the session, the market came under renewed selling pressure in the second half of trading. Market analysts said that while Bangladesh Bank's accommodative monetary policy and the government's efforts to ease the energy crisis have offered some support, lingering uncertainties continue to keep investors cautious.

The benchmark DSEX index shed 10.62 points, or 0.18%, to close at 5,886. The blue-chip DS30 index fell 9.06 points to 2,204, while the DSES Shariah Index lost 6.18 points to finish at 1,186.

Turnover on the premier bourse also declined, dropping 3.74% from the previous session to Tk1,211 crore.

Among the 393 issues traded, 165 advanced, 169 declined and 59 remained unchanged. Although gainers and losers were nearly evenly matched, stronger selling pressure toward the close dragged the market into negative territory.

Market participants said uncertainty over the proposed margin loan rules has added to investors' concerns. With the deadline for public feedback approaching, investors remain uncertain whether the regulator will revise several contentious provisions before finalising the rules. As a result, many investors, particularly those relying on margin financing, are refraining from taking fresh positions.

In its daily market commentary, EBL Securities said the capital bourse slipped back into negative territory after witnessing day-long volatility, as selling pressure intensified near the psychological 5,900-point level. Despite supportive monetary easing and government initiatives to alleviate the energy crisis, persistent gas shortages and lingering Middle East tensions kept investors cautious, resulting in range-bound trading.

According to the brokerage, the benchmark index opened higher before selling pressure intensified across the board, pushing the market into negative territory by mid-session. A modest recovery attempt later in the day proved short-lived as profit-taking re-emerged, reflecting investors' continued caution amid an uncertain near-term market outlook.

On the sectoral front, textiles accounted for the largest share of turnover at 26.2%, followed by pharmaceuticals and chemicals at 11.8% and engineering at 10.6%.

Sector performance was mixed with mutual funds posting the strongest gain, rising 2.1%, followed by jute at 1.4% and information technology at 0.9%. On the downside, food and allied stocks fell 0.8%, general insurance declined 0.6%, and the miscellaneous sector lost 0.5%.

Fareast Finance topped the gainers' list with a 10% rise. Peoples Leasing and Financial Services and International Leasing and Financial Services followed, each advancing 9.52%.

Among the decliners, Meghna Pet Industries fell 5.15%, while SBAC Bank and Bangladesh Export Import Company (Beximco) lost 4.0% and 3.88%, respectively.

The most actively traded stocks of the day were Sharp Industries, Far East Knitting, and Monno Fabrics.

The Chittagong Stock Exchange (CSE) also closed lower, with the CSCX index shedding 14.2 points and the CASPI falling 30.2 points.

Shares of IT sector-listed Aamra Technologies have surged 65% over the past two months, but the company says there is no undisclosed price-sensitive information (PSI) behind the sharp rise.

Following the unusual increase in the share price and trading volume, the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) separately sought explanations from the company.

In replies to the DSE's query dated 12 July and the CSE's query dated 2 August, Aamra Technologies said it is not aware of any undisclosed price-sensitive information that could have influenced the recent movement in its share price or trading volume.

The company said there had been no significant changes in its business operations, financial position or future plans that could explain the rally.

The stock closed at Tk21.40 on the DSE today (3 August).

According to DSE data, the company's share price rose from Tk13 on 1 June to Tk21.50 on 2 August, a gain of 65.38% in two months.

Trading activity also increased sharply during the period, with turnover in several sessions well above the stock's usual average. Market observers say simultaneous spikes in price and trading volume in relatively small-cap stocks can sometimes indicate speculative trading, although determining the cause falls within the purview of the stock exchanges and the market regulator.

Aamra Technologies was listed on the stock market in 2012 and is currently in the 'Z' category. The company has a paid-up capital of Tk65.70 crore.

As of 30 June 2026, sponsor-directors held 30.01% of the company's shares, institutional investors owned 33.68%, while general investors held the remaining 36.31%.

Shares of loss-making Sharp Industries have surged 132.35% in just six weeks despite the company reporting a net loss of Tk65 crore in the first nine months of FY2025-26.

Trading in the stock has also increased sharply, although the company says there is no undisclosed price-sensitive information (PSI) behind the rally.

According to data from the Dhaka Stock Exchange (DSE), Sharp Industries' share price rose from Tk17 on 15 June to Tk39.50 on 3 August, gaining Tk22.50 during the period.

The unusual rise in both the share price and trading volume prompted the DSE to seek an explanation from the company on 13 July.

In its response, Sharp Industries said there had been no material developments, including changes in business operations, financial condition, new investments, asset sales, mergers, restructuring or any other corporate event, that could explain the recent surge in its share price.

The company also said it had no undisclosed price-sensitive information related to the movement.

Trading activity has risen significantly in recent weeks, with the stock featuring among the DSE's top-traded issues in several recent sessions.

Sharp Industries emerged from the merger of RN Spinning Mills Limited and Samin Food and Beverage Industries and Textile Mills Limited. RN Spinning had suspended operations following a fire in 2019 and had been incurring continuous losses since FY2018-19. As part of its revival plan, the company merged with Samin Food to resume operations.

The High Court approved the merger in December 2022, while the Bangladesh Securities and Exchange Commission granted its consent in October 2023.

Following the completion of the merger, the company began trading on the DSE under the name Sharp Industries PLC on 29 October 2024.

Despite the restructuring, the company's financial performance remains weak. During the first nine months of FY2025-26, Sharp Industries posted a Tk65 crore net loss on Tk257 crore in revenue.

In the January-March quarter alone, it incurred a Tk21 crore loss while generating Tk56 crore in revenue. As of March 2026, the company's accumulated retained losses stood at approximately Tk78 crore.

Market participants say the sharp rally in the shares of a company that continues to report substantial losses and has shown no visible improvement in its fundamentals is unusual.

They note that Bangladesh's textile sector is still facing significant challenges due to persistent gas shortages and rising production costs, making such a dramatic appreciation difficult to justify based on fundamentals alone.

Under DSE regulations, the exchange seeks explanations whenever a listed company's share price or trading volume shows unusual movements, with the objective of determining whether any undisclosed price-sensitive information exists.

Analysts advise investors to base investment decisions on a company's financial performance and fundamentals rather than short-term price momentum.

The National Board of Revenue (NBR) has allowed businesses to use both their old and newly reassigned Business Identification Numbers (BINs) for customs-related activities until November 30, 2026, aiming to ensure uninterrupted import and export operations following the restructuring of VAT commissionerates.

As part of an administrative reform to expand the tax net, improve revenue collection, and enhance taxpayer services, the NBR has reorganised the jurisdictions of the existing VAT commissionerates and created new ones.

Under the restructuring, the BINs of many businesses have been transferred to new VAT jurisdictions.

While the last four digits of the BIN -- indicating the relevant VAT commissionerate and division -- have changed, all other business information linked to the BIN remains unchanged.

To prevent disruptions to international trade, both the old and new BINs will remain temporarily active in the Customs ASYCUDA World system.

This will allow businesses to complete the ongoing customs procedures, including letters of credit (L/Cs), bills of entry, customs declarations, and other import-export formalities initiated under the previous BIN.

The NBR has requested all affected businesses to complete all pending transactions under the old BIN and switch to the new BIN by November 30, 2026.

After that date, the old BINs will be automatically deactivated in the ASYCUDA World system, and all customs-related import and export activities must be carried out using the new BIN only.

The revenue authority said the transitional arrangement was intended to ensure uninterrupted economic activities while supporting a more dynamic, efficient, and modern tax administration.

Most leading commercial banks have cut deposit interest rates by 50 to 100 basis points from the beginning of August, pushing returns further below inflation as excess liquidity and weak private-sector credit demand reduce the need to attract fresh deposits.

The rate adjustments follow broader policy shifts, including Bangladesh Bank's recent decision to cut the policy rate from 10% to 9.50% after nearly two years and enforce interest rate spread caps. Consequently, banks lowered lending rates as well.

The move comes at a severe cost to savers. With overall inflation standing at 9.16% in June, the fresh round of rate cuts will drag deposit yields down to 8.50-9%, down from the 9-10.15% range offered through July. As a result, depositors face negative real returns, as interest rates fail to keep pace with rising prices.

According to Bangladesh Bank's latest banking sector update, real deposit interest rates have remained persistently negative. Official data show deposit growth reached 11.41% in May, a performance bankers attribute to previously attractive deposit rates. However, industry leaders warn that reducing deposit rates while inflation remains elevated could eventually discourage savers.

"High deposit rates create massive future liabilities, which is why banks are moving to lower their cost of funds," said a senior executive at a private commercial bank. He added that yields on Treasury bills and government bonds had softened, squeezing banks' margins and reducing the incentive to offer 10% returns on one-year deposits.

Toufic Ahmad Choudhury, former director general of the Bangladesh Institute of Bank Management, questioned the central bank's policy decision.

"The question is why the central bank has decreased the policy rate? It is not a prudent decision anymore. Depositors are not getting real interest rates due to high inflation," he told The Business Standard.

Despite the continued erosion of purchasing power, bankers said depositors are still prioritising the safety of their funds over higher returns, helping deposits remain stable for the time being.

Excess liquidity weakens banks' appetite for deposits

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said lower yields on Treasury bills and bonds, combined with abundant liquidity and healthy deposit growth, had reduced banks' need to offer high deposit rates.

"Currently the interest rates on Treasury bills and bonds are lower than before. Banks have excess liquidity, and deposit growth is good. I think deposit interest rates will fall below the inflation rate," he said.

Mahbubur said the Bangladesh Bank had instructed banks to keep the interest rate spread within 4%, prompting lenders to reduce both deposit and lending rates, although deposit rates would be adjusted first.

Mohammad Ali, managing director of Pubali Bank, said higher deposit rates had previously helped banks attract savings.

"Depositors received attractive deposit rates earlier, and as a result deposit growth reached a satisfactory level. But leading commercial banks now have excess liquidity and weak credit demand. So banks have moved away from offering higher rates to depositors and have already reduced deposit rates," he said.

Another managing director of a commercial bank, speaking on condition of anonymity, said depositors are increasingly choosing financially credible banks rather than chasing higher interest rates. He added that if banks could reduce their funding costs, they would increase investment in Treasury bills and government bonds. However, he noted that weaker banks still needed to offer relatively high deposit rates to attract deposits.

Bangladesh Bank data show surplus liquidity rose to Tk3,27,877 crore in May from Tk2,35,500 crore in the same month of 2025.

Lending income weakens as investment demand slows

Banks' earnings from both lending and government securities have come under pressure as interest rates on Treasury instruments have eased and private-sector borrowing has weakened.

According to bankers, yields on Treasury bills are now below 9%, while Treasury bonds offer slightly above 10%, compared with around 12% previously. Lower returns from government securities have reduced their attractiveness compared with the period of higher yields.

Meanwhile, sluggish private investment has continued to suppress demand for bank credit. Bangladesh Bank data show private-sector credit growth remained below 5% in May 2026, reducing banks' income from lending over an extended period.

Banks' financial statements illustrate a significant shift in their income structure over the past four years. In 2021, the country's 52 major banks generated Tk40,793 crore in total income, with lending contributing 47%, investments 34% and commissions 19%.

By 2025, investment income had become banks' largest source of revenue, accounting for 73% of total income, while net interest income had fallen to 6.8%. Commission income remained broadly unchanged at around 20%.

Banks have increased their investment in Treasury bills and government bonds since late 2023, when yields on those instruments rose sharply, although returns have moderated more recently.

Chevron Bangladesh's fresh investment proposal to ramp up onshore gas exploration gets under processing, sources say, amid a thrust on energy search to meet shortages of fuels in the country.

The energy ministry has asked state-run Petrobangla to review the investment proposal from the US multinational.

Chevron Bangladesh, a part of the global energy company Chevron, submitted the investment proposal for further hydrocarbon exploration in block-11 and block-12 in the country's gas-rich northeastern region.

The American company is currently installing a compression station near Jalalbad gas field at a cost of around US$65 million to increase gas production from nearby producing gas fields.

The project is expected to be completed within 30 months, making additional gas available by 2028.

Chevron's investment proposal for these unexplored onshore areas in the Surma basin is long pending for approval by Bangladesh government.

The company has recently renewed interest in making further investment there to ramp up the country's overall natural-gas output against the backdrop of growing energy crisis since the beginning of the Middle East crisis late February, dwindling local gas reserves and mounting demand in industries, power plants and fertiliser factories.

Sources could not confirm how much investment Chevron will pour into these onshore blocks, but said that it would be no less than US$500 million.

"Chevron has planned to drill a good number of wells in new exploration areas and would be able to supply natural gas within the shortest possible time," said one source.

The US company is learnt to have sought to link the gas price to the price of Brent Crude on the international market and demanded that the price should be 10 per cent of the Brent Crude price, which will be variable.

Under the current international market rate, the price would be US$9.0 per cubic meter, considering the Brent Crude price at US$90 per barrel, which is around three times higher than the price at which it sells gas to Petrobangla from the currently operational gas fields.

Chevron placed the proposal after carrying out 'exploration study' in 11 onshore blocks, fully or partially, to delineate new hydrocarbon prospects over the past couple of years.

Among the blocks 1, 2A, 2B, 3A, 3B, 8, 9, 11, 12, 13 and 14, which were studied by Chevron, few are still vacant, or unexplored, some owned by state-run Bangladesh Gas Fields Company Ltd (BGFCL) and some owned by Sylhet Gas Fields Ltd (SGFL) and the remaining are Chevron's.

During the study, the company attained access to relevant data and carried out study in reservoir 'stratography', and unconventional reservoir 'farcies.'

Officials have said the US firm attained a 60-square-kilometer 'flank' area from Petrobangla outside its existing contract zone to the north of the Bibiyana gas field in the gas-rich region during the previous Awami League government.

It also invested around US$150 million in drilling a couple of new wells BY-27 and BY-28.

The onshore block-11 is one of the several blocks that were kept ring-fenced for development by BAPEX.

Chevron Bangladesh is currently the largest producer of natural gas in Bangladesh with its output of around 890 million cubic feet per day (mmcfd) from three of its onshore fields -- Bibiyana, Jalalabad and Moulavi Bazar, which are located in blocks 12, 13 and 14 respectively, according to official data of Petrobangla as on August 1, 2026.LPG supply solutions

The country's overall natural-gas output hover around 2,151mmcfd, including 500mmcfd regasified liquefied natural gas (LNG) and the remaining 1,651mmcfd from local gas fields that include the Chevron-operated ones.

Previously, the Bangladesh Oil, Gas and Mineral Corporation or Petrobangla had turned down a similar proposal from Chevron to develop onshore Rashidpur gas field, owned by the corporation's subsidiary Sylhet Gas Fields Ltd (SGFL).

Chevron then also had sought 10 per cent of the Brent Crude price for Rashidpur gas after development of the field and initiating production.

Instead of allowing it to develop Rashidpur gas field, Petrobangla has engaged its subsidiary Bangladesh Petroleum Exploration and Production Company Ltd (BAPEX) to drill extensively over there.

More than a decade back in 2015, Chevron also had proposed to invest around US$650 million in installing a new compression station at Bibiyana gas field and drilling three more wells in Jalalabad gas field, tagging condition of annual tariff hike by 3.0 per cent for Bibiyana gas.

The US firm later dropped the investment plan as Petrobangla rejected its plea for annual hike in gas tariffs. Chevron instead announced sellout of its Bangladesh stakes to Chinese joint-venture Himalaya Energy in April 2017.

The US firm reversed its decision in October 2017 when Petrobangla moved to acquire its assets. It decided not to sell off its Bangladesh stakes but to stay in Bangladesh.

Bangladesh’s low tax-to-GDP ratio highlights the need for greater revenue to fund infrastructure, social welfare and development. However, revenue measures must not undermine investment, employment or voluntary compliance.

The mandatory turnover tax on non-corporate businesses and professionals has therefore become a major concern among taxpayers. Under Section 163(6) of the Income Tax Act, 2023, as amended by the Finance Act, 2026, taxpayers must pay the prescribed turnover tax when their normal income-tax liability is lower.
The tax applies to gross receipts, even when losses are incurred. The general rate is 1 percent, with sector-specific variations and a 0.2 percent rate for newly established industrial undertakings during their first three years.The issue is not whether businesses should pay tax. The real question is whether gross sales or gross receipts (essentially, turnover) are an appropriate basis for determining tax liability, particularly for small and low-margin enterprises. Income tax is normally levied on net profit, the amount that remains after legitimate business expenses have been deducted.

A turnover tax, by contrast, is imposed on total sales, effectively treating sales volume as though it were income. However, a business may generate a high turnover while earning only a small profit. In such cases, taxing turnover rather than profit can impose a disproportionate burden, especially on businesses with thin profit margins.

Consider a small rice trader who starts with capital of only Tk 500,000 and repeatedly reinvests the same money throughout the year. Suppose the trader buys rice at Tk 75 per kilogram and sells it at Tk 80. With annual sales of Tk 12 million, the trader sells 150,000 kilograms and earns a gross profit of Tk 750,000. From this amount, the trader needs to pay Tk 150,000 for transportation, Tk 60,000 in rent, Tk 96,000 in salaries, Tk 12,000 for electricity and Tk 24,000 in other operating expenses. Total operating expenses come to Tk 342,000, leaving a net profit of Tk 408,000.

At a turnover-tax rate of 1 percent, the trader must pay Tk 120,000 in tax. But if tax were calculated on actual income, and Tk 408,000 were the trader’s only taxable income, the liability after the tax-free threshold would be around Tk 5,000 as minimum tax. The turnover tax would therefore be approximately 24 times higher. More strikingly, the Tk 120,000 tax would absorb almost 30 percent of the trader’s net profit. If the business made a loss in the following year, turnover tax could still be payable because the system does not consider profitability.

The turnover tax raises concerns under the ability-to-pay principle, which requires taxation to reflect a taxpayer’s real economic capacity. Gross sales are not the same as income. A trader may record crores of taka in sales yet retain only a small margin after paying suppliers, interest, transport, rent, wages, utilities and other expenses. This burden is especially severe for SMEs operating with limited capital and bank financing.

Rising borrowing costs, raw-material prices, transport expenses, electricity charges, digital banking fees and merchant discount rates have further reduced profitability, making turnover-based taxation increasingly disproportionate.

When small businesses are required to pay tax equal to 1 percent of gross sales, their working capital can decline rapidly. Working capital is the lifeblood of a small business; when it shrinks, the business may struggle to replenish inventory, pay employees, settle suppliers’ bills and service bank loans. This can lead to delayed payments, reduced employment, increased borrowing or even business closure. The consequences extend beyond the taxpayer, affecting employees, suppliers, lenders and consumers.

Turnover tax may be administratively simple where accounting records are weak, but simplicity should not undermine fairness. A disproportionate system can discourage formalisation, promote cash transactions and push businesses into the informal economy, ultimately reducing revenue. In countries such as the United Kingdom, Canada, Australia, Singapore and Japan, business income is generally taxed on net profit.

Simplified regimes in developing economies often consider business size, sector, profit margins and compliance capacity. Their purpose is to ease compliance, not penalise enterprises. Bangladesh should therefore adopt the following balanced measures that protect revenue while supporting sustainable SME growth:

First, the turnover tax rate for qualifying small and medium-sized businesses and professionals could be reduced from 1 percent to 0.2 percent.

Second, a tiered structure could be introduced, with tax rates varying according to annual turnover, business size and sectoral profit margins. A small grocery shop should not bear the same effective tax burden as a large, high-margin enterprise.

Third, businesses that consistently use formal banking channels and maintain basic digital records could receive targeted tax incentives.

Fourth, genuinely loss-making businesses below a defined threshold should be eligible for temporary relief. Appropriate documentation requirements and safeguards could be introduced to prevent abuse.

Fifth, the government should develop a phased roadmap for moving from turnover-based taxation towards profit-based taxation. This transition could be supported by expanding access to simple digital bookkeeping tools and affordable tax advisory services.

Finally, major tax policy changes should be preceded by structured consultations with business associations, professional bodies, tax experts and research institutions. Tax policy is more effective when those affected understand it, consider it reasonable and have the practical ability to comply.

Small and medium-sized enterprises are vital to employment, entrepreneurship and social stability in Bangladesh. Their tax contribution should be assessed not only in terms of immediate revenue but also by its impact on investment, jobs, business survival, access to finance and the future tax base.

Economic growth and revenue growth are mutually reinforcing. Reconsidering the 1 percent turnover tax therefore supports better, not lower, taxation. A tiered rate, relief for genuine losses and gradual movement toward profit-based assessment could protect revenue while allowing small businesses to grow, formalise and contribute more sustainably.

Bangladesh Bank has abolished the Telegraphic Transfer (TT) discounting facility for scheduled banks, under which banks were allowed to obtain short-term liquidity by placing liens on their current accounts maintained with the central bank.

The Banking Regulation and Policy Department issued a circular in this regard today (3 August).

TT discounting is a special facility that enabled commercial banks to borrow short-term funds from the central bank during urgent liquidity needs by placing a lien on their current accounts or without providing additional securities.

According to the circular, banks now have access to a range of effective sources for day-to-day liquidity management, including the call money market, repo, the Standing Lending Facility (SLF) and interbank borrowing.

"Therefore, there is no longer any need to continue the TT discounting facility against liens on current accounts," the central bank said.

The circular also noted that the facility had seen very limited use in recent years.

Against this backdrop, Bangladesh Bank said the TT discounting facility for scheduled banks would be deemed withdrawn with effect from 1 July.

The directive was issued under Section 45 of the Bank Company Act, 1991, and all managing directors and chief executive officers of scheduled banks have been instructed to implement the decision.

A chronic energy shortage, coupled with rising costs, a shortage of finance and global economic headwinds, has forced many factories to shut down in recent years, taking the steam out of the country’s economic engine.

Factories across key industrial belts are operating well below capacity because of the gas shortage, while many newly built plants remain idle with no clear timeline for starting production.

As machinery sits unused, businessmen continue to repay mounting bank loans. Besides, thousands of jobs that these factories were expected to create have never appeared.

Workers affected by factory closures move from one mill to another in search of work, while shuttered businesses are adding to the country’s growing burden of non-performing loans (NPLs).

At the centre of this cycle is the prolonged energy crisis, which continues to feed wider economic problems even as the government tries to revive growth through investment.

Although the government is seeking fresh investment, especially from overseas, local manufacturers say they are not receiving fair treatment when it comes to energy supply.

“Bangladesh seeks foreign investment, but those of us who have already invested are treated like beggars,” said Mostafa Kamal, chairman of Meghna Group of Industries (MGI), one of the country’s largest industrial conglomerates.

Industries have faced gas shortages for years, but business leaders say the situation deteriorated after the US-Israel war on Iran triggered fresh shocks in global energy markets.

The crisis worsened further after an accident at a floating liquefied natural gas terminal in Cox’s Bazar cut the country’s pipeline gas supply by more than 17 percent.

GROWTH SLOWS AS NEW INDUSTRIES SIT IDLE

The prolonged energy crisis, combined with the disruption that followed the political changeover in August 2024, has left clear marks on the industrial sector.

Industrial growth slowed to 2.86 percent in fiscal year 2025-26 from 3.71 percent a year earlier, according to provisional estimates by the Bangladesh Bureau of Statistics (BBS).

Fazlee Shamim Ehsan, president of the Bangladesh Employers Federation, said their dying units managed to operate at about 78 percent of capacity before the latest round of gas crisis. Now many are running at roughly half of their normal capacity.

“Still, we are in a much better situation in comparison with other factories. Factories in Kanchpur to Narsingdi industrial belt are facing the worst,” he said.

Amid these constraints, business leaders describe the energy crisis as the “biggest obstacle” to achieving Bangladesh’s target of $100 billion in exports by 2030.

As of mid-July, more than 1,850 applications for industrial gas connections were awaiting approval after the government instructed Petrobangla to suspend all new gas connections.

The decision has dealt another blow to large industrial groups and garment manufacturers that have spent years seeking gas connections for completed factories.

MGI, for example, has invested Tk 7,320 crore in glass and steel rod factories at the Comilla Economic Zone. Construction finished between one-and-a-half and two-and-a-half years ago.

The factories were financed largely through domestic and foreign loans, but they cannot begin production without gas. As a result, the group is paying about Tk 45 crore a month in interest.

MGI Chairman Mostafa said, “In the Comilla Economic Zone, seven factories in total were supposed to create jobs for 15,000 people. But now everything is stalled due to the lack of gas.”

“If we had been told from the beginning that gas would not be available, we would not have made such massive investments,” he commented. “The government now seeks foreign investment, but if investors face this situation, given Bangladesh’s poor rating, the risk will only worsen.”

City Group faces a similar problem. It has invested about Tk 14,000 crore in six factories, including sugar, salt and cement plants, at Hoshendi Economic Zone at Gajaria of Munshiganj.

City Group even spent about Tk 110 crore to build its own gas pipeline, yet it has still not received a gas connection. The factories have been ready since 2022 but cannot begin operations because of the lack of gas.

The company is paying nearly Tk 5 crore a day in bank interest.

According to a City Group official, who requested anonymity, the six factories would directly employ around 10,000 people if they were operational.

DWINDLING SUPPLY FUELS RISING NPLS

An entrepreneur in Narsingdi, who requested anonymity, said he invested Tk 600 crore in a spinning mill after being promised a gas connection by 2024. Following the fall of the Awami League government that year, the connection never came.

He said he has had to seek additional bank loans while continuing to pay interest on expensive machinery that remains idle inside the factory.

The entrepreneur has also been hit by the depreciation of the taka, which has lost about 40 percent of its value against the US dollar over the past three years. He opened letters of credit (LCs) when the exchange rate stood at Tk 85 to the dollar. By the time payments were due, it had climbed to more than Tk 123, leaving him with heavy losses and a shortage of working capital.

Many big businesses with political links also ran into trouble after the Awami League government fell in August 2024.

Large groups including S Alam Group, Beximco Group and Nassa Group defaulted on their loans after their businesses shut down and production stopped as owners fled, became fugitives or were arrested.

Other major industrial groups faced difficulties because of delayed gas connections, exchange rate volatility and supply chain disruptions linked to the global economy.

As these companies failed to repay their loans, bad debt in the banking sector rose sharply. At the end of 2024, NPLs stood at Tk 345,765 crore, up from Tk 211,392 crore six months earlier.

By the end of March this year, total NPLs climbed to Tk 588,704 crore, equal to 32.26 percent of the Tk 1,824,668 crore in outstanding loans, according to the Bangladesh Bank.

To ease the pressure, the central bank under the interim government introduced more flexible loan restructuring and rescheduling facilities for businesses affected by factors beyond their control.

After taking office, the BNP-led government made economic growth and employment its priorities. As part of that effort, it sought to reopen closed factories and industries, while the central bank introduced a series of support measures, including a Tk 60,000 crore stimulus package.

Anis A Khan, former chairman of the Association of Bankers Bangladesh (ABB), told The Daily Star that many industrial groups had fallen into distress because of circumstances beyond their control rather than poor business decisions.

“Take City Group, for example. If it had received a gas connection for its economic zone on time, it would have been able to repay its bank loans on schedule.”

Anis, also the former managing director of Mutual Trust Bank, said the company would not have ended up in its current situation. “To keep the economy on track, these businesses need to be supported.”

Bangladesh and South Korea are set to formally sign a Comprehensive Economic Partnership Agreement (Cepa) today (4 August), having recently wrapped up negotiations on the bilateral trade deal.

Commerce Ministry Public Relations Officer Md Kamal Hossain confirmed the development to The Business Standard yesterday (3 August).

Once signed, the agreement will become Bangladesh's second bilateral free trade agreement after its Economic Partnership Agreement (EPA) with Japan, bringing the country closer to strengthening trade and investment ties with one of Asia's fastest-growing economies.

The agreement comes as the country steps up efforts to preserve preferential market access and expand bilateral trade and investment ahead of its LDC graduation. Bangladesh will gradually lose preferential access in many export markets after graduating, making bilateral trade agreements increasingly important to maintaining its competitiveness.

The breakthrough followed five days of negotiations involving around 60 representatives during the fifth and final round of bilateral talks, held in Seoul from 27 to 31 July.

Commerce Minister Khandaker Abdul Muktadir is scheduled to brief the media today following a Cepa Negotiation Conclusion Ceremony at the Ministry of Commerce.

Meanwhile, South Korea's Trade Minister Yeo Han-koo, who arrived in Bangladesh yesterday to attend the ceremony, paid a courtesy call on Prime Minister Tarique Rahman at his office in the Cabinet Division of the Secretariat, according to the Prime Minister's Deputy Press Secretary Shahadat Hossain Shadhin.

During the meeting, the South Korean minister briefed the prime minister on the proposed Cepa, saying the agreement would significantly expand bilateral trade and economic cooperation while encouraging greater South Korean investment in Bangladesh.

Tarique urged South Korean companies to invest in Bangladesh's toy manufacturing, electronics, telecommunications, automobile, semiconductor and shipbuilding sectors. He also assured them that the Bangladesh government would provide the necessary support for investment in the shipbuilding sector.

During the meeting, Tarique also invited the South Korean president to visit Bangladesh.

Broader market access

Under the proposed agreement, South Korea has agreed to open 111 specialised services sub-sectors to Bangladesh.

According to officials, this is the first time in the history of the World Trade Organization (WTO) that a graduating or least developed country has been granted market access across such a large number of services sub-sectors.

In return, Bangladesh has agreed to open 95 services sectors to South Korean investors while protecting sensitive domestic industries and small and medium-sized enterprises (SMEs).

Commerce ministry officials said the proposed agreement could secure duty-free access for Bangladeshi RMG, leather and leather goods, pharmaceuticals, jute and jute products in the South Korean market. Some trade preferences may also continue after Bangladesh graduates from LDC status.

The agreement is also expected to include provisions on rules of origin for selected products, improve market access for information technology, engineering, financial services and education, simplify customs procedures through digital customs systems, strengthen intellectual property protection, promote technical cooperation, skills development, industrialisation and infrastructure development, and establish an effective dispute settlement mechanism.

Officials said the Cepa would also make it easier for Bangladeshi IT professionals, civil, mechanical and shipbuilding engineers, and marine technicians to obtain temporary visas and work permits in South Korea.

Bangladeshi software firms would also be able to provide data processing and cloud services directly.

The agreement is also expected to create employment opportunities for Bangladeshi nurses, physiotherapists and skilled caregivers in South Korea under the country's legal employment framework.

Trade, investment opportunities

On the investment front, globally recognised South Korean engineering and technology companies are expected to gain greater opportunities to participate in Bangladesh's mega power plant projects, metro rail schemes, operations at the Matarbari deep-sea port and the expansion of 5G technology.

Bangladesh currently enjoys duty-free and quota-free (DFQF) market access for about 95% of its products in South Korea under the Asia-Pacific Trade Agreement (APTA) and WTO arrangements introduced in 2008, according to the Embassy of Bangladesh in Seoul.

Bilateral trade between the two countries currently stands at $1.39 billion, with Bangladesh exporting goods worth $491 million and importing $902 million from South Korea.

Bangladesh's major exports to South Korea include woven garments, knitwear, home textiles, leather and leather products, including footwear, frozen food, ceramic products, pharmaceuticals, jute and jute goods, tents and synthetic ropes.

Its main imports from South Korea include iron and steel, plastics and plastic products, machinery, mechanical appliances and boilers, paper and paperboard, and tanning and dyeing extracts.

Bangladesh is set to launch a National Rating System (NRS) that will, for the first time, give every government and private institution a standardised score based on how well it manages IT, information and cybersecurity.

Built on a four-pillar framework called the National ICT and Cybersecurity Maturity Rating, the system is expected to provide the country’s first evidence-based benchmark for measuring institutional cyber readiness. It comes as Bangladesh’s rapidly expanding digital landscape continues to face cyber breaches, fraud and financial theft.
The system will be unveiled today at the ICT Division, according to documents obtained by The Daily Star.The first pillar, IT and Information Security Governance, carries a weight of 20 percent and will assess leadership, policies, organisational structure and administrative accountability.

The second pillar, Infrastructure and Operations, accounts for 30 percent of the score. It will evaluate IT infrastructure, data centres, networks, servers, backup and disaster recovery systems, and change management.The system comes as Bangladesh’s rapidly expanding digital landscape continues to face cyber breaches, fraud and financial theftThe third pillar, Cybersecurity and Data Protection, also carries 30 percent. It covers security controls, data protection, risk management, incident response, vulnerability management and audit compliance.

The remaining 20 percent comes from Digital Service and User Maturity, which assesses the quality of digital services, user-centricity, IT service management, software governance and continuous improvement.Each of the 131 indicators under the four pillars will be scored on a five-point maturity scale, ranging from 0 (not implemented) to 4 (fully implemented or optimised). The intermediate levels are initial/ad hoc, partially implemented and largely implemented.

The weighted scores will then be combined into a total score out of 100 and converted into a letter grade from A (excellent) to E (poor).

Officials said the indicators were developed in line with internationally recognised standards and frameworks, allowing an institution’s overall ICT and cybersecurity readiness to be assessed through a single integrated system.

Bangladesh has long lacked a unified system to assess how well operators of critical information infrastructure, government agencies and private institutions are prepared to deal with cyber-attacks, data theft, ransomware and service disruptions, an ICT Division official said.He added that institutions currently differ widely in their policies, technical safeguards, staffing, infrastructure and digital service management, making it difficult to compare their cyber readiness or identify areas that need improvement.

The government expects the rating system to identify institutional weaknesses and risks, help prioritise IT audits and vulnerability assessment and penetration testing (VAPT), and support planning for budgets, staffing and infrastructure.

According to the documents, the system will also create a national maturity baseline by producing an annual ranking of public and private institutions. Officials said this would support evidence-based policymaking and strengthen the country’s cyber resilience and interoperability.

Future phases of the system will include an AI-based automated assessment engine, automated validation of submitted documents, sector-wise benchmarking, comparative analytics dashboards, and automated, risk-based recommendations and improvement roadmaps for individual institutions.

The framework is being introduced as Bangladesh faces growing cyber risks. As of June, the country had 13.60 crore internet users.

Several major cyber incidents have highlighted these risks.

In 2016, hackers stole millions of dollars from Bangladesh Bank in one of the world’s largest cyber-enabled bank thefts.

In 2023, a breach of a government birth and death registration website exposed the personal data, including national ID numbers, of more than 50 million Bangladeshis.
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In July 2025, Bangladesh Bank warned banks and financial institutions to strengthen their systems against possible cyber-attacks targeting critical information infrastructure, including the banking, healthcare and public service sectors.

According to the Bangladesh Cyber Threat Landscape 2024 report, published by an ICT Division unit, 188 cybersecurity incidents were reported in 2024.

The government should speed up domestic gas exploration to expand supply and reduce the country’s reliance on costly imports, according to economists, as the prolonged shortage hurts private investment, industrial output and export competitiveness.

The gas crisis has persisted for years, leaving industries to operate with inadequate supplies, said Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD).

He said the recent disruption to gas supply from a floating liquefied natural gas (LNG) terminal had made the situation worse. After the floating storage and regasification unit (FSRU) resumes, it will only restore the previous level of shortages rather than solve the underlying problem.

Moazzem said higher LNG imports alone could not close the supply gap. Bangladesh must recognise gas shortages as a structural challenge in the near term while accelerating domestic gas exploration and diversifying its energy sources.

He said the business environment is already under pressure from weak global demand, sluggish exports and high inflation. In this context, protecting existing investment is more important than attracting new investment.

“The immediate priority should be ensuring that existing factories continue operating,” said Moazzem.

He also urged the government to prioritise financially distressed but operational factories when providing incentives, arguing that supporting struggling businesses would generate greater economic benefits than focusing on factories that have already closed.

He added that industries should gradually reduce their dependence on natural gas by investing in energy-efficient machinery, electricity-based production systems, renewable energy and other technologies that could cut energy use by 15 to 20 percent.

M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, said years of inadequate onshore and offshore gas exploration have left Bangladesh heavily dependent on imported LNG, making the country vulnerable to global supply disruptions and price volatility.

He said limited LNG import infrastructure has further constrained gas supply, forcing many industries to operate below capacity.

According to him, gas shortages have reduced production by 30 to 50 percent in sectors such as garments, textiles, steel and ceramics, while power disruptions caused by fuel shortages have also affected small and service-oriented businesses. The resulting uncertainty has discouraged both local and foreign investors from expanding operations or making new investments.

Masrur said Bangladesh should urgently secure additional long-term LNG supply agreements to stabilise gas availability and prices while ensuring adequate foreign exchange support for imports.

Over the medium term, he called for faster onshore and offshore gas exploration and quicker progress on renewable energy projects to reduce dependence on imported fuel.

Mohammad Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said Bangladesh is facing more than a temporary industrial slowdown.

“The country is confronting a deepening investment and production crisis, where the energy shortage, banking-sector weaknesses, high financing costs, policy uncertainty and weak business confidence reinforce one another,” he said.

He said the gas shortage had become a major burden on industry. Factories operating below capacity faced higher unit costs, delayed deliveries and weaker competitiveness. The impact was even greater on new investment.

Razzaque said Bangladesh continues to pursue industrial growth despite declining domestic gas production, costly LNG imports that are vulnerable to external shocks, and inadequate transmission and distribution infrastructure, raising questions about the credibility of its policy approach.

“There has been no shortage of recommendations. The priority now is implementation,” he added.

Bangladesh should position itself to attract manufacturing relocating from China as the country moves towards advanced technology industries, while also pursuing broader zero-tariff access to the Chinese market, Prime Minister's Adviser Humaiun Kobir said today.

Speaking at the inauguration of the four-day Comparative Governance Forum 2026 in Dhaka, Humaiun said Bangladesh has a "tremendous opportunity" to strengthen economic growth and trade by deepening cooperation with China as global supply chains continue to evolve.

"As global supply chains shift and China moves from standard manufacturing into advanced technology, we can absorb some of those manufacturing lines through close collaboration with China," he said.

He said such cooperation would create jobs and help diversify Bangladesh's exports beyond textiles and light engineering. He also highlighted the potential for negotiating wider zero-tariff market access for Bangladeshi products in China.

The forum, jointly organised by the Bangladesh Institute of International and Strategic Studies (BIISS) and the School of International Relations and Public Affairs of Fudan University, is being held from 3 to 6 August.

The programme includes expert lectures, a panel discussion and field visits to the Padma Bridge and the Dasherkandi Sewage Treatment Plant.

Humaiun said Bangladesh and China have developed a comprehensive strategic cooperative partnership covering trade, investment, infrastructure, connectivity, education and people-to-people exchanges.

He said comparative governance is not about copying another country's model but about understanding how different countries address common challenges and adapting relevant lessons to national circumstances.

He also stressed that good governance is essential for sustainable development, saying institutions must remain transparent, accountable and responsive while embracing digital transformation and innovation to improve public services.

Chinese Ambassador to Bangladesh Yao Wen said Bangladesh-China relations have entered a new strategic phase under the vision of building a community with a shared future.

He said cooperation between the two countries is expanding in both scale and scope, including efforts to align development strategies and advance projects such as comprehensive management of the Teesta River, modernisation of Mongla Port and the China-Myanmar-Bangladesh Economic Corridor.

The ambassador said the forum would focus on practical governance issues, including poverty alleviation, digital governance, artificial intelligence and the digital economy, allowing participants to exchange experiences and explore policy solutions suited to Bangladesh's development needs.

Following the inaugural session, BIISS and Fudan University signed a memorandum of understanding to strengthen cooperation in research, academic exchanges, capacity building, joint publications and policy dialogue.

According to BIISS, the forum has brought together academics, researchers, policymakers and practitioners from Bangladesh and China to exchange views on governance, public policy and international affairs.

Discussions will cover China's governance model, targeted poverty alleviation, digital governance and artificial intelligence, industrialisation, the Global Development Initiative, and future Bangladesh-China cooperation.

The National Board of Revenue (NBR) has requested all businesses to complete the transition from their old business identification number (BIN) to the newly assigned BIN by November 30 of this year, following the restructuring of VAT Commissionerates aimed at strengthening tax administration and improving taxpayer services.

In a press release issued yesterday, the NBR said it has reorganised the jurisdiction of existing VAT commissionerates and established new commissionerates to expand the tax net, enhance revenue collection and ensure a more business-friendly environment through improved taxpayer services.
The move is part of the government’s broader administrative reform initiative to make the indirect tax system more dynamic, efficient and modern, it said. As part of the restructuring, the BINs of businesses have been transferred to the newly designated jurisdictions.

The NBR said only the last four digits of the BIN have been changed to reflect the respective VAT commissionerate and division, while all other business information associated with the BIN remains unchanged.

To ensure that import and export operations continue without disruption, both the old and new BINs of the affected businesses have been kept temporarily active in the customs’ ASYCUDA World system.

As a result, importers and exporters will be able to complete ongoing customs procedures-including letters of credit (L/Cs), bills of entry, customs declarations and other existing transactions-using their previous BINs during the transition period. The NBR urged all concerned businesses to complete all pending activities under their old BINs and ensure the use of the new BINs by the set deadline.

It warned that after the deadline, the old BINs will be automatically deactivated in the ASYCUDA World system. Thereafter, all customs-related import and export activities must be carried out exclusively using the new BINs.

The revenue board sought the cooperation of all stakeholders in ensuring uninterrupted economic activities and supporting its efforts to build a more dynamic, efficient and modern revenue administration

Price pressures spread across a wider range of goods and services in Bangladesh in June this year, signalling that inflation became more broad-based even as price trends varied across different categories.A larger share of items in the Consumer Price Index (CPI) basket recorded month-on-month price increases, indicating that inflationary pressures were affecting more products.
Out of the 382 CPI items, 261 recorded price increases compared with the previous month, while 22 registered price declines and 99 remained unchanged, Bangladesh Bank said in its quarterly Inflation Dynamics in Bangladesh report for the fourth quarter (April-June) of fiscal year 2025-26.

Month-on-month headline and food inflation accelerated in June, although non-food inflation edged down slightly. The food diffusion index also increased, with 82 of the 126 food items posting price gains, suggesting that food price pressures became more widespread.Meanwhile, steep hikes in gas tariffs and fuel and lubricant costs, along with solid fuel inflation, pushed energy inflation sharply higher in the last quarter of FY26, widening the gap between wage growth and consumer prices.

Out of the 382 CPI items, 261 recorded price increases compared with the previous month, while 22 registered price declines

ENERGY EMERGES AS BIGGEST DRIVER

Energy inflation remained elevated throughout the quarter, driven by strong positive momentum effects that reinforced upward pressure on energy prices, the report noted. The energy shock fed through to the CPI, lifting average headline inflation to 9.21 percent in Q4 from 8.8 percent in Q3 (January-March).

Energy inflation rose to 17 percent from 14.9 percent in the previous quarter, driven primarily by fuels and lubricants as well as a gas price hike.

Gas inflation surged to 24.0 percent year-on-year in Q4 from 11.3 percent in the previous quarter, while inflation for fuels and lubricants climbed to 13.8 percent from just 1.7 percent.

Solid fuels -- specifically firewood, agricultural by-products, cow dung and jute sticks -- remained the primary drivers of energy inflation, with their own inflation edging up to 21.8 percent from 21.5 percent.

This points to a “hidden” cost of living for households, particularly in rural areas, that rely on these traditional energy sources.

INFLATION OUTPACES WAGE GROWTH

Core inflation edged up to 8.4 percent in June from 8.0 percent a month earlier, driven in part by a surge in transportation and communication costs, particularly internet services.

Food inflation also rose to 8.7 percent, with vegetables emerging as the biggest contributor. Their share of overall food inflation jumped to 37 percent from 22.7 percent a month earlier.

However, protein-rich items -- including fish, meat and pulses -- remained the single largest driver, accounting for 46.0 percent of food inflation.

Retail and wholesale prices of most essential commodities increased during the quarter, with only a few exceptions. Farm-gate egg prices and marketing margins rose sharply in May, while energy-related price pressures continued to squeeze household budgets.

The wage-price gap widened in April-June compared with the previous quarter, although it narrowed marginally towards the end of the period, according to the Bangladesh Bank.

The central bank said the slight improvement stemmed mainly from a moderation in headline inflation rather than any meaningful acceleration in wage growth.

Wage growth stood at 8.2 percent in June, remaining below headline inflation of 9.2 percent. Among all divisions, Dhaka recorded the highest wage growth.
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The Asian Development Bank’s July 2026 outlook, cited in the report, projected that Bangladesh’s headline inflation would remain high at 9 percent in FY26 amid elevated global energy prices linked to the Middle East conflict.

The central bank said maintaining policy vigilance remained imperative to anchor inflation expectations, mitigate persistent inflationary pressures and safeguard households’ purchasing power going forward.

Bangladesh recorded its highest monthly exports in the past 12 months in July, with shipments totalling $4.72 billion. Despite the strong performance, exports declined 0.9% year-on-year, and exporters caution growth is likely to improve in the months ahead.

Data from the Export Promotion Bureau (EPB), however, show exports rose by more than 12% from June.

Exporters said July is typically the strongest export month as shipments of goods for the upcoming winter season peak during this period, making the higher export value expected.

They, however, cautioned that export growth is unlikely to improve in the coming months. They cited stagnant global demand for Bangladesh's main export item, ready-made garments (RMG), the country's ongoing energy crisis, and fresh payment-related complications involving leading Polish buyer LPP as major concerns.

An analysis of EPB data shows that Bangladesh exceeded $4 billion in monthly exports four times over the past year. Exports totaled $4.77 billion in July last year.

According to EPB data, most major export sectors outside garments recorded growth in July compared with the same month of the previous fiscal year.

Exports of plastic products rose 1.98%, leather and leather products 2.81%, jute and jute goods 54%, home textiles 14.37%, other footwear 5.52%, and specialised textiles 3%.

Ready-made garments account for more than 80% of Bangladesh's total exports.

Shovon Islam, managing director of Sparrow Group, one of Bangladesh's leading garment exporters with annual exports of around $350 million, told The Business Standard, "Exports are usually higher in July because shipments for the next winter season peak during this period. Large volumes of sweaters, along with woven garments, are exported at this time."

He said this seasonal trend explains the higher export volume in July.

Some exporters said the year-on-year decline, despite record monthly exports, was mainly due to an exceptionally high base last year, when many exporters accelerated shipments to the United States ahead of the implementation of new US tariffs from 7 August. As a result, export growth appears weaker this July despite the strong performance.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) echoed this view in a statement.

According to the BGMEA, Bangladesh's RMG exports fell 1.92% year-on-year to $3.89 billion in July, down from $3.96 billion in July 2025.

"However, it is important to note that July 2025 was an exceptionally strong month, marking the highest single-month export performance in Bangladesh's RMG history. Against that extraordinary base, the current figure of $3.89 billion represents a welcome start to the new fiscal year," the statement said.

BGMEA also noted that the industry is operating amid a severe gas crisis that is limiting production capacity, as well as ongoing geopolitical uncertainties disrupting global trade and supply chains.

Despite these challenges, it said, Bangladesh's RMG sector has remained resilient.

Exporters see little growth before January

Inamul Haq Khan Bablu, senior vice-president of BGMEA and managing director of Ananta Garments, said garment exports are unlikely to grow significantly before December despite July's strong performance.

He attributed this to weak global demand, buyers' concerns over Bangladesh's ability to meet delivery schedules because of the gas shortage, and uncertainty surrounding Polish retailer LPP, which may reduce orders from Bangladesh.

Bangladeshi exporters have alleged that LPP has withheld payment of around $40 million for exports made to Russian buyers through the company. Industry sources said the dispute prompted LPP to suspend new purchase orders from Bangladesh.

"We expect exports to recover from January," Bablu said.

He added that buyers have expressed concern over whether Bangladeshi manufacturers will be able to complete orders on time because of the ongoing gas crisis.

Another exporter, requesting anonymity, said orders could decline further if the energy crisis is not resolved quickly.

Shovon Islam also warned that Bangladesh could lose orders if the gas supply situation does not improve.

"Under the current circumstances, Bangladesh's garment exports are unlikely to grow at least until November," he said.

Merchandise exports from Bangladesh declined 1 percent year-on-year to $4.72 billion in July because of the sluggish trend in garment shipments.

However, the figure is 12.49 percent higher than June's $4.2 billion, according to data released today by the Export Promotion Bureau (EPB).

The EPB said Bangladesh's flagship readymade garment (RMG) sector posted remarkable growth, raising hopes of achieving the export targets set for the 2026-27 fiscal year.

In July 2026, garment exports totalled $3.88 billion, marking an impressive 14.73 percent month-on-month growth from June's $3.38 billion, the EPB data said.

Year-on-year, the sector experienced a 1.92 percent contraction, aligning with the overall merchandise trend as global buyers adjusted their post-pandemic inventory levels.

In terms of export destinations, the United States retained the top position, reaffirming the strong commercial ties between the two nations.

Exports to the United States in July 2026 reached $918.74 million, recording 0.25 percent growth over the same month last year—a bright spot amid the mixed indicators.

Germany secured the second position with exports worth $495.30 million, while the United Kingdom ranked third with $478.42 million.

Notably, Bangladesh's exports to India and Saudi Arabia registered the highest growth rates among major markets, surging by 15.30 percent and 10.64 percent, respectively, according to the EPB data.

With the United States leading demand and the RMG sector regaining strong monthly momentum, Bangladesh is well-positioned to capitalise on upcoming autumn and festive-season orders, the Export Promotion Bureau said in a statement.

Exporters are actively working to bridge the year-on-year decline through new product lines and non-traditional markets, ensuring the export trajectory remains firmly upward, the statement added.

Policymakers, economists, development practitioners and industry experts on Monday called for a fundamental overhaul of Bangladesh's skills-development ecosystem.

They also observed that a persistent mismatch between education and labour- market demand is preventing the country from fully capitalising on its demographic dividend.

Speaking at a discussion titled "Linking Skills with Employment: Challenges and Way Forward" at PKSF Bhaban in the capital, they stressed the need for closer collaboration among government, academia and industry to ensure that training programmes produce employable graduates and internationally competitive workers.

The Financial Express in association with Palli Karma-Sahayak Foundation (PKSF) organised the event.

Managing Director (MD) of Palli Karma-Sahayak Foundation Md Fazlul Kader said Bangladesh must change its social perception of vocational education, arguing that technical education continues to receive lower social recognition than conventional academic qualifications.

"For better employment opportunities and skills-based education, we must move towards vocational education in line with global practices," he said.

Mr. Fazlul Kader suggested that the government incentives should be redirected towards industries to encourage them to provide training, develop skilled workers and award recognitions, instead of focusing solely on subsidised loans.

He also highlighted the employment potential in Bangladesh's informal economy, particularly in agriculture, livestock and value-added micro-enterprises, stressing the need for stronger forward and backward linkages to unlock the growth potential.

Describing modern agriculture as a highly-skilled profession, he noted that an increasing number of educated young people are entering the sector.

Referring to overseas employment, he observed that Bangladeshi migrant workers remained vulnerable because many of them lack formal skills and certification.

"Providing training and producing skilled manpower is essential to protect migrant workers from job losses and exploitation," he said.

Quazi Moshrur-Ul-Alam, Senior Programme Manager of the PKSF's RAISE project, said Bangladesh has established a training system, but it is yet to build a complete ecosystem connecting skills with employment.

"The problem is not a lack of jobs, but the absence of an effective linkage between skills and employment," he said.

Highlighting the impact of practical skills training, a graduate apprentice Ashfakur Rahman shared how a RAISE-supported driving course enabled him to rebuild his family's livelihood after his father's death. He now works as a service engineer at Hyundai.

Director General of the Bangladesh Institute of Development Studies (BIDS) Dr A K Enamul Haque said Bangladesh faces a demand-side problem, as the economy fails to generate sufficient opportunities for science graduates and knowledge-based professionals.

"We continue to value clerical qualifications over practical knowledge, while industries lack incentives to innovate and absorb skilled graduates," he said.

Professor Sayema Haque Bidisha of the Department of Economics at the University of Dhaka said Bangladesh needs to address the persistent mismatch between the supply of graduates and industry demand.

She said both domestic and international labour market requirements should be carefully assessed so that skills development programmes reflect actual market demand.

"This requires coordinated efforts among academia, industries and policymakers," she added.

ATM Mahbubul Karim, Project Director and Joint Secretary of the Wage Earners' Welfare Board (WEWB), underscored the importance of strengthening the capacity of recruitment agencies to facilitate sustainable overseas employment.

The World Bank Task Team Leader Aneeka Rahman also called for an integrated skills ecosystem in which curricula and training delivery are directly aligned with labour market requirements.

The FE News Editor Anisur Rahman stressed the importance of strengthening foundational education, arguing that basic education and skills development should be linked to reduce school dropout rates and prepare students for vocational training.

Md Ashfaqur Rahman Khan of the International Organization for Migration (IOM) Bangladesh said the country lacks reliable labour market data to determine future demand for different occupations, calling for institutional reforms instead of fragmented project-based interventions.

Executive Director of UCEP Bangladesh Dr Md Abdul Karim said Bangladesh's education system remains heavily skewed towards general education, unlike developed countries where technical graduates dominate.

"This imbalance leaves many graduates unemployed while industries struggle to recruit skilled workers," he noted.

Executive Director of ESDO Dr Md Shahid Uz Zaman stressed the need for addressing the psychosocial challenges faced by marginalised youth alongside technical training, proposing the creation of "job banks" to better support employment transitions.

Dr Md Towfiqul Islam suggested introduction of foreign languages such as Japanese and Arabic from the primary level to improve overseas employment prospects, saying language proficiency could significantly enhance earning potential.

Joint Secretary of the Ministry of Finance Kamrul Hoque Maruf stressed the need for anticipating future labour market requirements in emerging fields such as machine learning and industrial automation, supported by tracer studies to evaluate employment outcomes.

Deputy Managing Director of PKSF Md Mashiar Rahman said successful training initiatives should be expanded through enterprise financing models, enabling experienced entrepreneurs to train additional workers and generate large-scale employment.

Towhidur Rahman of the International Labour Organization (ILO) warned that nearly 90 per cent of Bangladeshi migrant workers still lack internationally recognised skill certificates, weakening their bargaining power and exposing them to exploitation abroad.

Additional Secretary Mohammed Walid Hossain concluded the discussion by highlighting the need to embrace emerging technologies, including 3D printing and industrial automation, through a practical, industry-oriented approach to skills development.

Moderated by Shiabur Rahman Shihab, FE online head, the discussion was attended by representatives from government agencies, development partners, academia, international organisations and the private sector, who agreed that stronger industry participation and demand-driven training are essential to creating sustainable employment and enhancing Bangladesh's global competitiveness.

Bumper oil refining profits triggered by the Iran war are turbocharging Big Oil’s earnings, breathing new life into a business many investors had largely written off.

The sector looks poised to produce unusually strong returns for several years, but long-term structural changes in oil consumption mean refining’s star will likely fade quickly.

Despite occupying a critical position in the global energy supply chain, refining has long been the least glamorous corner of the oil business.

Western oil majors have steadily retreated from the sector over the past two decades, deterred by high operating costs, notoriously volatile margins, rising carbon costs and growing competition from state-backed refiners in the Middle East, Africa and Asia.

That retreat accelerated in the late 2010s, particularly in Europe, as governments and companies increasingly bet that rapid electric vehicle adoption would curb fuel demand by the 2030s, reducing the need for new refining investment.

As a result, Western oil giants’ refining capacity shrank dramatically.

Combined refining volumes for BP, Chevron, Exxon Mobil, Shell and TotalEnergies fell from 16.4 million barrels per day in 2005, representing around 22 percent of the global total, to 10.4 million bpd last year, or roughly 13 percent of worldwide crude processing, according to Reuters Open Interest calculations.

Shell has led the retreat, reducing its interests in refineries from 40 to just seven over the period.

But the refining environment has improved considerably in the past year, thanks to a spike in military conflict in several oil-rich regions.

First, there’s Iran.

The combination of the months-long effective closure of the Strait of Hormuz – which has limited refiners’ access to crude – and Tehran’s attacks on refineries throughout the Middle East have sent refining margins for gasoline, diesel and jet fuel to record highs.

The loss of Middle Eastern crude forced refineries, particularly in Asia, to cut operating rates.

While China has enormous crude stockpiles, it chose to scale back refining activity aggressively and halt fuel exports to offset its sharp reduction in crude imports.

Together, these disruptions removed roughly 5 million barrels per day, or around 6 percent, of pre-war global refining output in the second quarter.

Global refinery runs averaged around 78 million bpd, the lowest level since the depths of the COVID-19 pandemic in 2020, according to the International Energy Agency.

Meanwhile, months of relentless Ukrainian drone attacks on Russian energy infrastructure have sharply reduced Russia’s refining output, forcing Moscow to ban diesel exports.

That announcement sent diesel prices soaring.

PRICING SUPERPOWER

The combined impact of the two conflicts on refining profitability has been dramatic.

The refined product shortage has left Big Oil with enormous pricing power and encouraged operators to run plants at full capacity.

US refineries, which emerged as the world’s largest fuel suppliers during the conflict, operated at 97 percent of capacity in the week to July 24, well above their long-term average of around 90 percent.

BP’s refining-indicator margin, a gauge of global refining profits, climbed to $30 per barrel in the second quarter from $17 in the first quarter and $12 a year earlier.

The indicator has averaged $42 per barrel so far in the third quarter.

Exxon posted downstream profits of $5.5 billion in the second quarter, its strongest result since 2022, driven by record diesel production, while Chevron’s downstream earnings climbed to $4.9 billion, their highest level this decade.

Shell reported adjusted earnings of $2.5 billion for its products division, the highest this decade, as its refining network operated at a utilisation rate of 102 percent during the quarter.

TotalEnergies Chief Executive Patrick Pouyanne summed it up neatly when he told analysts late last month that the company’s refining segment had performed in “an exceptional way.”

BP reports earnings on Tuesday.

CAN IT LAST?

Most of the immediate pressures supporting these refining margins are likely to ease – the question is how quickly.

A sustainable resolution to the US-Iran conflict involving a full reopening of the Strait of Hormuz and the eventual recovery of Chinese refining activity would help loosen fuel markets meaningfully, but when that might occur is anyone’s guess.

What’s clear is that the industry’s problems cannot be repaired immediately. Fixing damage to dozens of refineries in the Middle East and Russia will take months, and in some cases years.

In the meantime, global spare refining capacity remains exceptionally thin.

There’s also reason to be positive on the demand side of the equation.

The Iran war has revived concerns about energy security.

Many governments are thus expanding strategic storage facilities for both crude oil and refined fuels to protect against future supply shocks.

Governments need to start by simply refilling inventories depleted during the conflict.

Global oil stocks fell by 5.1 million barrels per day in the second quarter and are forecast to decline by a further 2.2 million bpd in the third quarter, according to US Energy Information Administration estimates.

Rebuilding inventories of diesel, jet fuel and gasoline will likely take years, creating persistent demand.

Alan Gelder, senior vice president for refining at consultancy Wood Mackenzie, expects refining margins and utilisation rates to remain strong through the end of the decade, supported by continued growth in oil demand and a limited pipeline of new refining projects.

THE PARTY WON’T LAST

But the boom masks a deeper fragility.

Today’s windfall profits are being generated by war, damaged infrastructure and scarcity, not by a structural improvement in the industry’s underlying fundamentals.

Refiners are benefiting because the world has lost capacity faster than demand has disappeared.

But that might not be the case for long.

Several countries with limited domestic refining capability are now reassessing whether they need more local processing capacity.

Australia, for example, is already considering such plans.

Over time, those investments could create a new wave of capacity and eventually lead to oversupply.

The oil majors understand this reality.

A few years of exceptional margins may slow the decline of the refining sector.

But they are unlikely to reverse it.