Bangladesh’s energy planning has created an uncomfortable contradiction. A country struggling to afford its current LNG (liquefied natural gas) imports is planning to more than double its import capacity within the next two years. The question is not whether Bangladesh needs LNG, but whether it can afford such a massive expansion.

Is the government creating another LNG trap, similar to the one in the power sector? People are already bearing the costs of capacity payments, loan interest and fuel imports, while high energy prices are pushing up the cost of living. Yet households and industries continue to face unreliable energy supplies.

With mounting debt and growing subsidy requirements for state-owned Petrobangla and the Power Development Board (PDB), the government must carefully assess the economic costs and benefits of expanding LNG infrastructure before committing public resources to another long-term financial burden.

One-third of the national budget could go towards LNG imports

Bangladesh currently operates two floating LNG terminals with a combined capacity of 1,100 million cubic feet per day (mmcfd). The government plans to add three more by 2029, raising the total capacity to 2,700 mmcfd to address gas shortages and ensure supplies to industries.

The rationale is understandable. Domestic gas reserves are declining, industries are facing shortages, and gas-fired power plants cannot operate at full capacity. But the ability to import gas does not necessarily mean the country can afford it.

Following the Iran war, Bangladesh had to purchase LNG from the spot market at around $29-30 per million British thermal units (MMBtu), reflecting the volatility seen after Russia’s invasion of Ukraine in 2022. These crises demonstrate how geopolitical tensions can disrupt global energy markets and make future prices extremely difficult to predict.

If Bangladesh operates LNG import infrastructure with a combined capacity of 2,700 mmcfd, the annual import bill could reach around $29 billion at an average price of $28 per MMBtu. At $30, the bill could approach $30 billion.

Although Bloomberg’s Global LNG Market Outlook 2030, published in September 2025, projected average global prices below $10 per MMBtu in 2026 and potentially below $5 by 2030, such forecasts cannot account for every geopolitical crisis or supply disruption. Indeed, the report was published before the Iran war and the closure of the Strait of Hormuz.

Bangladesh’s national budget for FY2026-27 stands at Tk 9.38 trillion. In a future wartime scenario at $28 per MMBtu, importing LNG equivalent to the planned capacity could cost more than Tk 350,000 crore annually at the current exchange rate—over one-third of the national budget. Any further depreciation of the taka would increase the burden.

Limited foreign currency earnings, massive spending

According to Bangladesh Bank, the country earns around $80 billion in foreign currency annually. Earnings stood at $83.5 billion in FY2025-26. An annual LNG import bill of $30 billion would therefore place enormous pressure on foreign exchange reserves.

Bangladesh must also spend billions of dollars importing food, fertiliser, edible oil, industrial raw materials, machinery, pharmaceutical ingredients and other forms of energy. The country already spends around $12 billion annually on oil, gas and coal imports, while its trade deficit exceeded $27 billion in FY2025-26.

The country’s foreign currency earnings remain heavily dependent on readymade garment exports and remittances, both of which are vulnerable to global economic uncertainty. Although increased energy supplies could support industrial growth and exports, high energy costs could undermine the competitiveness of local industries.

Many factories are already struggling with rising production costs and cannot afford significantly higher gas prices if subsidies are withdrawn. Without diversifying its export base and moving towards higher-value products, Bangladesh cannot assume that expensive LNG imports will generate enough additional foreign currency to cover their costs.

Lower prices will not eliminate the problem

LNG prices will not remain at $28-30 per MMBtu indefinitely. However, even if prices fall to $10, importing LNG equivalent to 2,700 mmcfd would still cost Bangladesh more than $10 billion annually.

For an economy with a narrow export base, this would remain a substantial burden, competing with essential imports, debt repayments and investment in other sectors. LNG at $28 per MMBtu would be prohibitively expensive, but even at $10, it would not be cheap.

The hidden costs of LNG infrastructure

The financial burden does not end with purchasing LNG. Individual terminals can cost between Tk 5,000 crore and Tk 11,000 crore to construct, depending on their capacity.

Bangladesh’s first LNG terminal, built by US-based Excelerate Energy in 2016-17, cost around $180 million, or Tk 2,214 crore at the time. Petrobangla currently pays Tk 2.9 crore a day in capacity charges for the terminal, amounting to approximately Tk 1,064 crore annually. Over its 15-year contract, these payments will total around Tk 16,000 crore.

Using this terminal as a reference, three additional terminals could cost at least Tk 10,000 crore each on average. Their capacity payments could reach around Tk 50,000 crore. Including the costs associated with all five terminals, the total could rise to approximately Tk 75,000 crore, or $7 billion.

There are also concerns about the proposed rental charge for a third LNG terminal, approved for a Chinese company. The proposed daily charge of $342,000, equivalent to Tk 4.2 crore, is around 40 percent higher than the rates for existing terminals. If approved without changes, it would further increase capacity-payment obligations.

The risk of stranded assets

Bangladesh could complete these terminals but later struggle to import sufficient LNG because of high prices, foreign currency shortages or global market volatility. Yet rental payments, loans and interest obligations would continue regardless of how much gas the terminals handle.

The power sector offers a clear warning. Many power plants remain idle, but Bangladesh pays more than Tk 25,000 crore annually on average in capacity charges. In 2025 alone, these payments exceeded Tk 42,000 crore.

Bangladesh’s public debt exceeded Tk 22 lakh crore in early 2026 and is increasing by around Tk 1.5 lakh crore annually. Rising interest payments are adding further pressure. Expensive energy imports and infrastructure financed through borrowing could create a cycle in which efforts to secure energy undermine broader economic security.

The government is simultaneously planning three new LNG terminals, expanding domestic gas exploration through 150 wells and pursuing a target of 10,000 MW of solar power by 2030. If domestic gas exploration and renewable energy programmes succeed, expensive LNG infrastructure could be underused or become stranded assets.

A report by Zurich-based SolAbility, Global LNG Market Outlook 2026–2035, notes that several countries, including Pakistan, Vietnam and the Philippines, are cancelling LNG projects as they expand renewable energy. One key reason is the high cost of LNG-based electricity, estimated at $80–120 per megawatt-hour (MWh), compared with just $30–40 per MWh for solar power combined with battery storage.

Before approving additional terminals, the government should publish transparent economic assessments based on LNG prices of $10, $20 and $30 per MMBtu. These should detail annual foreign currency requirements, funding sources and capacity charges, including payments for underutilised infrastructure.

The government must also compare LNG investments with domestic gas exploration, rehabilitation of ageing gas wells, improvements in transmission infrastructure, industrial energy efficiency, renewable electricity and grid modernisation.

Has the energy strategy really changed?

In 2023, the previous government finalised the Integrated Energy and Power Master Plan (IEPMP) with Japanese assistance. The plan opened the way for LNG imports of up to 5,000 mmcfd by 2040 and proposed $179 billion in energy infrastructure investments, including LNG terminals.

Some experts have raised concerns about the influence of Japan’s commercial interests, given its position as a major LNG re-exporter and its investments in LNG trading infrastructure and gas-fired power plants across Asia.

Although the IEPMP lost relevance following the departure of the Awami League government, questions remain about how much Bangladesh’s fundamental energy strategy has changed. The current administration also appears interested in pursuing several similar initiatives.

Bangladesh does need LNG in the short term as domestic gas production declines and industries face shortages. But LNG cannot be a permanent solution to the country’s energy crisis.

If Bangladesh is struggling to secure 1,100 mmcfd today, how will it manage to secure 2,700 mmcfd within the next two years—and, more importantly, how will it afford the bill?

The writer works for an international development organisation and is an independent energy journalist.

For the first time, the Bangladesh Bank has introduced a quarterly Monetary Policy Statement (MPS). This is a positive step as the move to review the monetary policy stance every three months instead of every six months comes at a time when inflation, investment, credit flows, and global conditions are changing rapidly.

In its first quarterly statement, the central bank has kept the policy interest rate unchanged at 9.5% for the October–December 2026 period. The aim of this change is to make monetary policy more timely and responsive by taking new information and emerging risks into account.The first quarterly statement says the main objective of the initiative is to regularly review domestic and global economic conditions and, when necessary, adjust the monetary policy stance in a timely manner.
The decision is important in the sense that, according to the Bangladesh Bureau of Statistics (BBS), inflation declined somewhat, standing at 8.32% in July and 8.26% in August, but supply-side and cost-related risks remain.High fuel and fertiliser prices, the conflict in the Middle East, and the potential impact of a new wage structure could push inflation up again. At the same time, weak industrial production, slower private-sector credit growth, and a slowdown in investment are putting pressure on economic activity.
Bangladesh Bank expects that regular reviews will help strike a balance between maintaining price stability and supporting economic activity. The Monetary Policy Committee plans to closely monitor domestic and global economic and financial developments and adjust its policy stance when necessary.

The statement also mentions incentive and refinancing programmes to support growth and help contain inflation. However, it does not specify how much the quarterly reviews are expected to reduce or increase inflation or credit growth.

In reality, the outcome will depend on the availability of reliable data, timely policy decisions and complementary measures, including reforms in the banking sector.

The central bank expects private-sector credit growth to pick up in the October–December quarter as liquidity conditions improve. However, it acknowledged that interest rates alone will not be enough to revive economic growth.

To ensure that credit reaches productive sectors, it is essential to address weaknesses in the banking sector, reduce credit risks and tackle constraints related to power, energy and infrastructure.
Against this backdrop, recent trends in Bangladesh's economy show that while inflation has eased somewhat, it is still far from a comfortable level. Weaknesses also persist in lending and investment.Alongside monetary policy, banking-sector reforms and coordinated government action on supply-side and fiscal policies will be essential to contain inflation, restore investor confidence and boost the flow of credit.One advantage of reviewing monetary policy every three months is that the central bank will not have to wait too long to respond to changes in the economy. But changes in the policy interest rate take time to feed through to lending and investment. Despite a modest cut in the policy rate, private-sector credit growth stood at just 4.75% in August, significantly lower than in previous years.

The quarterly monetary policy statement would be more useful for businesses and investors if it clearly explained the data underpinning each policy decision and the risks that could prompt a change in the policy stance. Greater clarity on these issues would help private-sector decision-makers plan with more confidence.Improving the quality of economic forecasts is also important. Alongside publishing a specific inflation forecast, Bangladesh Bank could explain how changes in fuel prices, the exchange rate, food supply or government spending could affect the outlook.If there is a gap between an earlier forecast and the actual outcome, the reasons should be explained in the following statement. This would help markets and businesses distinguish between changes driven by new information and those that signal a shift in the monetary policy stance.Removing the barriers to credit flow is equally important. High levels of non-performing loans and weak governance in banks, borrower risks and a lack of investor confidence could prevent credit from reaching productive businesses even if the policy rate is lowered.

Bangladesh Bank itself has highlighted the need to restructure banks, restore their capital, strengthen governance and improve credit discipline.

Finally, monetary policy needs to be coordinated with the government's fiscal and supply-side policies. Raising interest rates can help curb overall demand, but it cannot directly stop price increases caused by shortages of food or fuel.

Other measures are equally important, including removing bottlenecks in food imports and distribution, closely monitoring supply conditions, ensuring adequate fuel supplies and providing targeted support to low-income households.Fiscal and monetary policies also need to work in tandem to ensure that government borrowing and the budget deficit do not undermine the objectives of monetary policy.The quarterly monetary policy statement has shortened the policy review cycle, giving the central bank more scope to respond quickly to changes in the economy. Its effectiveness, however, will depend on the timeliness of data, the credibility of forecasts and the transparency of policy decisions.With regular reviews, the approach should ideally make it easier to see how new information shapes policy decisions and the reasoning behind them. Alongside monetary policy, banking-sector reforms and coordinated government action on supply-side and fiscal policies will be essential to contain inflation, restore investor confidence and boost the flow of credit. The author is a Distinguished Fellow at the Centre for Policy Dialogue (CPD).

Bangladesh Bank’s first-ever quarterly Monetary Policy Statement is an important institutional change. Moving from half-yearly to quarterly reviews should make monetary policy more responsive to rapidly changing domestic and global conditions. But greater frequency will matter little unless policy becomes more effective in addressing Bangladesh’s difficult combination of persistent inflation, weak investment and financial-sector stress.

The decision to keep the repo rate unchanged at 9.5 percent is understandable. Headline inflation declined to 8.26 percent in August, but non-food inflation remained stubbornly high at 9.32 percent. Higher fuel prices and the possible implementation of the new pay scale create additional inflationary risks. Another rate cut at this stage could therefore have been premature.

The larger concern is monetary transmission. Private-sector credit growth was only 4.75 percent in August despite substantial liquidity in the banking system. Bangladesh Bank acknowledges that policy-rate changes are transmitted relatively quickly to market rates but not effectively to private credit and the real economy. This raises a fundamental question: how much can interest-rate policy achieve when the banking channel itself is severely impaired?

Here, banking reform deserved much greater prominence in the MPS. The statement recognises the problem: non-performing loans have reached 32.78 percent, capital erosion is significant, and liquidity is unevenly distributed across banks. Yet banking reform appears largely as one among several supporting conditions rather than as a central component of monetary-policy effectiveness. That understates the seriousness of the problem. Bangladesh’s banking sector accounts for around 90 percent of financial-sector assets, while weak governance, regulatory capture and related-party lending remain major vulnerabilities.

The policy challenge therefore extends beyond keeping rates high or cutting them. Bad loans must be recognised and resolved, weak banks must be restructured, connected lending must be disciplined, and bank supervision must be made credible. Fiscal policy must also reduce excessive dependence on bank borrowing, while exchange-rate flexibility and supply-side measures should complement monetary policy.

Quarterly reviews are a useful reform. But institutional frequency cannot substitute for institutional effectiveness. Unless banking reform becomes central to the monetary-policy framework, Bangladesh Bank risks adjusting the price of credit while the machinery that allocates credit remains fundamentally impaired.

The writer is a professor of economics at Dhaka University and the executive director of SANEM.

A further Tk 20 per litre increase in fuel prices has landed at a difficult time for most households in Bangladesh. It comes five months after the last major adjustment in April, followed by a smaller rise in June. Fuel prices have risen across much of the world following the conflict that began with US and Israeli strikes on Iran and subsequent tensions around the Strait of Hormuz. For Bangladesh, the impact is compounded by persistent domestic inflation.

For more than four years, Bangladesh has struggled to bring inflation down from rates close to 10 percent, against a longer-term average of around 5-6 percent. Before the Hormuz crisis, Bangladesh maintained relatively low domestic fuel prices compared with many other countries. Now the situation is such that while inflation stays elevated, the government is having to make substantial price adjustments given its acute fiscal space constraint, with the tax-GDP ratio falling below 8 percent.

Higher fuel costs would ripple through almost every economic activity, raising the cost of producing goods, transporting them to market and providing essential services

In fact, among the developing countries with which Bangladesh is commonly compared, its fuel price increase since the Hormuz conflict has been one of the largest, at around 38 percent, compared with less than 10 percent in India, 19 percent in China and 27 percent in Viet Nam. Indonesia has experienced a gasoline price rise nearly as large as Bangladesh’s, but inflation in Indonesia is much lower, at around 3.3 percent.

The dual blow of prolonged high inflation and steep fuel price increases falls on consumers, particularly poor and vulnerable households. It comes amid recent assessments suggesting that poverty in Bangladesh is likely to have risen substantially since the last official household survey in 2022.

Higher fuel costs would ripple through almost every economic activity, raising the cost of producing goods, transporting them to market and providing essential services. Poor households, small farmers, and enterprises with limited working capital have the least capacity to absorb the additional pressures, whether through higher prices, narrower margins or reduced consumption.

One may well ask how many more shocks households can bear when their real purchasing power has been declining for years. Yet, for several years now, the response to prolonged inflation has too often been delayed and half-hearted, without sufficient attention to the scale of the problem.

During the interim government’s tenure, efforts to control inflation relied heavily on demand management. Bangladesh Bank raised its policy rate and maintained a tight monetary stance, but liquidity support for troubled banks and rising government borrowing, particularly borrowing directly from the central bank, complicated that effort. Supply-side measures received less sustained attention.

After the February 2026 election, the new government recognised the importance of bringing inflation down. Its first budget, however, set an ambitious growth target and substantially higher spending. This was accompanied by a large stimulus package for struggling industries, significant provision for restructuring weak banks and, subsequently, approval of a new public-sector pay scale for phased implementation. Bangladesh Bank also reduced its policy rate by 50 basis points. Each measure responds to a real problem, but together they raise the question of whether the drive to revive growth is adequately reconciled with lowering inflation.

Spending out of the crisis is risky when inflation remains high and firms cannot readily expand production. Energy shortages and reliance on imported fuel constrain the supply response, while additional demand could put fresh pressure on prices and the foreign exchange reserves Bangladesh Bank is seeking to rebuild. This makes the supply constraints central to the inflation debate.

One principal element of the supply side deserves closer examination. Merchandise imports fell from a peak of $79 billion in FY22 to $68 billion in FY25. According to Bangladesh Bank’s provisional estimates, imports recovered substantially to $75 billion in FY26, though they remained below the FY22 level. Import compression may have contributed to supply shortages. The policy question is whether formal or informal barriers to importing essential goods and production inputs are unnecessarily restricting supply.

This question warrants a systematic comparison of prices for selected essentials in Bangladesh, international markets and, particularly, neighbouring countries, allowing for differences in exchange rates, quality, transport costs and taxes. Where substantial gaps persist, there is a need to examine whether tariffs, import permissions, access to foreign exchange or delays in opening letters of credit are restricting supply.

This is also an opportune moment to consider prudent tariff rationalisation, with particular attention to the widespread use of supplementary and regulatory duties. These duties can impede imports even where domestic producers are unable to increase supply sufficiently. Easing such constraints and facilitating imports could relieve price pressures.

The pressure to rebuild foreign exchange reserves makes import policy sensitive. Reserve accumulation remains essential, but the budget’s projection of $41 billion in gross reserves by the end of FY27 should be weighed against the costs of restricting imports. The objective should be to rebuild reserves without unnecessarily constraining the supply of essential goods and production inputs.

There is a fiscal dimension too. With weak revenue mobilisation, ambitious spending plans can mean greater government borrowing. Support for troubled banks, industrial stimulus and public-sector pay increases may each have a case, but their scale, timing and financing matter when bringing down inflation is already proving difficult. Price stability needs to carry greater weight in these decisions.

Stabilising the taka helps contain import costs and inflationary pressures. During high inflation, taka depreciation would only add fuel to the fire. However, if inflation remains high while the nominal exchange rate barely moves, the taka may appreciate in real terms, undermining export competitiveness.

For instance, as against Bangladesh’s average rate of 9-10 percent during FY23–FY26, India’s inflation fell from 6.7 percent to around 4 per cent; Viet Nam was able to contain it within 3-4 percent while China saw near-zero inflation. These differences must have put pressure on Bangladesh’s export competitiveness and contributed to its recent difficulty in expanding exports. Holding the nominal exchange rate steady cannot substitute for bringing inflation under control.

Finally, goods must move reliably from farms, ports and factories to markets. Extortion along transport routes, delays and other logistical obstacles add to costs and disrupt supply. Tackling them requires sustained enforcement, alongside better freight and market infrastructure. Without a more effective domestic supply chain, even adequate imports or harvests may fail to ease prices where consumers buy their essentials.

The fuel price increase has exposed a wider policy challenge. There is a critical need to protect vulnerable households now while addressing the import, fiscal and distribution constraints that have allowed high inflation to persist. Households cannot keep absorbing external shocks through a steady loss of real purchasing power. Nor can it be overemphasised that failure to rein in inflation is likely to have serious consequences for macroeconomic stability and external competitiveness.

The socioeconomic costs of persistent inflation are too high for price stability to be weakened by conflicting policy choices; tackling it requires sustained commitment and prudent, practical measures across the economy.

The author is an economist who serves as chairman of Research and Policy Integration for Development (RAPID). He can be reached at m.razzaque@rapidbd.org

The latest fuel price hike will add to the cost of doing business and put further pressure on export-oriented industries already struggling with declining competitiveness, according to Shams Mahmud, the president of the Bangladesh-Thai Chamber of Commerce and Industry.

Talking to The Business Standard last night (20 September), he said, "As it is, all forms of business activities, including manufacturing, logistics, agro, service sector, and FMCG [fast-moving consumer goods], are going through stress in these turbulent times.

"International energy markets have recently been affected by the strikes in Saudi Arabia by Houthi rebels. Just today [Sunday], Saudi Arabia said next month's shipment of oil to Europe will be withheld."

"So we can anticipate future price increases. The government has taken the right decision as a policy to create a buffer for any price shock, especially about sourcing and subsidy," he said.

"But unfortunately, this will add a burden to the business ecosystem of Bangladesh, with inflationary pressure on the internal economy reducing disposable income. For export-oriented industries, which are already in a vulnerable state with decreasing competitiveness, it will add to the already increasing cost of doing business," said the businessman.

Also, the International Monetary Fund has been pressuring the government for a reduction of subsidies, and it may also have had an influence on the decision, as both parties will sit in Bangkok next month to work out the next loan from the global lender, he added.

The government last night increased the retail prices of diesel, octane, petrol, and kerosene by Tk20 per litre. The revised rates took effect today (21 September).

With the new price adjustment, this is the second time the BNP government has hiked fuel prices after assuming power in February this year. The last price hike was back in April.

The per-litre prices of diesel, octane, petrol, and kerosene have been raised to Tk135, Tk165, Tk160, and Tk155, respectively.

The latest fuel price hike will increase transportation, agriculture, and industrial costs, putting further pressure on inflation and disproportionately affecting poor and lower-middle-income households, according to Dr Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue (CPD).

"The latest price increase seems to be another adjustment to a continuing external energy-price shock. Nevertheless, increasing all major petroleum prices by the same absolute amount at once is a substantial policy intervention, especially when inflation and household financial pressure are already high," she told The Business Standard last night (20 September) in her immediate reaction.

"The increase will have wide-ranging consequences. Individuals will face higher expenses for transportation. Even households that do not purchase fuel directly will be affected as transportation costs raise the prices of food and other essentials.

"Poor and lower-middle-income families will suffer disproportionately because most of their income is spent on daily necessities," she added.

The government last night increased the retail prices of diesel, octane, petrol, and kerosene by Tk20 per litre. The revised rates took effect today (21 September).

With the new price adjustment, this is the second time the BNP government has hiked fuel prices after assuming power in February this year. The last price hike was back in April.

The per-litre prices of diesel, octane, petrol, and kerosene have been raised to Tk135, Tk165, Tk160, and Tk155, respectively.

Fahmida continued, "Diesel-dependent agriculture will face higher irrigation, mechanisation and transportation costs. This could potentially raise food prices, but reduce farmers' returns."

Around 70% of the country's irrigation pumps are operated using diesel. A research paper published by researchers from Bangladesh Agricultural University (BAU) and the Bangladesh Rice Research Institute (BRRI) found that irrigation is one of the major components of the total input or production costs for Boro rice, accounting for 20-25% of the total expenditure.

Fahmida also said, "Industries will incur higher logistics and generator costs, which will weaken profitability and export competitiveness. Small businesses will be especially vulnerable.

"At the macroeconomic level, the increase may intensify inflation, reduce household consumption and weaken growth."

Since the government had no other option but to increase energy prices, it should monitor how this increased price is imposed on the common people by market players, the economist stressed.

"The government should publish the price calculation transparently, prevent excessive fare increases and market manipulation. The government should also provide targeted support to low-income households, small farmers and public transport users," she added.

The tea stall in Mohammadpur opens before the light does. A kettle hisses. Oil spits in a pan. The first customer is a rickshaw puller who has already counted the coins in his pocket twice. He orders what he always does: two buns and a glass of tea.

The tea costs Tk10. The buns are supposed to cost Tk10 each. But when he breaks one open, he notices what the sticker will not tell him. The bun is smaller. Not by much. But enough.

This is not a story about scarcity. It is a story about arithmetic performed in silence, at the bottom of a supply chain that stretches from the Black Sea to a cold storage in Rangpur, and ends at a tea stall where the numbers never quite add up for the person who can least afford the difference.

The bakery association had announced it would raise prices by up to 20% starting 12 September. A sack of refined flour had jumped from Tk3,000 to Tk5,600. A drum of cooking oil rose from Tk25,000 to Tk36,000. Sugar hit Tk120 to 125 per kilogram, up roughly Tk10 in a week. Bakery owners said production costs had climbed 20% to 30% over six months, driven by raw materials, energy, and transport.

On 15 September, the commerce ministry called a meeting. A committee was formed, led by the chairman of the Bangladesh Trade and Tariff Commission, and given seven days to study the problem. The bakers agreed to put the hike on hold "for the time being." The headline said prices were stable.

What the headline did not say is what the bakers had already planned for the cheapest items. For the Tk10 bun, there would be no price increase. Instead, the bun would shrink. A 40 gram bun could lose about 5 grams. A 400 gram loaf could drop to 320 or 350 grams if the price stayed the same. The association called it a "modest adjustment." The customer, if he is paying attention, might call it something else.

The rickshaw puller knows the bun is smaller. He does not need a committee to tell him. He buys two buns instead of one, because one no longer fills the gap between breakfast and the first fare of the morning. His lunch just cost Tk20 instead of Tk10. The government held the price. The market held the scale. He held the difference.

This is not a case of scarcity. It is a structural condition of a country that imports more than 80% of its wheat. Domestic production meets less than 10% of demand. Bangladesh imported a record 7.25 million tonnes of wheat in the 2025-26 fiscal year, the highest in its history.

Meanwhile, the area under wheat cultivation fell from 4.44 lakh hectares in 2015-16 to 2.8 lakh hectares in 2024-25, the lowest in at least a decade. Farmers are switching to maize and vegetables because wheat simply does not pay. When the global market moves, Bangladesh feels it. When the dollar strengthens, Bangladesh feels it. When a ship is delayed at a foreign port, the tea stall in Mohammadpur feels it.

This is not a case of scarcity. It is a structural condition of a country that imports more than 80% of its wheat. Domestic production meets less than 10% of demand. Bangladesh imported a record 7.25 million tonnes of wheat in the 2025-26 fiscal year, the highest in its history.

The data tells a story of pressure that has not eased. Overall inflation in August was 8.26%, down slightly from July. Food inflation was 7.02%. Rural inflation, where the poorest households live, was 8.31%, higher than the national average. The committee's report will not change these numbers. The report is not designed to change them. It is designed to buy time.

The government bought seven days. In seven days, the headlines will move on. The committee will submit its findings. The price hike may be gradually implemented or restructured into another form of shrinkflation. The problem will remain: a nation that cannot feed its bakeries without ships from abroad, and a working poor that measures its day in buns that keep getting smaller.

The rickshaw puller in Mohammadpur has finished his tea. He has two buns in his hand, each one slightly lighter than it was last week. He does not know about the committee. He does not know about the Trade and Tariff Commission, or the seven day deadline, or the press release from the commerce ministry. He knows what his hands know. He knows the bun is smaller. He knows he is still hungry.

The government held the price. The market held its breath. And the man with the rickshaw held the difference, one gram at a time.

Zakir Kibria is a Bangladeshi writer, policy analyst and entrepreneur based in Kathmandu, Nepal. His email address is zakir.kibria@gmail.com

Merging weak banks with other lenders alone will not resolve the ongoing crisis in the banking sector, said Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank.

The full extent of this sector's financial distress has yet to emerge, as non-performing loans, capital shortages, provisioning requirements, liquidity pressures and governance weaknesses need to be addressed simultaneously, he said.

"Giving fresh capital or merging a bank does not automatically make a weak bank sustainable," he said at a discussion, "Financial Condition of the Banking Sector", jointly organised by the Capital Market Journalists Forum and CFA Society Bangladesh in Dhaka today (19 September).

Mahbubur, former chairman of the Association of Bankers, Bangladesh (ABB), said the volume of non-performing loans in the banking sector was around Tk28,000 crore in 2008 but has now exceeded Tk600,000 crore, accounting for more than 32% of total loans.

Many rescheduled loans could also become classified again in the future, he warned.

According to a CFA Society Bangladesh analysis based on Bangladesh Bank data, the banking sector's NPL ratio stood at 32.8% in June 2026. As of December 2025, the top five banks accounted for 51.87% of total NPLs, while the top 10 accounted for 73.63%.

Mahbubur said implementing International Financial Reporting Standard (IFRS) 9 could provide a clearer picture of banks' credit risks and provisioning requirements, potentially putting additional pressure on the capital positions of some banks.

"There is no such thing as giving Tk50,000 crore today and fixing a bank tomorrow," he said.

On the government's initiative to merge five weak banks, he said a merger between a strong bank and a weak or specialised bank could create operational synergies, but merging one weak bank with another weak bank may not deliver the expected benefits.

After a merger, overlapping branches, employees and management structures need to be reduced to lower operating costs and improve efficiency, he said, adding that simply changing ownership or the name of a bank while retaining the existing structure would not deliver the real benefits of consolidation.

The CFA Society analysis showed that deposits grew 10.74% in June 2026, while private-sector credit increased only 4.47%. Meanwhile, banks' investments increased 30.3%. In 2025, investment in government securities reached 14.1% of total banking-sector assets.

Mahbubur said the rise in investment in government securities while loans and advances were declining at many banks could generate income in the short term, but could not replace banks' core business.

"The core business of a bank is to lend and take deposits. Therefore, a decline in net interest income is a bad sign for banks and the banking industry as a whole," he said.

The sector's net operating profit increased 116% to Tk32,108 crore in 2025, but provisioning against bad loans rose to Tk249,600 crore.

The sector's overall capital adequacy ratio also fell to negative 2.64% at the end of 2025, against the regulatory minimum of 10%. However, 42 banks met the requirement, representing 60.51% of total sector assets.

Mahbubur said banks need to increase low-cost deposits, particularly CASA, and use technology to reduce operating costs. Rather than indiscriminate layoffs, banks should improve productivity through technology and efficiency.

He said stronger governance, accurate assessment of banks' financial condition, adequate provisioning and compliance with international accounting standards are essential for restoring stability.

"To make the banking sector sustainable, we need more than mergers. We need targeted restructuring where necessary and structural reforms across the sector," he said.

Bangladesh’s exporters are losing ground to regional competitors as rising energy, financing and logistics costs squeeze profit margins and make it increasingly difficult to match the prices and delivery times offered by countries such as Vietnam, China and India.

The pressure is becoming harder to absorb because exporters have little scope to pass higher costs on to overseas buyers, raising the risk of lost orders and shrinking market share.

Bangladesh’s merchandise exports declined by nearly 5 percent in 2025, falling to $47.74 billion compared with the previous year, according to official data.

By comparison, Vietnam’s exports grew 16.8 percent in 2025 and China’s 5.5 percent, while global merchandise exports increased 7.2 percent, data from the World Trade Organization and UN Trade and Development (UNCTAD) showed.

Even a small difference in price can determine where an order goes, industry leaders say. The continuing conflict in the Middle East and the Trump administration’s additional 10 percent tariff are now adding to the pressure on exporters, making it harder for them to compete.

Buyers may shift orders when Bangladesh’s free-on-board (FOB) price – the price before shipping and insurance – is just 1-2 percent higher than that of a competitor, said Asif Ibrahim, vice-chairman of New Age Group.

For a $4 garment, a 1-2 percent difference amounts to only 4-8 cents per piece.

But on a one-million-piece order, that could mean a difference of $40,000-$80,000, explained Asif, who is also a former director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

“Bangladesh has already lost orders to Vietnam, India, Pakistan, Sri Lanka and Indonesia, particularly when buyers prioritise price and delivery reliability,” Ibrahim said.

He said industry estimates suggest production costs have risen by around 30-40 percent over the past several years, driven by higher gas and electricity prices, wages, interest rates and exchange-rate depreciation.

But buyers have generally not increased the FOB prices proportionately.

ENERGY, LOGISTIC COSTS RISE

Energy has emerged as one of the biggest constraints. Bangladesh’s electricity tariff increased nearly 19 percent, from Tk 8.95 per unit in February 2024 to Tk 10.63 in June 2026.

In April 2025, gas tariffs for new industrial connections rose 33.3 percent to Tk 40 per unit, while captive power gas prices increased 36.6 percent to Tk 42.

“Even a 2–3 percent reduction in manufacturing costs would be transformative. On $40 billion in RMG exports, 2 percent represents about $800 million in competitiveness,” Ibrahim said.

Meanwhile, logistics costs are adding to the pressure.

Chattogram Port’s October 2025 tariff revision raised service charges by an average 41 percent, while charges for a 20-foot container increased 37 percent to Tk 16,243 from Tk 11,849, according to Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Private inland container depots also increased export-container handling charges by roughly 36-44 percent, he said.

“Exporters often have limited scope to pass these additional costs on to overseas buyers,” Fazlee said.

He said longer logistics lead times, partly linked to the lack of a deep-sea port, are further weakening Bangladesh’s position, while poor branding, bureaucracy, skills shortages and slow automation are compounding the problem.

Riad Mahmud, managing director of Shoeniverse Footwear, said higher interest rates and disruptions in energy supply had significantly increased operating costs and put pressure on cash flow.

He said many banks are either not providing sufficient working capital or are taking too long to process financing, despite government calls for support.

“If the government’s incentives are not implemented in time, high costs will erode our export competitiveness. We risk losing orders and market share to competing countries, and those markets may be difficult to regain,” Riad said.

PROFIT MARGIN FALLING

For some exporters, the squeeze is already hitting profitability.

RN Paul, managing director of RFL, said rising electricity, gas, port and freight costs had increased production expenses, while the company had little room to raise prices because it competes directly with suppliers from China and Vietnam.

“We have no scope to increase prices because we have to compete with China and Vietnam. Our prices have remained static,” he said.

RFL has installed solar power and improved labour productivity to contain costs, but Paul said these measures have not been enough to offset the increase.

The company’s profit margin may have fallen from around 3 percent to 1 percent, he estimated.

As a result, RFL is avoiding some export orders that could result in losses, a shift Paul said would slow market growth.

The competitiveness problem extends beyond individual exporters and could affect investment, employment and economic growth, said Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue.

“The ongoing Middle East crisis, the enforcement of an additional 10 percent tariff under the Trump administration, and other trade-related measures have emerged as serious challenges to exporters’ competitiveness. These factors are significantly increasing the cost of doing business,” he said.

He warned that losing buyers could have long-term consequences because relationships built over years can be difficult to restore once orders move to competing countries.

“Export competitiveness is linked to employment and GDP growth, as well as the inclusiveness of growth. SMEs suffer more from these pressures,” Mustafizur said.

While Bangladesh has made remarkable strides in expanding access to financial services, ensuring that individuals and businesses can fully participate in and benefit from the formal financial system will define the next chapter of the country’s development journey.

According to a June 2026 report by the Bangladesh Bank, domestic credit card usage increased by 43.24 percent between June 2025 and June 2026, illustrating how rapidly payment behaviour is evolving among existing users. This is a meaningful signal of momentum. Yet financial inclusion is about more than increasing transaction activity among those already inside the formal system. The question today is how widely people and businesses across Bangladesh can participate in that system and use it to transact, save, grow businesses and build economic resilience. In that sense, financial inclusion is not only a social objective; it is an economic growth imperative, one that shapes how resilient households and enterprises are in the face of shocks, and how effectively capital reaches the people who can put it to productive use.

Much of that opportunity lies in reducing reliance on cash. Bangladesh Bank’s latest annual report shows that cash accounted for 67.2 percent of total transaction value in 2025, while digital payment channels represented 32.8 percent. Meanwhile, transaction volume through cards increased by 91 percent between July 2021 and June 2026, underscoring the longer-term shift towards card-based payments even as cash retains a substantial share of everyday commerce.

If the last decade was about building Bangladesh’s digital payments ecosystem, the next should be about ensuring every Bangladeshi can participate fully in it and access financial freedom.

Closing that gap will not happen overnight, but it is a clear and achievable opportunity. Making cards, POS devices, and QR acceptance infrastructure more affordable can help extend this progress across the mass market and encourage wider merchant acceptance, particularly among small retailers and businesses for whom the upfront cost of digital acceptance remains a real barrier. At the same time, well-designed, time-bound incentives for small merchants and consumers, particularly first-time and occasional users, can help turn digital payments into a habit rather than an alternative, nudging behaviour at the margin where it matters most.

Ensuring that inclusion reaches everyone, especially women, must be a national priority. Payroll digitisation has already demonstrated its transformative potential among Bangladesh’s four million ready-made garment workers, most of whom are women, for whom receiving wages digitally becomes far more than a change in payment method. It becomes a gateway to savings, a credit scoring history and greater financial security, benefits that ripple outwards into households and communities. Extending similar solutions to freelancers and SME workers, groups often left at the margins of formal finance, can bring these same benefits to even more people as Bangladesh’s economy continues to diversify.

Government-led programmes are playing their part too. Initiatives such as the Family Card and Farmer’s Card, which channel social safety net disbursements through open-loop digital systems, are similarly helping reach citizens who may not otherwise enter the formal financial system, demonstrating that public and private infrastructure can reinforce one another when designed to work together.

None of this requires reinventing the wheel. It requires keeping financial inclusion, rather than transaction volume alone, at the centre of policy and industry priorities, and sustaining the collaboration between regulators, financial institutions and technology partners that has brought the country this far. Mastercard remains committed to supporting this journey by strengthening the connected infrastructure that enables banks, fintechs, businesses and government programmes to operate together seamlessly. If the last decade was about building Bangladesh’s digital payments ecosystem, the next should be about ensuring every Bangladeshi can participate fully in it and access financial freedom.

Since the political changeover in August 2024, Bangladesh has experienced significant political and social changes. Under the interim government, uncertainty remained over policy direction and the predictability of administrative procedures. It was certainly not an easy business environment for foreign companies.

Yet Japanese companies continued their operations. More importantly, some even announced new investments or business expansions during this period. One reason may be that Japanese companies do not assess Bangladesh solely on the basis of short-term political developments. They are looking beyond the immediate political risks: the country’s large population, rising income levels, competitiveness as a production base and the expansion of its domestic market. In other words, they are looking at what Bangladesh could become over the next 10 or 20 years.
Bangladesh is gradually becoming more than a low-cost production base for Japanese companies. It is also a country where they see potential for future sales and business growth.

The 2025 JETRO Survey on Business Conditions of Japanese Companies Overseas provides some evidence. Of the Japanese companies surveyed in Bangladesh, 50 percent expected to be profitable in fiscal 2025, while 56.9 percent said they planned to expand their business over the next one to two years. At the same time, 94.4 percent identified political and social instability as an investment risk. These figures suggest an interesting contrast: Japanese companies are clearly aware of the risks, yet many continue to see opportunities for expansion.

The reason is not simply low labour costs. Bangladesh offers Japanese companies an established business base today, while its large population, rising incomes and expanding domestic demand offer the possibility of a much larger market tomorrow. In this sense, Bangladesh is gradually becoming more than a low-cost production base for Japanese companies. It is also a country where they see potential for future sales and business growth.

From this long-term investment perspective, the establishment of the Invest Bangladesh authority is an important development. On August 20, the government brought the Invest Bangladesh Act, 2026 into effect through a gazette notification, merging BIDA, BEZA and the PPP Authority into a new organisation. This is an important step towards consolidating investment promotion functions.

However, this merger does not mean that Bangladesh’s investment administration has become a unified system. Institutions such as BEPZA and Bangladesh Hi-Tech Park Authority (BHTPA), which also play important roles for investors, remain outside the new organisation. Moreover, the issues faced by investors do not end with investment promotion agencies. They may need to coordinate with various government agencies on matters ranging from work permits to tax, customs and foreign-exchange regulations.

This is why I believe the potential role of Invest Bangladesh goes beyond managing the three organisations brought together under the new authority. It could become a coordinating “control tower” that addresses cross-government issues from the investor’s perspective.

For example, information submitted by an investor could be shared across relevant agencies. Digital procedures could also create clear records of applications and decisions, reducing room for different interpretations by individual officials. The real objective should not simply be to create “one organisation”, but to create “one administration from the investor’s perspective”.

Japanese companies have continued to see Bangladesh’s long-term growth potential. If the new organisation can play this cross-government coordinating role and improve the investment experience for companies, it could further strengthen that long-term confidence.

The Invest Bangladesh authority has the potential to make Bangladesh’s investment administration simpler, more transparent and more predictable from the perspective of businesses. That is a development worth watching closely.

One morning in August 2025, a Turkish textile giant walked into BIDA, exploring Bangladesh for its first overseas factory. Until then, Egypt had been its default choice. After discussing Bangladesh’s market, workforce, incentives and industrial zones, the company was more interested. Then came a simple question: “Can you show us which plots are available?”

We paused. That sat with a different agency. The investor asked, “But you just heard our whole story. Do we really have to start again with someone else? How annoying.”

This experience reflects the confusion investors have faced for years -- fragmented roles, duplicated functions and multiple desks for the same investment journey. Investors have long asked for one focal point, one front office.

That is where Invest Bangladesh came from.

The idea was shaped by feedback from investors, business associations, think tanks and policy papers calling for the agencies to be unified. Bangladesh has also had multiple national-level investment promotion bodies with overlapping mandates. That is why the creation of Invest Bangladesh became one of the priorities under the government’s 180-day plan. Invest Bangladesh formally began its journey on August 20, 2026, bringing BIDA, BEZA and PPPA under one apex investment development agency.

The significance is the combination of capabilities.

Investment promotion and facilitation, policy coordination, economic zone development and PPP capability can now sit within one institutional framework. The agency can remain with an investor throughout the investment lifecycle, from opportunity identification and location selection to approvals, implementation, aftercare and expansion. The investor should be able to bring the project to one platform instead of first trying to understand the government organogram.

The Invest Bangladesh Act, ratified by the parliament, introduces capabilities that are easy to overlook. The new agency has a mandate to facilitate the transfer or privatisation of state-owned assets. Bangladesh has over a hundred government assets that are either non-operational or loss-making despite having valuable land, facilities or infrastructure. The new structure creates a pathway to bring these assets into commercial use.

“One-stop service” has been used so loosely in Bangladesh that, for an investor, it can sometimes feel like “many stops”. Multiple agencies operate their own platforms, while interoperability remains limited and manual service delivery continues alongside digital systems.

The new Act addresses this more directly: one central platform, mandatory integration of relevant services and, over time, a transition away from parallel manual processes. This is critical if digitisation is to reduce investor touchpoints rather than replicate them online.

The Act allows sector experts and specialists to enter the institution at different levels, including leadership roles. This can help Invest Bangladesh operate as the private-sector-facing arm of government, translating investor feedback into policy intervention.

This is not the first rodeo.

Our predecessor, BIDA, was created over a decade ago through the merger of two institutions. The intent was right, but execution exposed important gaps. The organisational structure took years to finalise, while legacy rules and ways of working continued under a common name.

A sustainable merger needs more than a new signboard. It needs a common purpose, integrated systems, aligned people and clear accountability. Those lessons must shape this transition.

But will it solve everything? The answer is no; it will not.

Invest Bangladesh is not a silver bullet. It is a back-office integration designed to make the investor experience simpler, faster and more coherent. The direction is clear: the investment ecosystem is moving towards simplification, and policymakers are beginning to walk the talk on reform. The next job is harder: making sure execution is flawless, and investors actually feel the difference.

The writer is the head of Business Development at Invest Bangladesh

It is very concerning that, despite having sufficient deposits in their bank accounts, depositors cannot withdraw funds because of liquidity crises and the inability of many banks and NBFIs to honour cheques or requests. Serious patients could not receive medical treatment, while emergency family needs, including higher education, could not be met. A few banks and NBFIs are still running well, but they can be counted on one hand. The issue came to the surface after August 5 of 2024, when owners fled or went into hiding, boards were restructured, top management changed and, in some cases, the central bank appointed administrators.

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Political will to ensure good governance is critical. Putting the right people in the right places is also important. Undue interference by the government and regulators should be avoided.

The question is why this happened when the central bank is responsible for monitoring and regulating the banking and financial systems, alongside the Ministry of Finance. The position on bad loans was kept suppressed, with the central bank exercising undue power over the quantum of provisions for bad and doubtful debts. It introduced tripartite meetings after statutory audits and dictated matters to external auditors, jeopardising their independence. Our experience over the past decade shows this weak governance. Tripartite meetings should only resolve disputes between clients and banks. In Bangladesh, this mechanism has been thoroughly misused.

Governance failures are apparently the key reason for this situation. Laws, rules and regulations were not adhered to; policies were not followed as they should have been; directors, especially chairmen, did not play their role as custodians, and independent directors failed to meet the expectations of depositors. Internal audit teams also failed to play their due role. Undue board influence, lack of professionalism and weak ethical standards also contributed. The failures of external auditors and senior management cannot be ignored.

My experience as a nominated director of a state-owned bank for about two years and an NBFI for more than five years was rewarding. The NBFI managed its asset quality very well. Even as an auditor for an NBFI, I had to discontinue my audit after one year of a three-year rotation because of a disagreement over the quantum of provisions for bad and doubtful debts. Neither the central bank nor the Ministry of Finance asked me about my discontinuation.

In the absence of a strong capital market, the main source of business finance is funding from banks and NBFIs. When banks and NBFIs are weak, and in some cases insolvent, business, trade, and industrialisation have no way but to suffer, while economic growth is severely affected.

Institutions are built over many years. When they fail to perform and financial systems break down, restoring them is difficult. Bangladesh is experiencing such a phase.

Political will to ensure good governance is critical. Putting the right people in the right places is also important. Undue interference by the government and regulators should be avoided. In cases of gross negligence or motivated decisions, wrongdoers should be subject to independent investigation by credible agencies. If proved guilty, they should be held accountable. Bad practices must not be repeated.

Ultimately, the situation must be addressed with due attention to timelines. Delays can be costly, and Bangladesh cannot afford them. Based on media reports, it is also alarming that the economy is likely to turn around only after four years. Although there is no visible basis for this statement, it is nevertheless hopeful that at least a ray of hope can be seen. Let us hope for the best.

Amid the energy crisis that has been dragging on for more than a month, top business leaders have recommended bringing idle power plants run by coal, furnace oil and diesel back into operation as a short-term measure.

They say this would reduce some of the pressure on gas supplies used for electricity generation, allowing more gas to be diverted to manufacturing units.

The ownership of coal, furnace oil and diesel-fired power plants in Bangladesh is split between the government and private independent power producers. Private companies hold a large share of oil-based generation, while coal-fired capacity is driven by large public-private or state ventures.

The proposal by the business leaders is aimed at firefighting the immediate energy crisis triggered by the US-Israeli war on Iran, which has disrupted shipping through the Strait of Hormuz and severely affected liquefied natural gas (LNG) deliveries from the Middle East. Alternatively, refined heavy fuels and coal are available in regional markets, including Singapore, Malaysia and Indonesia.
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Businesses are going through a turbulent period as energy shortages, difficulties in accessing finance and growing uncertainty weigh on factory production and make firms cautious about new investment decisions.
Md Fazlul Hoque, Administrator to FBCCI

At a discussion at The Daily Star Centre in Dhaka yesterday, the business leaders also made recommendations for the medium and long-term energy plan.

“Many factories, especially apparel units, are now running at only 30 percent to 40 percent capacity because of frequent power outages,” Fazlee Shamim Ehsan, president of the Bangladesh Employers’ Federation, said at the discussion.

Frequent load-shedding is affecting the dyeing sections of garment factories, making it difficult for apparel manufacturers to achieve the exact colour of fabrics, as the dyeing process requires a continued flow of adequate gas pressure, he told the programme on current challenges facing the industrial sector and the way forward.

Shamim, who is also the executive president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the actual gas pressure was allocated at 15 PSI, but factories are currently getting as little as 1 PSI, which is inadequate to run the dyeing sections.

He said nearly 1,200 garment exporters in Fatullah area of Narayanganj industrial belt are facing the same problem.
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If I know I will miss a deadline by 20 days, I can plan for it. But I do not know how long an energy disruption will last, it is worse.
Fazlee Shamim Ehsan, President of Bangladesh Employers’ Federation

If the government can supply gas even at 7 to 8 PSI, it would be acceptable to businesses as they could run their factories and ship goods according to their commitments to international trading partners, he said.

For dyeing factories, the problem is particularly serious because the process depends on steady heat and steam. Frequent interruptions make it difficult to maintain production schedules and ensure the required colour and quality of fabrics, said the BKMEA executive president.

According to him, until now, factory owners have continued operating despite lower gas pressure and frequent load-shedding, hoping energy supplies will improve soon. However, it is becoming difficult for businesses to know how long they can continue operating under such conditions.

“If I know I will miss a deadline by 20 days, I can plan for it. But when I do not know how long the disruption will last, that is much worse,” Shamim said.

He believes the immediate response should focus on restoring energy supplies rather than waiting for a permanent solution. He also called for a clear short, medium and long-term energy plan so businesses know what to expect.

Fazlul Hoque, administrator of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said businesses are now going through a turbulent period as energy shortages, difficulties in accessing finance and growing uncertainty weigh on production and investment.

He said the current crisis is in some ways worse than the Covid-19 period because the pandemic affected countries at the same time, whereas the present situation is uneven, with some countries doing well while others are struggling.

During the pandemic, Bangladesh’s competitors were also facing widespread similar disruptions, meaning businesses in major competing countries were also dealing with similar difficulties, Fazlul said.

“But the current situation is different, with some countries operating normally or doing well while we are struggling with energy shortages, finance and other constraints.”

For businesses, he said, the problem is no longer confined to one sector. Gas and power shortages are disrupting factories, banks have become more cautious about lending and trade finance, while uncertainty is making entrepreneurs reluctant to commit fresh capital.

“The result is a slowdown in investment at a time when the economy needs new money and new activity,” said Fazlul.

The FBCCI administrator said the country needs to pay greater attention to investment in areas such as IT and AI-related sectors over the next two to three years and diversify where capital is being deployed.

Even if such investments do not immediately create large numbers of jobs, they would bring money and foreign currency into the country and help keep economic activity moving, he said.

Instead of waiting for large investments to return, Fazlul said Bangladesh should encourage a broader flow of capital, including foreign direct investment, so that money continues to circulate through the economy.

“But restoring production is an immediate concern.”

The immediate challenge, Fazlul said, is to take the initiative to operate furnace oil and coal-based power plants to mitigate the ongoing crisis. One option is to bring idle or underused power plants back into operation using alternative fuels such as furnace oil.

He said Bangladesh’s export economy has grown substantially over the years, creating jobs and building industrial capacity. But repeated shocks have also eaten into businesses’ reserves, leaving many companies with little room to absorb another prolonged disruption.

“The energy crisis has also exposed the limits of the banking sector’s ability to support struggling businesses.”

Fazlul said commercial banks have become overcautious and are demanding a lot of documents for loan approval. At the same time, some banks are not giving loans easily because of a trust deficit between bank management and exporters.

“Banks that once helped distressed factories recover are now dealing with problems of their own. As a result, businesses that need working capital or support to restart operations are finding it harder to get help.”

He argued that the biggest problem is no longer simply the high interest rates. For most businesses, the FBCCI administrator said, access to finance matters more than the rate itself.

“Banks have become more cautious and transactions that once took minutes can now take days as lenders scrutinise risks more closely.”

He said that caution is understandable given the condition of the banking sector, but prolonged delays can create another problem for businesses, particularly exporters who need timely trade finance.

For companies already facing production losses because of inadequate gas and electricity, delays in obtaining working capital can further restrict their ability to operate.

This combination of weak energy supplies, cautious banks and uncertainty is also making businesses more reluctant to invest, he added.

As I walked through the streets of Ho Chi Minh City last week, my second trip there within a month, I couldn’t help but wish Dhaka could resemble it. It was a delightful experience to walk on cleaner pavements without constant uneven impediments and hawkers. I neither had to encounter reckless battery-run rickshaws nor put up with beggars nudging at my car windows. I never had to worry about security while taking a stroll on the streets of Ho Chi Minh City late at night. I could smell the aroma of world-famous Vietnamese coffee as I passed cafes that are almost omnipresent. I took “Grab” cars for rides, with comfortable, spacious and clean vehicles that reminded me of the run-down Uber cars in Dhaka. Both are old cities, yet Ho Chi Minh City is so much more liveable because of these small things.

Vietnam is rapidly progressing to a developed economy. Singapore did this decades ago. Vietnam is on the same path, with much bigger geographical and demographic advantages.

Vietnam is having a spectacular growth phase. In its latest assessment report, Standard Chartered has raised its forecast for Vietnam’s GDP growth in 2026 to 9.5 percent and 11 percent for 2027. It has also lowered its inflation forecasts to 4.4 percent for 2026 and 3.3 percent for 2027. Vietnam’s foreign direct investment was a staggering $38 billion during the first seven months of 2026. These are enviable economic indicators for any country. The government is encouraging banks to support its target of achieving double-digit GDP growth. The State Bank of Vietnam (SBV) has recently allowed banks to exclude public sector project loans from their overall credit limits and single borrower limits.

Yet economic indicators alone do not tell the full story until one experiences Vietnam first-hand. I could feel the vibe of a country collectively focused on its growth journey. I could see large infrastructure projects everywhere, even when I travelled outside Ho Chi Minh City. I saw people rushing to their destinations in cars and motorbikes. I found shopping malls with world-class brands full of visitors, locals and tourists. I visited grocery stores as locals stocked up their shopping carts with wholesome food and vegetables.

Vietnam has also become an attractive tourist destination. Some places reminded me of Kolkata, with colonial-era buildings and museums full of rich history. The food is served artistically in Michelin-starred restaurants, though my strict “halal only” cuisine policy left me with limited choices of vegetarian dishes, full of local herbs enriched with heavenly aroma. Most people in Vietnam, even at professional levels, do not speak or understand English. That is not an impediment to its growth journey, as it did not stop China or Korea. Vietnamese professionals have an insatiable hunger to learn best practices from global experts and implement them, especially in banking. Many expatriates are now working in Vietnamese banks and companies, sharing their experience and training local talent, who are very hard-working, bright and promising.

Vietnam is rapidly progressing from a developing to a developed economy. Singapore did this decades ago, and now Vietnam is on the same path, with much bigger geographical and demographic advantages. With a deep-rooted supply chain powered by SMEs and households, global tech giants such as Samsung, LG and Foxconn have chosen Vietnam as major manufacturing bases. As companies continue to hedge their China dependence and leverage their connectivity with other markets, Vietnam is leaping forward by building top-class infrastructure, delivering good governance and achieving world-class productivity in manufacturing and electronics.

There is a lot to learn from the Vietnam story as it unfolds rapidly in front of our eyes, and not too far from us.

Between fiscal year 1995-96 and fiscal year 2021-22, Bangladesh experienced an average inflation rate of 6.3 percent over the 26 years. There were episodic divergences during FY2012 and FY2013 from this long-term trend, but they were corrected quickly. This stability of the price level has been a big win for Bangladesh, playing a major role in boosting investment and protecting the incomes of the poor and lower-income groups.

By contrast, Bangladesh has experienced an average inflation rate of 9.3 percent over the past four years, from FY2023 to FY2026, and the inflation rate remains stubbornly high. This unusually high pace of inflation has hurt investment and the incomes of the poor and lower-income groups. Even the middle class is now feeling the pain of rising prices that continue to outstrip income growth for most households. Inflation control is arguably the biggest economic challenge facing the government today.
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When the current episode of inflationary pressure first emerged in FY2023, most people believed it was a temporary phenomenon caused by the combined effects of Covid-19-related disruption to global supply chains and the trade disruption caused by the Ukraine war. There was therefore a belief that this external-shock-related inflationary episode would pass once the world adjusted to these events and the surge in global commodity prices and global inflation subsided. While global commodity prices have normalised and the global inflation rate has sharply declined, inflation in Bangladesh remains stubbornly high. Indeed, the average inflation rate in most countries has come down, including in India, Thailand, Malaysia, Indonesia and Vietnam, but not in Bangladesh.
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Sadiq Ahmed

Many explanations have been provided for why the inflation rate remains persistently high, including holding profiteers and syndicates responsible. In my own write-ups, I have argued that the inflationary spiral was ignited by Covid-19-related expansionary monetary and fiscal policies and then accentuated by a deep supply shock resulting from a sharp fall in the GDP growth rate, especially in the manufacturing sector, and unprecedented import cutbacks. Unfortunately, the inflationary effect of the supply crunch is not yet well understood or adequately reflected in policymaking. In particular, the adverse effects of the import crunch on domestic prices are still not well appreciated.

The country’s total import volume has fallen by 31 percent since FY2022. This is the outcome of trade and exchange restrictions and the fall in import demand for capital goods owing to the sharp slide in public and private investment rates. Some researchers may argue that FY2022 was an abnormal year. The cutbacks remain deep if, instead, the base-year values of FY2021 are used. Imports fell by 14 percent between FY2021 and FY2026. The import cutbacks were broad-based, although the deepest reduction happened in capital goods, which fell by 41 percent. Intermediate goods and consumer goods also saw substantial cutbacks, declining by 7 percent and 9 percent respectively.

With an average GDP growth rate of 5 percent and an empirically verified income elasticity of demand of 1, imports should have grown by 25 percent between FY2021 and FY2026 instead of falling by 14 percent. The import supply shock is obvious. Additionally, given the crunch in domestic supply, reflected in the sharp slowdown of GDP growth, especially in the manufacturing sector, the adverse effects of the import cutbacks on domestic prices and inflation are magnified.

The axe on imports is the bluntest instrument that policymakers tend to use to respond to a balance of payments crisis. Its temporary use is understandable to avoid an unsustainable run on reserves. But import control is a poor instrument for achieving a sustainable balance of payments position over the longer term. It is also inconsistent with GDP growth and price stability objectives.

Moving forward, to manage inflation, the government must pursue policy reforms that help increase both domestic and import supply. Since recovery of the domestic economy will take time in view of the deep-seated problems plaguing the Bangladesh economy, including the fragile banking sector, the crisis in the energy sector and the severe fiscal constraint, the fastest way of lowering the inflation rate is to allow a rapid recovery of imports, especially consumer goods, including food items. All import restrictions in terms of margin and licensing requirements must be eased. Import duties, including supplementary and regulatory duties, must be cut to the maximum extent possible, at least for a limited duration until domestic supply recovers and inflation is brought down to the 4-5 percent level.

The adverse BoP effects of rising imports should be tackled through export diversification and greater mobilisation of remittances. The exchange rate should be fully flexible and market-based, without intervention from Bangladesh Bank. A fully flexible, market-based exchange rate is essential to diversify and boost exports and mobilise remittances without the need for fiscal subsidies, which are in any case unsustainable in an environment of severe fiscal constraint.

Sadiq Ahmed is vice-chairperson of the Policy Research Institute of Bangladesh (PRI). He can be reached at sadiqahmed1952@gmail.com.

Bangladesh is yet to see recovery in investor confidence even though the current government has taken some good initiatives to improve the business environment and encourage investment.

Without investment revival, the economy, which has been suffering from sluggish growth for the last four years, will struggle to gain momentum, said Birupaksha Paul, a professor of economics at the State University of New York in Cortland, US.

In an interview with The Daily Star recently, he said Bangladesh needs stronger institutions and political inclusivity for a manufacturing revival to put the economy back on the growth path.

As the government marked six months in office, he said weak domestic and foreign investment, factory closures and growing frustration among young people show that the economy is yet to regain confidence.

“Neither foreign direct investment nor domestic investment has shown an exponential rise. Without a significant increase in investment, Bangladesh will struggle to achieve the growth required to become a trillion-dollar economy,” said the economics professor.

Stating that growth fell to 3.49 percent in fiscal year (FY) 2025 and stood at 4.14 percent in the following year, Birupaksha noted that a minimal recovery would largely represent a rebound from a weak base.

CONFIDENCE IS THE MISSING LINK

For Birupaksha, who is also a former chief economist at the Bangladesh Bank, the problem is not simply the cost or availability of credit. Investment depends heavily on confidence -- what economist John Maynard Keynes described as ‘animal spirits’.

“That confidence is missing,” he said.

When businesses are uncertain about demand, policy direction, political stability or the investment climate, they postpone expansion. An investor may have financing but still decide not to build a factory, expand production or hire workers.

Birupaksha pointed to the early 1990s as an example of how reform can change economic expectations. After the BNP came to power in 1991, bank privatisation, reforms in hospitals and universities, VAT and the rapid expansion of mobile phones helped reshape economic activity.

“That reform momentum is not visible today,” he said.

POLITICAL UNCERTAINTY DELAYS INVESTMENT

Birupaksha believes political inclusivity is also necessary to restore investor confidence.

“Wrongdoers must be punished,” he said, stressing that every political party has people who commit wrongdoing.

He said if businesses remain unsure about the political and economic environment, they are likely to delay major investment decisions. That is why political accommodation cannot simply be postponed until the end of the government’s five-year term. “It has to begin now.”

FACTORY CLOSURES DEEPEN CRISIS

Hundreds of factories have closed, and workers have lost their jobs in recent years, according to Birupaksha.

“Being unemployed is one kind of pain. But once you are employed and then lose your job, that pain is 10 times greater,” he said.

The employment challenge is becoming more urgent as around 22 to 23 lakh young people enter the labour market every year. The government cannot employ everyone, Birupaksha said, and cannot even provide jobs to one lakh people directly.
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That leaves private investment and business expansion as the main mechanisms for absorbing new workers. But businesses cannot create jobs on a large scale without investing.

The economist questioned the government’s emphasis on services. A healthy economy, he argued, first develops strong manufacturing and then expands services around that productive base.

“You cannot build a service economy without a manufacturing base,” he said. A stronger service economy should grow around productive industries through logistics, finance, transportation, trade, exports and imports.

Birupaksha noted that China and Vietnam have demonstrated the importance of manufacturing, while Bangladesh still has factories that have not reopened. The government’s employment target will be difficult to achieve when a large share of jobs is expected to come from services. He described the strategy as ‘impractical’.

BANKS AND INSTITUTIONS NEED REFORM

Banks should primarily provide working capital to SMEs, startups and the creative economy.

Calling for institutional reforms, Birupaksha recommended that revenue collection be separated from the finance ministry and placed under a new ‘Ministry of Revenue’.

He also suggested separating the Planning Commission from the planning ministry.

Greater autonomy for the Bangladesh Bank would help prevent excessive fiscal pressure on monetary policy, he added. “Sometimes you need to lose power to be strong.”

INVESTMENT BEFORE GROWTH TARGET

Birupaksha also questioned whether Covid-19 can still explain Bangladesh’s economic weakness. The pandemic caused severe supply disruptions, but he said it cannot account for all of the country’s continuing problems.

A temporary GDP rebound will not be enough if businesses remain reluctant to invest, factories continue to close and young people struggle to find productive employment.

Investment is the bridge between economic recovery and sustainable growth, stated Birupaksha.

The economist, therefore, sees political inclusivity, institutional independence and manufacturing revival as parts of the same investment challenge.

“If you do not create an environment of inclusivity, you will have problems on the investment front,” he said.

For Bangladesh, the real test of recovery is not simply whether growth returns, but whether investors regain the confidence to invest for the future, he added.

There is a simple question worth asking about Deloitte, PwC, EY and KPMG, the firms we call the “Big Four”. How have they lasted this long? Deloitte goes back to the 1840s. They have outlived empires, wars and currency collapses. Most companies do not survive a century. These four have thrived for the better part of two, and today employ around 1.5 million people globally and make more than $200 billion.

The reason, in my view, is not their size. It is their willingness to keep changing what they sell. They began as bookkeepers, became auditors, then tax advisers, then consultants, and today they are, in large part, technology firms. Through all of it, they have guarded one thing above all else: trust. That kind of trust is slow to build and very hard to copy, and it is the real product they sell. It also explains why their arrival or departure matters greatly for business.

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Risk is the other half of the story. A firm that vouches for other people’s numbers must manage its own with the same care. One bad audit, or one conflict of interest left unchecked, and a brand built over a century can disappear in no time. So, these firms have wrapped themselves in layers of protection: strict rules that keep their auditors independent, constant internal quality reviews, and walls between one service line and the next. Helping a bank or company understand the risks it is actually running, across its loan book, supply chain, computer systems and legal dealings, has become one of their largest lines of work.

Take technology, where they are growing fastest. As banks, factories and government offices move online, the ‘Big Four’ have moved with them, installing enterprise software such as SAP and Oracle, upgrading core banking systems, shifting operations to the cloud, building cyber defences and advising on digital government. In this work, they behave more like engineers than auditors, building controls into the systems the economy runs on. To my mind, the most exciting area is data and analytics. Analytics tools, automation, and now artificial intelligence are changing how businesses operate, how fraud is caught and how decisions are made.

Away from the headlines, these firms help with Basel and IFRS 9 rules, insurance and non-bank finance. They advise on restructuring weak institutions, carry out actuarial work for insurers and help firms raise money. They also work with regulators on supervising a modern financial system, and with boards and audit committees meant to hold banks in check.

Assurance is the oldest of these services, and goes beyond signing off annual accounts. They help companies report under financial reporting standards, carry out internal audits and provide independent assurance over sustainability and other non-financial information.

In management consulting, they advise governments and large companies on reform and strategy. This includes modernising tax and revenue collection, structuring public-private partnerships, turning around loss-making state enterprises and redesigning how organisations operate. Their deals teams handle: financial and tax due diligence, independent valuations, advice on mergers and acquisitions, and support for companies raising money through share flotations or bond issues. On ESG, they build sustainability reporting frameworks, provide assurance over the results, and advise banks and exporters on climate risk and green finance.

No one really buys a logo anymore. Clients want value-driven service, trust and hard-won experience, and that is what the “Big Four” bring to the table. The brand may open the door, but it is the substance behind it that keeps them going.

The writer is an economic analyst and founding managing partner of PwC, Bangladesh

On July 21, a fire during a ship-to-ship transfer damaged the cabling on one boiler aboard a leased floating terminal off Moheshkhali. That fault removed 450 million cubic feet of gas per day from the grid. Within a fortnight, load shedding was averaging 3,000 megawatts, and CNG queues ran three rows deep.

Commentary has rerun a familiar argument: too little exploration on one side, an unaffordable import bill on the other. Both points have merit, but neither explains why one boiler could do this much damage. It could, because Bangladesh’s entire imported-gas channel floats on two ships. Both were disconnected during Cyclone Mocha in 2023. Cyclone Remal damaged one in 2024, cutting capacity for nearly four months. The July fire is the third systemic outage in four years. The binding constraint is not the molecule; it is the infrastructure that lands it.

The official response has been fast and floating. On July 28, the cabinet committee approved in principle a third FSRU at Kutubjom under a government-to-government arrangement, adding 600 million cubic feet per day, and, by expert estimates, for three to four years. A third ship, built by a Chinese contractor, adds capacity in the same fragile form, exposed to cyclones and single-vessel risk. Floating units were chosen to avoid capital spending. That saving has been repaid several times over in spot cargoes above $21 per million British thermal units and idled factories: the country has paid for a fixed terminal without owning one.

The land-based terminal at Matarbari, discussed since 2014, would bring storage measured in days rather than hours, but the complex and pipeline are the better part of a decade away. The stronger candidate is the gravity-based structure: a concrete terminal resting on the seabed, LNG tanks built inside it, offering the resilience of a fixed terminal in less time. Italy has operated one fifteen kilometres offshore since 2009, supplying 14 percent of Italian gas, financed privately against a 25-year capacity contract. Starting now, a GBS could be delivering gas within this government term. Whether the Bay of Bengal seabed and cyclone loading suit it is a question for engineers. Whether it belongs in the Matarbari feasibility study is not.

Pakistan built its first LNG terminal at Port Qasim for $125 million in 332 days, with debt from the IFC and the Asian Development Bank and a capacity fee from the state gas utility. Tolling is not exotic here; it is how both existing Moheshkhali terminals are already remunerated.

I have arranged investor funding for concentrated gas assets in Europe and the Middle East, where offtake is contractual, and structures are clean. The same could be done for Bangladesh. The World Bank has committed $700 million to guarantee Petrobangla’s LNG import payments through letters of credit and short-term credit lines. That is procurement support, not construction finance. The same guarantee logic, already used for Bangladeshi power projects, can be pointed at terminal steel rather than cargo invoices.

Petrobangla has already invited transaction advisers for the Matarbari land-based terminal; submissions closed on August 10. The structuring choice sits with the Energy and Mineral Resources Division, which could set terms for a project-financed, build-own-operate-transfer structure with take-or-pay tolling and multilateral credit enhancement, with a gravity-based option costed alongside the onshore design. A terminal financed that way costs the exchequer little. The past weeks have shown what the floating alternative costs.

Insurance is unlike any other financial service. Banks safeguard deposits and capital markets facilitate investment, but insurance sells trust. Every insurance contract is built on a promise that when an unforeseen loss occurs, financial protection will be available. When that promise is honoured promptly and fairly, confidence grows. Delays or denials without transparency erode public confidence.

For the Bangladesh insurance industry, restoring that confidence is now the single most important reform challenge. Despite progress in the overall economy, insurance penetration remains among the lowest in Asia. One principal reason is the perception that claims are slow and uncertain. In every mature insurance market, prompt and transparent claims settlement is the industry’s most powerful advertisement. Public trust is earned not through marketing campaigns but by consistently honouring legitimate claims. Industry data indicate that unpaid claims have accumulated to several thousand crore taka across the sector. While claim disputes are inevitable, prolonged delays impose substantial economic costs. Businesses face liquidity constraints, reconstruction is delayed, and households experience financial hardship when insurance is expected to provide relief. These outcomes undermine confidence in the insurance system.

Improving claims performance should therefore become a national reform priority. Digital claim submission, electronic documentation, transparent service standards and publicly disclosed claims-settlement indicators would improve accountability and customer confidence. Several leading markets publish claims performance metrics as measures of governance and service quality. Bangladesh should consider moving in the same direction. A second area requiring policy review is reinsurance. Reinsurance is often described as the “insurance of insurers”. It enables insurers to absorb large losses while maintaining financial stability. As Bangladesh economy expands, with growing investment in infrastructure, energy and manufacturing, access to efficient and globally connected reinsurance markets becomes more important.

The existing reinsurance framework has contributed to domestic market development. However, the insurance industry now operates in an increasingly interconnected global environment characterised by advanced catastrophe modelling and integrated reinsurance capacity. Periodic evaluation is therefore needed to meet changing needs while preserving financial stability. Equally important is the adoption of internationally recognised financial and regulatory standards. The implementation of IFRS 17 and IFRS 9 will improve transparency, comparability and financial reporting across the insurance sector. Consideration of deferred tax implications will further strengthen implementation. Together, these reforms can enhance investor confidence and improve Bangladesh’s integration with international financial markets.
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M Sharifur Rahman Bhuiyan

Regulatory philosophy should evolve alongside these reforms. Across leading insurance jurisdictions, risk-based supervision (RBS) has replaced detailed operational control as the preferred supervisory model. Regulators evaluate solvency, governance, risk management, capital adequacy and consumer protection while allowing insurers flexibility to innovate and compete.

As Bangladesh prepares for post-LDC graduation, insurance reform should be viewed as part of national economic policy. A trusted insurance sector mobilises long-term savings, protects productive investment, supports entrepreneurship and strengthens resilience against economic and climate-related risks. Bangladesh has already demonstrated that ambitious reforms can transform industries and accelerate development. The insurance sector now has an opportunity to undertake a similar journey. By embracing smart regulation, risk-based supervision, claims excellence, modern reinsurance, IFRS 17, IFRS 9 and stronger actuarial capacity, Bangladesh can build an insurance industry that safeguards policyholders, strengthens investor confidence, supports sustainable development and improves global competitiveness.