Newsletter

BUILD, in partnership with the Department of Foreign Affairs and Trade (DFAT), Australia, organised a National Conference on Small and Medium Enterprises
(SME) Competitiveness and Export Growth in Bangladesh at the CIRDAP International Conference Centre on 13 June 2026. The event focused on study findings titled “Institutionalised Exclusion: Bonded Warehouse Policy and SME Export Competitiveness in Bangladesh,” which aims to address the structural barriers limiting the integration of non-RMG SMEs into the global export market. Md Shahriar Kader Siddiky, Secretary, Economic Relations Division (ERD), graced the event as the chief guest.

Md Shahriar Kader Siddiky assured participants that the conference recommendations would receive serious consideration, as the government remains strongly committed to SME growth. He announced that the government is set to secure an Asian Development Bank (ADB) project to enhance economic facilities, thereby streamlining approval processes. He also informed attendees that a Creative Hub is to be established on 150 acres of land in Purbachal. Furthermore, the government is exploring alternative financing and prioritising policy implementation, which a dedicated commission will carefully monitor. Siddiky noted that Bangladesh is working towards a fully digitalised economy to facilitate proposed reforms. Addressing a concern raised in the BUILD presentation, he acknowledged that many SMEs remain unaware of the policies and support mechanisms available to them. He emphasised the importance of renewable energy, noting plans to reduce taxes on such initiatives and to establish a dashboard to raise public awareness. Additionally, he stated that the government intends to prepare a checklist and a set of Standard Practices to support all enterprise types, rather than viewing them through an oligarchic lens.

Dr Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), commended BUILD for conducting a timely and insightful study. He noted that while SMEs have a significant presence in the RMG sector—where their success is well-established due to structured support—similar measures have not been extended to other promising sectors. Dr Rahman argued that providing comparable facilities to industries such as home textiles, light engineering, and agro-processed foods could substantially enhance their performance. Citing examples from India, he recommended exploring partial-exporter support mechanisms. He concluded by emphasising the need for reforms in skills development, infrastructure, technology adoption, and awareness-building to enable Bangladeshi SMEs to compete effectively in global markets.

Abul Kasem Khan, Chairperson of BUILD, opened the conference by highlighting the sector’s untapped potential: “SMEs contribute significantly to the economy; about 90% of our industrial establishments, a quarter of GDP, and about 8 million jobs are created by SMEs. However, their contribution to exports is not significant due to insufficient support. They pay high costs for imported raw materials as they lack bonded warehouse facilities, utility access, and infrastructural support.” He further emphasised the urgency of these reforms, stating, “As Bangladesh prepares for LDC graduation, export diversification is no longer optional—it is imperative. Together, let us build an inclusive, competitive, and export-oriented SME sector that drives Bangladesh’s next phase of economic growth.”

In the keynote presentation, Dr Wasel Bin Shadat, Research Director at BUILD and Assistant Professor at the Institute of Business Administration (IBA), University of Dhaka, revealed a profound structural paradox: while SMEs account for over 90% of industrial establishments, a quarter of GDP, and 7.8 million jobs, their contribution to the export economy remains marginal. This marginalisation is institutionally produced, as the bonded warehouse regime, originally designed for the RMG sector, has become a structural filter that excludes non-RMG manufacturing SMEs.

He reported that none of the 107 firms surveyed has ever used a bonded warehouse, and awareness of the partial-exporter notification (SRO-384) stands at a mere 1.87%. Administrative complexity, limited financial resources, and high raw material tariffs are the main obstacles, with exporters reporting significantly higher regulatory burdens than non-exporters. The study identifies a “home textile paradox,” in which firms face the highest export rates alongside the most significant burdens, largely due to yarn duties that can reach 40%, effectively exceeding annual net profits. Furthermore, as 100% of importing firms rely on commercial traders, duties are permanently embedded in input prices. Despite these challenges, there is strong latent demand: 48.4% of non-exporters indicated they would attempt to export if given duty-free access and simplified compliance requirements.

The proposed reform roadmap, presented by Dr Shadat, is built on three pillars: Institutional-Legal Reform, including a Partial Exporter Licence; Shared Infrastructure and Capacity, through a phased rollout of Common Facility Centres (CFCs); and Governance, Finance, and Metrics, incorporating compliance tiering and revised performance metrics. He called for
coordinated action from the National Board of Revenue, Ministry of Commerce, Bangladesh Bank, Ministry of Industries, and development partners to ensure that the post-LDC era is defined by the diversification of Bangladesh’s export basket.

Dr Ahmed Ullah FCMA, Director General-2 (Additional Secretary) at the Prime Minister’s Office, emphasised the government’s commitment to improving the ease of doing business. He stated that policymakers remain receptive to reform initiatives and expressed optimism that the recommendations emerging from the conference would be carefully considered and gradually implemented to create a more enabling environment for SMEs.

Mohammad Naziur Rahman Miah, First Secretary, NBR, highlighted that the national budget reflects the government’s commitment to SME growth. Referring to the 2026-27 Budget, he informed the audience that changes to SRO-384 mean the input-output coefficient is no longer mandatory; instead, assessments will be based on raw material imports and actual export volumes. The 30% value-addition ratio requirement has been withdrawn and replaced by a simplified condition: exported goods must be of higher value. In addition to the existing eight sectors, nine more have been added for the duty-free import of raw materials, subject to a 100% bank guarantee.

Nawshad Mustafa, Director, SMESPD, Bangladesh Bank, informed participants that a segregated fund of BDT 5,000 crore, with an interest rate of 9%, would be introduced to support SMEs. He further highlighted the need to reform existing securities and stock exchange regulations to make capital markets more accessible to small enterprises, enabling them to raise funds and expand through stock market listings.

Nazeem Hassan Sattar, Deputy Managing Director, SME Foundation, stressed the importance of strengthening linkages between suppliers and producers, particularly by developing robust backwards-linkage industries. Referring to the BUILD study, he noted that 48.4% of surveyed enterprises possess latent export potential. He urged policymakers to take this finding seriously and to develop targeted support mechanisms to help transform potential exporters into actual exporters.

Billal Hossain, Chief Executive Officer, Bangladesh Agro-Processors’ Association (BAPA), observed that despite sourcing 80–90% of raw materials domestically, the agro-processing sector continues to struggle to realise its full export potential due to a lack of cold-storage facilities, inadequate branding strategies, and shortages of raw materials during off-seasons. He emphasised the urgent need to establish robust cold-chain infrastructure and strengthen branding initiatives to enhance international market access.

Sarwar Hossain, General Manager, Extension Division, BSCIC, noted that 4,882 industrial units are operating under BSCIC, 870 of which are export-oriented. Among these, 31 large enterprises and 527 SMEs are currently unable to utilise bonded warehouse facilities for export. SMEs struggle to avail these facilities because they require specific, independent premises. He proposed utilising the BSCIC Common Facility Centre premises as centralised bonded warehouses to mitigate this problem. However, this would require new rules to establish customised bonded warehouse operations within BSCIC industrial estates.

Ferdaus Ara Begum, CEO of BUILD, moderated the working session. She stated that BUILD will follow up on the useful recommendations that emerged from the conference. Referencing the study’s finding that 48.4% of enterprises in the five sectors studied have latent export potential, she noted that even if only 10% were successful, this would significantly contribute to the export economy. She concluded the session by inviting responses from clusters working in home textiles, footwear, and light engineering.

The conference concluded with an exchange of thanks between the business entrepreneurs, academia, think tanks, government representatives, and other participants.

On 7 May 2026, a high-level delegation of BUILD, led by its Chairperson, Abul Kasem Khan, met with A. B. M. Abdus Sattar, Principal Secretary to the Honourable Prime Minister, at the Bangladesh Secretariat to discuss the strengthening of public-private policy coordination.

A. B. M. Abdus Sattar, Principal Secretary to the Prime Minister, acknowledged the need to reduce the cost of doing business and simplify services provided by various government agencies. He expressed that while the country has experienced significant bureaucratic disruptions over the past two years, the government remains committed to improving the economy through structural reforms. Highlighting the effectiveness of the Private
Sector Development Policy Coordination Committee (PSDPCC), he confirmed his willingness to convene the next meeting in July 2026 to address coordination gaps. He also expressed his sincere appreciation for BUILD’s continued partnership and contributions to policy reforms.

Abul Kasem Khan, Chairperson of BUILD, highlighted the organisation’s significant contributions to advancing private-sector development, noting that 725 of its 1,194 policy reform proposals have received official approval, with 476 already implemented. He emphasised that the PSDPCC remains the principal institutional mechanism for public-private collaboration. He further stressed the need to simplify trade licence procedures, particularly for SMEs, which are currently discouraged by excessive fees and compliance burdens. Additionally, he handed over a draft Concept Note on the proposed National Logistics Development Authority (NLDA) to strengthen export competitiveness. He expressed BUILD’s interest in organising a high-level Policy Summit at the end of the year to mark its 15th anniversary.

Kamran T. Rahman, Trustee Board Member of BUILD and President of MCCI, urged reforms to land policies to create opportunities to establish commercial solar power projects on unused land, such as in tea estates, to contribute to energy security and reduce import dependency.

Ferdaus Ara Begum, CEO of BUILD, elaborated on BUILD’s pioneering role in private sector development and logistics infrastructure. She highlighted that despite prolonged advocacy efforts, the provision for a five-year renewal of trade licences is still not being effectively implemented at the municipality and union parishad levels.

Alamgir Kabir, Director-6 of the Prime Minister’s Office (PMO), reaffirmed the role of the Policy Coordination Unit (PCU) in facilitating PSDPCC activities and assured full support for organising the next committee meeting.

The meeting concluded with a decision to organise the next PSDPCC meeting in July 2026 and to share the Concept Note on the proposed NLDA with the PMO following the second meeting of the National Logistics Development Coordination Committee.

In a call-on meeting with a BUILD delegation today, on 12 May 2026, Khandaker Abdul Muktadir, Honourable Minister of Commerce, informed that a series of sweeping regulatory reforms is aimed at reducing the cost of doing business, easing the business environment, and accelerating the transition toward a trillion-dollar economy.

Honourable Minister of Commerce said, “The government is committed to simplifying the start-up process for entrepreneurs, including company formation processes to be faster and easier. For major licences, including Fire and DIFE, the government is considering making it easier by issuing a provisional licence valid for 12 months until the final licence process is completed. This would allow businesses to implement without unnecessary delays.” Regarding the expansion of Bonded Warehouse facilities, any sector that presents a viable proposal is invited to come forward. He said that the government is also eager to work with BUILD to develop the jute sector, and, in that regard, Jute Pulp from green jute could be an option. Furthermore, he stated that plans are progressing to create an investment-friendly business climate by consolidating investment agencies into a single entity to streamline the investment ecosystem. The concern regarding private-sector representation in Public-Private Partnerships (PPPs) has also been noted for further review.

Abul Kasem Khan, Chairperson, BUILD, said, “Deregulation is the most effective tool for controlling the grey economy and bringing more businesses into the formal sector. The current trade licence system remains a major barrier for new entrepreneurs, and a transition toward a ‘One Licence’ system is necessary to foster innovation.” To further support youth-led ventures, he proposed a five-year tax exemption for young entrepreneurs. Additionally, he informed that BUILD is in active conversation with the PMO regarding critical logistics reforms and will present these ideas to the Prime Minister shortly. He noted that BUILD is planning to hold a “policy summit” at the end of this year to define the private sector’s requirements for the next decade to achieve a trillion-dollar economy.
Kamran T. Rahman, Trustee, BUILD, and President, Metropolitan Chamber of Commerce and Industry (MCCI), said that “the jute sector remains a pillar of the national economy but requires urgent modernisation. Modern technology must be integrated into the jute sector to improve efficiency and value addition, ensuring it remains a profitable and sustainable industry in the years ahead.”

Ferdaus Ara Begum, CEO of BUILD, emphasised the importance of product traceability. According to her, ensuring product traceability is no longer optional in the global market; it is now mandatory for maintaining access to international supply chains, particularly in the EU. A robust National Traceability Strategy is essential to ensure transparency and compliance with evolving global sustainability standards, which directly impacts the competitiveness of our exports. Furthermore, she stated that, to support local industries, Geographical Indication (GI) products should be leveraged to promote the “One Village, One Product” initiative. She raised the concern that the manufacturing industry currently requires up to 23 different licences to operate. This burden on the business community must be minimised to maintain a competitive industrial edge.

The National Budget 2026–27 signals a transformative shift toward a “democratic, humane, and inclusive economy”. Honourable Finance Minister Amir Khasru Mahmud Chowdhury has explicitly prioritised an “investment-dependent, employment-generating, and production-oriented economy”. With a focus on deregulation, transparency, and a transition to a trillion-dollar economy by 2034, the budget lays out a clear ambition to reduce inflation to 7.5% and boost growth to 6.5%. Crucially for our stakeholders, the government has committed to a “deregulation agenda” to simplify business environments, including a directive to process new proposals within seven days.
While the budget recognises the need for export diversification, our recent study, “Institutionalised Exclusion: Bonded Warehouse Policy and SME Export Competitiveness in Bangladesh,” reveals a stubborn structural barrier: the “export paradox”. Although SMEs comprise 90% of industrial establishments and 7.8 million jobs, their contribution to exports remains marginal. The current Bonded Warehouse (BW) regime, designed decades ago for the RMG sector, acts as a structural filter that excludes non-RMG manufacturing SMEs. Our survey found that none of the 107 firms had ever used a BW, and 82.2% suffered from “double non-awareness” of available facilities such as SRO-384.

The FY 2026-27 budget’s emphasis on “deregulation” and “innovative communication strategies” provides a timely opportunity to address these systemic gaps. To align budgetary ambition with the ground reality of our SMEs, we propose three critical areas for government action:

First, we must shift from binary export requirements to a partial exporter licence. Current rules force an all-or-nothing approach that is commercially infeasible for most SMEs. A licensing system based on export intensity (e.g., a 25% threshold) would instantly unlock a massive segment of latent supply.

Second, the government’s focus on establishing industrial hubs and “creative hubs” should prioritise the development of common facility centres (CFCs). As our findings show, fixed compliance costs are the primary killer of SME competitiveness. Bundling shared bonded warehousing, quality testing, and digital printing under one roof is the most effective way to lower these costs and scale our reach.

Finally, the budget’s commitment to “financial stability” must translate into cluster-based credit scoring. By using utility bills and association membership as proxies for creditworthiness, we can bypass the collateral-based exclusion that currently cripples our SMEs.

The FY 2026-27 budget offers a historic opportunity to move from RMG-centric growth to a diversified export base. However, awareness alone is not enough; 48.4% of non-exporters are ready to enter international markets, but only if institutional architecture is reformed.

By adopting the evidence-based recommendations from our study—specifically targeting the “institutionalised exclusion” layer—the government can ensure this budget truly delivers on its promise of an inclusive, competitive, and export-oriented SME sector.

By transforming the current “institutionalised exclusion” into an “institutionalised access,” we can ensure that our SME sector becomes the sustainable backbone of Bangladesh’s post-LDC economic journey.

Ferdaus Ara Begum​
CEO, BUILD

The first meeting of the Policy Coordination Unit (PCU), established at the Ministry of Commerce (MoC), highlighted the need for a National Traceability Strategy to ensure sustainability and better access to the EU market. The meeting recommended that a Task Team hold dialogues with the concerned export sectors to assess their readiness.

The Ministry of Commerce (MoC), in collaboration with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH under the STILE-II Project, convened this policy discussion for reviewing the ‘Gap Analysis and Needs Assessment’ conducted by Business Initiative Leading Development (BUILD) for addressing the European Union’s Ecodesign for Sustainable Products Regulation (ESPR) and developing a National Strategy on Product Traceability today, 12 March 2026. The meeting was chaired by Md Abdur Rahim Khan, Additional Secretary (Export), MoC.

In a keynote presentation titled ‘ESPR: A Structural Shift in Market Access Architecture’, Dr Wasel Bin Shadat, Research Director, BUILD, informed that ESPR represents a structural shift in market access architecture, moving from voluntary environmental standards to legally binding requirements for nearly all physical goods entering the EU market. His analysis revealed that failure to prepare could put an estimated USD 0.36-1.20 billion in annual export revenue at risk.

Central to this challenge is the implementation of the Digital Product Passport, a system that requires exhaustive data on carbon footprints and material composition to be machine-readable at the border. The research presented by BUILD identified 62 specific readiness gaps across six compliance domains, including 15 Tier 1 gaps that require immediate national intervention to prevent substantial revenue losses. The presentation recommended a Federated Architecture for a traceability platform.

Md Abdur Rahim Khan, Chair of PCU, informed that the EU’s Ecodesign for Sustainable Products Regulation (ESPR) is mandatory for market access to the EU, while DPP is a tool for complying with EU regulatory requirements, and the private sector should be ready.

Ferdaus Ara Begum, CEO of BUILD, further elucidated the gravity of the ESPR alongside other emerging EU regulations. She stressed that a deep dive into these evolving rules is now a necessity for the private sector. Highlighting existing infrastructure, she suggested that the Registered Exporter (REX) system currently managed by the Export Promotion Bureau (EPB) could serve as a foundational framework for developing a robust national traceability platform.

Representing the apparel sector, Vidiya Amrit Khan, Vice President of BGMEA, noted that the EU is increasingly demanding verifiable evidence of responsible and sustainable sourcing. She explained that the ESPR is designed to strictly monitor and ensure that production is free of child labour, unfair labour practices, and environmental degradation. Affirming that compliance is mandatory and non-negotiable, she shared that BGMEA is already working closely with factory owners to prepare them for these stringent requirements.

From a financial perspective, Md Towhidul Islam, Additional Director of the Sustainable Finance Department at Bangladesh Bank, informed the unit that a fund of BDT 2,500 crore is available to facilitate industries in adopting the necessary green and compliant practices.

Michael Klode, GIZ Project Head (STILE-II), clarified the scope of the current collaboration, noting that BUILD and the Ministry of Commerce are not building the Digital Product Passport (DPP) itself, but are instead focused on developing a national strategy for product traceability. This strategic roadmap is intended to equip industries with the tools and guidance needed to effectively meet DPP and traceability standards.

Maj. Rafiqul Islam, Secretary General of LFMEAB, highlighted a gap in awareness within the leather and footwear sectors. He pointed out that many association members remain unfamiliar with ESPR requirements and called for organised awareness campaigns. While acknowledging the need for preparation, he also suggested exploring avenues to accommodate flexible timelines.
A. B. M. Fakhrul Alam, Group Sustainability Lead at Urmi Group, warned that delaying the implementation of traceability systems would lead to an unmanageable compliance burden in the near future. He advocated for the swift development of a simplified national traceability platform to help manufacturers manage data and ease the transition.

Public-sector representatives, including the Ministry of Industries, MoEFCC, Planning Division, Ministry of Textiles and Jute, ICT Division, Ministry of Labour and Employment, BEZA, EPB, SREDA, BSTI, DoE, and SMEF, were present. Representatives from the private sector, including DCCI, BKMEA, BPGMEA, BTMA, BGBA, BTGWPEA, and BAFFA, were present and spoke on the occasion.

The National Board of Revenue (NBR) concluded its pre-budget meeting with various stakeholders on 28 April 2026. BUILD presented its summary proposals at the NBR office, where the Chairman of the NBR, Mr Abdur Rahman, FCMA, and Board Members were present to respond to points raised by BUILD alongside other research organisations and think tanks.

BUILD’s presentation included proposals across income tax, VAT, and Customs; detailed budget proposals had been submitted to the NBR in advance. This meeting provided an opportunity for immediate feedback from the NBR, allowing the concerned organisations to understand which proposals are likely to be accepted.

BUILD noted that the first budget of the newly elected democratic government is being formulated amid numerous challenges. Following LDC graduation, the need to increase domestic resource mobilisation has grown significantly. In all NBR meetings held thus far, the emphasis has remained on enhancing tax revenue collection.

Conversely, business entrepreneurs have used these meetings to highlight specific areas where they require support. Although the NBR has initiated several important measures to improve revenue collection discipline, they have yet to yield a significant increase in revenue.

The previous budget stood at BDT 7.9 trillion, while the upcoming budget is expected to reach BDT 9.3 trillion—a 16% increase. Tax revenue, previously BDT 5.6 trillion, is expected to rise to BDT 6.8 trillion (+21%). It is vital to consider whether the economy has the capacity to withstand this pressure; like previous years, this budget may require substantial later revision. Efforts must focus on increasing the tax-to-GDP ratio through robust tax policy reform.

The upcoming budget is expected to pivot away from debt dependency and towards an investment-friendly climate. To achieve this, initiatives will be taken to simplify tax compliance and foster a business-friendly system. Anticipated changes include amendments to VAT law and the introduction of automated income tax refunds. The CEO of BUILD raised several recommendations to simplify the tax system and encourage compliance:

Macroeconomic and Policy Issues

• Harmonisation of Fiscal and Monetary Policy: According to the election manifesto (p. 28), fiscal and monetary policies should be harmonised. However, in the first nine months of the year, the government borrowed nearly BDT 100,000 crore from banks. With the policy rate and inflation both remaining above 10% for an extended period, liquidity has increased while monetary policy remains contractionary. Better coordination between budget projections and monetary policy is essential.
• High Interest Rates as a Barrier to Investment: Current lending rates range from 14–18%. Monetary policy data shows that private-sector credit growth has declined to 6.5%, while public-sector credit growth has climbed to 18.1%, despite a lack of significant large-scale development. As government expenditure on interest, salaries, and social safety nets rises, the budget must target a reduction in unnecessary spending. Subsidies to State-Owned Enterprises (SOEs) amounted to BDT 36,000 crore in FY 2025–26, further bloating operational costs.

Income Tax-Related Proposals

• Separation of Tax Policy and Tax Collection Authority: The private sector should be updated on the status of the directive to separate tax policy from collection authority. A clear decision should be featured in the FY 2026–27 budget. Under Section 4 of the Income Tax Act 2023, 15 positions currently combine these functions; the law should be amended to separate these roles with clearly defined responsibilities for field-level officials.
• Simplification of the Tax Collection System: Of 3.8 million taxpayers, only 0.76% (35,000) are corporate taxpayers. Within that group, 860 belong to the Large Taxpayers Unit (LTU), contributing BDT 4,062 crore—only 1.5% of total tax revenue. While 12.8 million individuals hold TINs, only 59% submit returns. Similarly, of the 288,000 companies registered with the RJSC, only 8.45% file returns. The reasons for this non-compliance must be investigated and the data updated.
• Refund Mechanism for Withholding Tax: The income tax law requires a clear provision for the refund of taxes deducted at source. Currently, withholding tax—collected under 111 sub-sectors—accounts for 63% of income tax revenue (rising to 85% when including all withholding). In FY 2021–22, refunds amounted to a mere 0.43% of total collections. The lack of an efficient refund system discourages compliance; rules must be formulated immediately to implement Section 215 (subsections 2 and 3).
• Reduction of Minimum Tax Scope: 43 of the 111 withholding tax categories fall under minimum tax provisions, contributing 38.63% of income tax revenue. As many are ineligible for refunds, they function as a final tax, increasing costs across supply chains and discouraging investment. These should be gradually replaced with refundable or adjustable mechanisms.
• Discretionary Power under Section 147: This section has increased discretionary power regarding withholding tax. Provisions should be added to ensure transparent procedures and proper notice before the inspection of business premises or records.
• Risk-Based Audit System: The NBR should move from random selection to a risk-based audit system. Taxpayers who have been compliant for over three years should be exempt from audits for at least five years, and top taxpayers should receive a three-year exemption.

VAT (Value Added Tax) Proposals

• Single VAT Rate of 10%: Multiple VAT rates currently exist alongside the 15% standard rate. Lower rates often disallow input credit, causing a cascading effect where effective VAT can reach 30%. A uniform 10% rate would reduce the burden and bolster compliance.
• Advance Tax Adjustment: Delays in adjustments and a lack of refunds reduce the competitiveness of industrial IRC users.
• Transparency in Withholding VAT: VAT deduction certificates should explicitly separate supply value and VAT to ensure transparency.
• Automation of the VAT System: Integrating IVAS modules and automating returns and invoices is necessary to build trust and reduce inconsistencies.
• Support for Women Entrepreneurs: Currently, VAT exemption for women entrepreneurs is BDT 3 million annually, while income tax exemption is BDT 7 million. These should be aligned. Furthermore, certain small sectors listed in General Order 17 of 2019 should be removed from mandatory registration to allow small-scale women entrepreneurs to benefit from turnover exemptions.
• Full Online VAT System: Implementation of automated returns, integration with ASYCUDA, and the introduction of e-invoicing are essential.

Customs-Related Proposals

• Expansion of SRO Benefits: Beyond the eight current industries, coverage should expand to include agro-processing, cement, API, home textiles, footwear, and light engineering.
• Tariff Rationalisation: Bound tariffs should be aligned with MFN (Most Favoured Nation) tariffs. Protective duties (SD, RD, AIT) should be gradually reduced following LDC graduation.
• Alternative Export Incentives: As cash incentives are phased out, alternative support—such as bonded facilities, research grants, and climate adaptation support—must be introduced.
• Sample Imports: Import rules for samples should be harmonised across all sectors, including RMG. Misclassification in ASYCUDA (IM7 vs IM4) results in unnecessary duties being applied.
• Alternative Dispute Resolution (ADR): The resolution timeframe should be reduced from 90 to 30 days, and associated fees should be lowered.

The Prime Minister’s Office (PMO) has decided to establish a dedicated Logistics Unit to streamline the sector’s development and coordinate the implementation of the National Logistics Policy 2025. The decision was made during the 2nd meeting of the National Logistics Development and Coordination Committee (NLDCC), held at the Bangladesh Secretariat and chaired by the Principal Secretary to the Prime Minister, A. B. M. Abdus Sattar.

In his opening remarks, the Principal Secretary emphasised the government’s commitment to time-bound implementation of national policies. Addressing the overlap of activities across ministries, he directed that a single ministry lead the coordination of specific programs to avoid duplication. He noted that while political instability in 2024–25 had slowed progress, the current administration is focused on rapid execution.

BUILD played a central role in the discussion, advocating for a robust institutional framework to attract foreign investment.

Abul Kasem Khan, Chairperson of BUILD, proposed establishing a National Logistics Authority or a National Logistics Platform. He argued that without such a structural change, attracting major foreign direct investment (FDI) would remain a challenge. He also suggested considering a dedicated Logistics Ministry to manage the 17-18 ministries and divisions currently involved in the sector.

Ferdaus Ara Begum, CEO of BUILD, highlighted that the sector should be viewed through two lenses: Trade Facilitation and Infrastructure Development. She noted that separating these activities would naturally prevent duplication of work. BUILD CEO also pointed out Bangladesh’s current standing in global logistics rankings, stressing that there is significant room for improvement through coordinated reforms.

The World Bank representative shared that they have been working on logistics in Bangladesh since 2022, which contributed to the 2024 draft policy. Their current project proposal with the Road and Highways Division is designed to avoid overlap with ADB activities. They emphasised a major “skills gap,” noting that current curricula cover only about half of the 106 skilled roles required by the industry, and suggested collaborating with the NSDA to address it.

Representative from ADB noted that the logistics sector is too vast for any single partner to manage alone, making broad coordination essential. It was highlighted that the PMO is already utilising an ADB technical assistance project to help implement the national policy and manage the new logistics unit. To ensure maximum efficiency, the Committee decided that the Road Transport and Highways Secretary will lead a joint session with the World Bank and ADB to align their project components and prevent duplication of effort.

Key Decisions of the NLDCC Meeting

The meeting concluded with several high-level decisions aimed at formalising the logistics governance structure:

• Immediate Unit Formation: A dedicated Logistics Unit/Cell will be established in the PMO within seven days to monitor policy reforms and follow up with relevant institutions.
• Concept Paper on National Authority: Following the Principal Secretary’s principled agreement with BUILD’s suggestion, BUILD and the Bangladesh Freight Forwarders Association (BAFFA) were tasked with submitting a formal concept paper justifying the establishment of a National Logistics Authority.
• Coordination Committee: A committee led by the Secretary of the Road Transport and Highways Division will be formed to resolve overlaps between technical assistance projects funded by the World Bank and ADB.
• English Translation of Policy: A draft English translation of the National Logistics Policy 2025 will be presented at the next meeting.
• Committee Expansion: The Economic Relations Division (ERD) and the Planning Commission will be co-opted as members of the NLDCC.

The next meeting of the NLDCC is scheduled for May 2026 to review the progress of these decisions.

The war in the Middle East between Iran and the joint forces of the United States and Israel has significantly disrupted global energy supply chains and the broader economy. The impact on Bangladesh is particularly severe, as the country is closely linked to the region for sourcing energy, exporting its migrant workforce and food and agricultural products, and importing essential inputs such as fertilisers.

Bangladesh is a net energy-importing country. As of March 2026, it imported roughly 95% of its oil requirements and a significant portion of its LNG from Middle Eastern countries, including Saudi Arabia, the United Arab Emirates (UAE), and Qatar. With energy supply chains from this region disrupted, Bangladesh is facing acute fuel shortages, resulting in long queues at filling stations across the country and the start of illegal hoarding.

Due to these supply chain disruptions, global energy prices have surged, forcing Bangladesh to procure energy products at higher prices. Government estimates suggest that the war could increase the country’s import bill by an additional USD 4.8 billion—a 40% rise compared to 2025 levels—on top of the previous annual energy bill of USD 12 billion. Consequently, pressure on the country’s already constrained foreign exchange reserves has intensified, raising concerns about their rapid depletion and the growing debt burden.

Traditionally, the Middle East has been the primary destination for Bangladesh’s migrant workers. According to the Bureau of Manpower Employment of Training (BMET), around 7 million workers are employed in this region. These workers are estimated to remit over USD 13.5 billion annually, which helps offset pressure on the country’s foreign exchange reserves. However, as the war has escalated across the region, the steady flows of workforce exports and remittances, as well as the safety and security of these workers, are under significant threat.

The crisis is not limited to the depletion of foreign reserves, remittance inflows and the safety and security of migrant workers. Given its far-reaching implications, it is likely to affect the country’s already fragile macroeconomic conditions adversely. In recent years, Bangladesh has been grappling with multiple macroeconomic challenges. The ongoing crisis is expected to worsen these conditions further, thereby exacerbating existing macroeconomic vulnerabilities.

The conflict has significantly impacted the economy’s growth prospects and slowed the economic recovery. In recent years, the country’s GDP growth has slowed, largely due to political instability, rising global protectionism, geopolitical fragmentation, and sluggish domestic investment. According to IMF estimates, however, the country is expected to achieve modest GDP growth of 4.7–4.9% in 2026.

The conflict may further fuel inflation, which has been hovering around 8–10%. As the energy prices have increased in the international market, after weeks of reluctance, the government has raised the prices of key energy products to avoid the growing burden of subsidies required to absorb the higher cost of energy imports. The burden has increased due to declining revenue generation (the tax-to-GDP ratio declined to 6.73% in FY2025 from 9.6% in FY2015). Maintaining low and stable inflation is highly desirable, as elevated inflation can have cascading effects on the livelihoods of ordinary people, especially people with low incomes.

The conflict is also likely to affect the export sector. If energy shortages persist, industrial production would be disrupted, and export-oriented industries and sectors would face higher energy and transportation costs, thereby reducing the country’s export competitiveness.

The crisis calls for a range of policy and adjustment measures to mitigate its adverse effects. In the meantime, the government has adopted several austerity measures, including reducing office hours to 9 am–4 pm, mandating the closure of shopping malls and markets by 6 pm, restricting decorative lighting, and setting air conditioner temperatures at 25°C or higher to curb energy consumption. The effectiveness of these measures will depend largely on robust enforcement and close monitoring of compliance, which requires greater government attention.

To offset the additional costs arising from higher global energy prices, the government has approached the World Bank and the International Monetary Fund for concessional financing. The government has introduced a fuel pass to regulate fuel sales and prevent panic buying and hoarding.

To better absorb future shocks and maintain a sustainable debt position, the government should prioritise increasing the tax-to-GDP ratio and ensuring fiscal discipline and the prudent use of foreign exchange reserves, thereby reducing reliance on external borrowing. At the same time, an uninterrupted energy supply must be ensured for industries, including small and medium enterprises (SMEs), to prevent disruptions in industrial production and ensure the timely fulfilment of export orders.

In the medium to long term, Bangladesh can reduce its dependence on the conflict-prone and volatile Middle East by diversifying its energy sourcing countries and expanding the use of renewable energy. Accelerating offshore oil and gas exploration will also be crucial for ensuring long-term energy security.

Additionally, market diversification and the development of a more skilled workforce—particularly in sectors such as nursing and caregiving—should be promoted to sustain the momentum of overseas employment. Furthermore, the families of affected workers should be brought under social safety net programs, with special support extended to those who have lost their lives in the conflict.

Ferdaus Ara Begum​
CEO, BUILD

BUILD extends its heartfelt congratulations to the newly formed government following the swearing-in of the Prime Minister, the cabinet of ministers, and members of the 13th National Parliament. As the nation enters this new chapter, BUILD emphasises the urgency of addressing the prevailing economic challenges to ensure sustainable growth and private-sector resilience.

The immediate priority for the new administration should be restoring macroeconomic stability. This includes managing inflation, maintaining a stable foreign exchange regime, and improving liquidity in the banking sector. BUILD believes that a stable economic environment is the primary prerequisite for regaining investor confidence and sustaining industrial productivity.

As a PPD platform, BUILD urges the government to accelerate reforms that reduce the cost of doing business. With the upcoming challenges of LDC graduation, BUILD emphasises the need for streamlined trade procedures, rationalised tariff structures, and the removal of regulatory bottlenecks. Attracting both domestic and FDI must remain at the heart of the national economic agenda to create employment and diversify exports.

BUILD calls for targeted policy support for MSMEs. Recognising them as the backbone of the economy, the organisation stresses the importance of simplifying licensing processes and ensuring easier access to finance for small business owners. Formalising the informal sector through digital integration and simplified regulatory compliance is essential for inclusive economic development.

Since 2011, BUILD has served as the secretariat to the Private Sector Development Policy Coordination Committee (PSDPCC) at the Prime Minister’s Office. The organisation remains committed to providing evidence-based research and facilitating structured dialogues between the government and the private sector. BUILD looks forward to working closely with the new government to implement result-oriented policies that address immediate economic hurdles while building a long-term foundation. BUILD is a premier PPD platform of Bangladesh, jointly promoted by the Dhaka Chamber of Commerce and Industry (DCCI), Metropolitan Chamber of Commerce and Industry (MCCI), and Chittagong Chamber of Commerce and Industry (CCCI). It provides research-based support for policy reforms to improve Bangladesh’s investment climate.

In recent years, a series of economic and political shocks has placed macroeconomic stability at risk. The COVID‑19 pandemic stalled economic activity and external connectivity for nearly two years, followed by the Russia–Ukraine war, which drove up global commodity prices and sharply reduced foreign reserves in 2023–24. The July 2024 uprising toppled the previous government, after which an interim administration oversaw one‑and‑a‑half years of slowing growth, weak domestic investment, subdued credit flows, and sluggish FDI amid political uncertainty. In April 2025, the United States imposed reciprocal tariffs on about 60 countries, adding to a global slowdown driven by trade disruptions and geopolitical tensions.

The confluence of these factors has left the macroeconomic situation highly vulnerable. Growth, which exceeded 6% for more than a decade, has slowed; inflation remains persistently high; and private‑sector credit, domestic investment, and FDI inflows have all weakened. In the first half of FY 2025–26, exports recorded negative growth compared with the same period of FY 2024–25 due to external shocks. Unemployment remains a major concern. The closure of many industries and layoffs following the 2024 political transition have worsened the situation, while subdued economic activity and declining investment have limited new job creation. This poses a serious risk to social stability, as thousands of educated young people enter the labour market each year without sufficient opportunities.

On 6 February, the BNP released its election manifesto, outlining 51 commitments under five pillars. It pledged to transform Bangladesh into an upper‑middle‑income economy with GDP reaching USD 1 trillion by 2034. The manifesto emphasises private‑sector‑led growth through simplified registration and legal procedures, streamlined licensing and taxation, and the development of digital ecosystems. It also promotes “Made in Bangladesh” initiatives to strengthen global competitiveness and aims to raise FDI from 0.5% to 2.5% of GDP by streamlining relevant policies and procedures.

Following the Thirteenth General Election, businesses are showing renewed optimism about economic recovery under the new government. The private sector—the economy’s main engine—can drive this revival if the cost of doing business is reduced, access to affordable credit improves, incentives for emerging sectors expand, logistics and infrastructure become more business‑friendly, and regulatory barriers are minimised. Micro, small, and medium enterprises (MSMEs)—which account for a large share of output and most employment—remain largely informal and face financing, capacity, and technology constraints; given their central economic role, the government should prioritise formalising MSMEs and providing targeted support.

Inflation remains high, and interest‑rate hikes have curbed investment and jobs, underscoring the need for supply‑side measures to stabilise prices more sustainably. Prolonged political uncertainty and a weak law‑and‑order environment have left private investment stagnant, now at a two‑decade low. Business dynamism has consequently weakened, and job creation has slowed. Reviving private‑sector growth requires improved access to finance, streamlined licensing and registration, a competitive incentive framework, upgraded infrastructure and logistics, reliable energy supply, more efficient regulation, and a stable security environment.

The country’s tax‑to‑GDP ratio remains among the lowest in South Asia, forcing heavy domestic and external borrowing and pushing public debt to about BDT 23 lakh crore, constraining fiscal space and crowding out private investment. Although the interim government began separating tax policy from tax administration within the National Board of Revenue (NBR), progress is incomplete; the new government must prioritise revenue mobilisation through accelerated NBR reforms, a review of tax exemptions, and digital modernisation of tax administration. The financial sector has become one of the economy’s most vulnerable areas, with non‑performing loans reaching an estimated 36%. The interim government introduced reforms to strengthen banking governance and enhance the autonomy, supervision, and oversight of Bangladesh Bank. The new government should assess these measures—including the proposed Financial Institutions Court Act—and expedite the recovery of defaulted loans.

Attracting FDI is critical for faster growth and technology transfer, yet existing policies have failed to deliver higher inflows. A comprehensive overhaul is required: implementing a single window under BIDA, digitalising VAT, customs, and investment approvals, establishing a 24/7 investor helpdesk, speeding up investor visas and work permits, improving infrastructure, and ensuring uninterrupted electricity and gas supply. Addressing these constraints is essential to achieving the target of raising FDI to 2.5% of GDP.

After taking office, the government sought a three‑year extension of Bangladesh’s graduation from Least Developed Country (LDC) status and submitted a request to the Chair of the Committee for Development Policy (CDP), citing emerging internal and external challenges. To ensure a smooth and low‑risk graduation, it must diversify export products and markets, enhance competitiveness, pursue free trade agreements with key partners, raise productivity, invest in infrastructure, improve logistics and port efficiency, and strengthen the operating environment for SMEs and other businesses. The challenges are significant, but the BNP’s mandate enables it to pursue essential reforms and to coordinate short-, medium-, and long-term strategies to revive the economy and deliver its manifesto commitments.

BUILD, as a public–private dialogue platform, undertakes private‑sector‑focused policy research and advocacy to support smooth business operations and contribute to national economic development. It has produced six sector‑specific business‑licence guidebooks to aid regulatory compliance and is currently developing a national traceability strategy to protect exports and strengthen competitiveness in line with EU sustainability requirements. BUILD remains committed to supporting the government’s private‑sector agenda, advancing economic recovery, and addressing pressing economic challenges.

Ferdaus Ara Begum​
CEO, BUILD