Economics experts and business leaders on Sunday underscored the importance of ensuring an investment-friendly climate and policies that facilitate private sector growth, support export diversification, and enhance ease of doing business to bolster both domestic and foreign investor confidence.
They also stressed political stability to attract more foreign direct investment (FDI), ensuring energy supply in industrial units, transparency and digitalization in customs, proper classification of raw materials and the gradual removal of non-tariff barriers to strengthen Bangladesh’s trade competitiveness amid its upcoming LDC graduation.
The remarks came up at a seminar titled “Fiscal Issues for National Budget 2025-26 to Foster Economic and Business Growth” organized by the Institute of Chartered Accountants of Bangladesh (ICAB), in collaboration with the Foreign Investors’ Chamber of Commerce and Industry (FICCI) and the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), at Sheraton Dhaka.
Md Abdur Rahman Khan, secretary of the Internal Resources Division and chairman of the National Board of Revenue (NBR), attended as the chief guest. Mohammed Humayun Kabir, ICAB’s council member and past president, chaired the session.
In his speech, the NBR chairman said, “In the FY26 budget, we try our best to simplify the processes that can facilitate business people. We are trying the best to simplify the processes of cost of compliance in income tax, customs and VAT, especially in tax and VAT laws as well as the tax revenues do not reduce.”
He said procedures would be simplified in the fresh finance ordinance once the FY26 budget is declared.
“You will see a consistency in new policies. The government would be doing rationalization of the tax structure, although it might not be up to the expectations of the business community. As a chairman of the revenue board, it is very difficult for me to strike a balance between the increasing revenue and facilitating trade and business,” he said.
He said despite Bangladesh offering one of the lowest nominal corporate tax rates in the region at 22.5%, the effective burden remains high due to arbitrary assessments.
The NBR chairman said his revenue board is considering introducing a long-term tax policy framework to reduce abrupt changes. A new online export-import tax portal has been launched for transparency.
The seminar featured insightful keynote presentations from Dr M Masrur Reaz, chairman of Policy Exchange Bangladesh, and Snehasish Barua, partner at Snehasish Mahmud and Co, Chartered Accountants.
Foreign direct investment at a six-year low
Dr M Masrur Reaz highlighted the formidable challenges facing Bangladesh’s economy, emphasising that its resilience is tested amid global economic uncertainty.
“With inflation hovering near double digits and foreign direct investment at a six-year low, Bangladesh must take decisive fiscal and monetary action to navigate these headwinds,” he said.
FDI inflows dropped by 71% year-on-year, falling to $104.33 million in the July-September quarter of FY25, the lowest in six years, according to the Bangladesh Bank.
He called for urgent structural reforms in debt management, governance and banking sector regulation, stressing that rising debt servicing costs are limiting productive investments while fragmented institutional coordination hampers effective policy responses.
Greater transparency in public investments and the revitalization of capital markets would be essential in reducing dependence on bank borrowing, he said.
Despite these challenges, he pointed to signs of optimism, noting that exports are gradually rebounding and remittances remain strong. However, he warned that sustaining this momentum requires policy consistency, supply-side improvements and robust fiscal reforms that strengthen investor confidence and financial discipline.
Echoing these concerns, Snehasish Barua stressed the need for bold fiscal policies in the upcoming budget.
“Incremental changes will not be enough – we need a forward-thinking, investment-friendly strategy that directly addresses revenue mobilization, rising debt and tax compliance,” he said.
He highlighted Bangladesh’s low tax-to-GDP ratio as a key issue, calling for a broader tax base, VAT modernization and full automation of tax administration to improve transparency and compliance.
NBR Chairman Abdur Rahman Khan emphasized the government’s commitment to a fiscally responsible national budget, cautioning against excessive borrowing that could place an undue burden on future generations.
Saying that the NBR has already addressed the majority of investment-related tax issues, he assured that efforts are ongoing to resolve the remaining challenges through close collaboration with stakeholders.
Reaffirming the government’s commitment to business-friendly reforms, he also stressed the importance of strengthening enforcement to curb tax non-compliance. A significant policy shift was announced – transferring the authority to grant tax exemptions to parliament.
“This move aims to enhance transparency, reduce undue influence, improve the ease of doing business and align fiscal policy more closely with long-term economic sustainability,” he said.
ICAB President Maria Howlader said, “We need to set a predictable tax policy and ensure consistency investors and the businesses plan on the basis of existing policy, but sudden changes within six months discourage.”
Integrated tax system to enhance revenue collection
FICCI President Zaved Akhtar emphasised the need for an integrated tax system to enhance revenue collection while ensuring transparency and efficiency.
He stressed the importance of distinguishing policy formulation from revenue administration to foster fairness and predictability. Optimizing tax rates – rationalizing TDS, eliminating inadmissibility thresholds and phasing out minimum tax – will be key to attracting foreign investment.
He also advocated for a unified VAT rate, proper classification of raw materials and the gradual removal of non-tariff barriers to strengthen Bangladesh’s trade competitiveness amid its upcoming LDC graduation.
JBCCI President Tareq Rafi Bhuiyan (Jun) highlighted the potential to attract investment and foster stronger Bangladesh-Japan economic ties.
JETRO Country Representative Yuji Ando urged policy consistency, better incentives than other countries and proper support for existing investors to attract more FDI in Bangladesh.
Courtesy: Daily Sun
Bd-Pratidin English/ AM
