Tax exemptions to boost healthcare infrastructure, medicine production
Tk4,166 crore allocation has been proposed for providing free medical services to the poor people and Tk1,000 crore for the Expanded Program on Immunisation
Highlights
- Tk41,908cr health sector allocation
- Allocation 5.3% compared to last year's 5.2% of the total budget
- Reform Commission recommends 15%
- Tk4,166cr allocation for free treatment to poor patients
- Tk1,000cr for vaccination expansion
In a push for universal health coverage, the interim government has introduced key reforms and financial incentives in the proposed national budget to boost both public and private healthcare.
To stimulate the healthcare industry and reduce patient costs, the government has extended import duty reductions on medical equipment and machinery to all hospitals with over 50 beds, not just referral hospitals.
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The budget also extends VAT exemptions on hybrid and electric vehicles, including ICU-equipped ambulances, and continues the VAT exemption at the manufacturing stage for Active Pharmaceutical Ingredients (API) until June 2030, a move applauded by pharmaceutical leaders.
The budget allocates Tk41,908 crore to the Ministry of Health and Family Welfare – slightly up from last year's Tk41,407 crore. Despite the reform commission's 15% recommendation, this year's health budget rose slightly from 5.2% to 5.3% of the total budget.
Announcing the 2025-26 fiscal budget, Finance Adviser Salehuddin Ahmed declared a renewed commitment to bringing all citizens under universal health coverage by 2030.
In a further boost, all VAT has been exempted on the import and local purchase of materials and spare parts required for manufacturing hospital beds, effective until 30 June 2030.
Dr AM Shamim, founder and managing director of Labaid Group, welcomed the initiatives. "This is a good step. Duty reductions will make spare parts and equipment more accessible and affordable for hospitals. That will translate to better services and reduced costs for patients," he told The Business Standard.
He added that due to foreign exchange constraints, many hospitals have been unable to upgrade equipment in recent years. These tax benefits, he said, would encourage investment and reduce reliance on overseas treatment.
Zahangir Alam, CFO of Square Pharmaceuticals, echoed the sentiment but urged for long-term policy stability. "Pharmaceuticals are a major export sector after garments. Tax benefits should not stop in 2030. To keep medicine prices low and ensure quality, long-term incentives are crucial," he said.
Tk4,166cr for free treatment to the poor
"To ensure healthcare services for the poor population, I propose allocating an additional Tk4,166 crore for providing them with free medical services in the upcoming fiscal year and Tk1,000 crore for the expanded vaccination programme," adviser Salehuddin said in the budget speech.
The budget also includes Tk1,000 crore for an expanded vaccination programme, while efforts are underway to address human resource shortages.
Adviser Salehuddin Ahmed said that recruitment of doctors, nurses, and technicians is being accelerated. Plans are also in place to launch PhD courses in nursing and establish a nurse teacher training centre, with a view to enhance caregiver skills and tap into the global care economy for foreign remittance opportunities.
If used effectively, it could triple public health services: Experts
Experts have cautiously welcomed the budget. Dr Syed Abdul Hamid, professor at the Institute of Health Economics, University of Dhaka, pointed out that while the allocation has increased to 5.3% of the total budget.
However, he believes that if effectively utilised, the current budget could triple the impact of public health services.
He stressed the need for systematic oversight to ensure that the benefits of VAT exemptions for private hospitals are passed on to patients. "The government must identify bottlenecks in fund utilization from the very start of the fiscal year," he added.
Abu Muhammad Zakir Hossain, a member of the Healthcare Reform Commission, said, "The commission recommend allocating 15% of the national budget to health. To build a people-centered, accessible, and universal healthcare system, increased investment in health is essential."
"Despite our repeated appeals, we have seen little to no progress. Without adequate investment in healthcare, national development and the well-being of the population cannot be achieved," he added.
