Protectionist trade regime acting as 'hidden tax' on consumers: Experts

Bangladesh's long-standing industrial protection policy has effectively turned into an invisible "protection tax," pushing up consumer prices and weakening export diversification, according to policymakers and business leaders. 

The government must gradually move away from long-standing protectionist policies and focus on execution, institutional coordination and energy security to sustain investment and employment growth, they said at a round at a roundtable "Bangladesh Trade Policy: Industrial Protection, Investment Impacts, and Consumer Welfare" organised by the Police Research Institute (PRI) at its office in Banani today (11 May). 

Bangladesh Investment Development Authority (Bida) Executive Chairman Ashik Chowdhury, addressing the event as the chief guest, said there is now a broad understanding that industrial protection cannot be sustained indefinitely as the country prepares for post-LDC graduation challenges, adding that consumers ultimately bear the cost of inefficiency.

Ashik also said investment promotion agencies have submitted 46 recommendations to the National Board of Revenue (NBR), including 19 proposals on deregulation.

Consumers Association of Bangladesh President AHM Shafiquzzaman said protectionist policies are directly increasing the burden on consumers.

"To protect 300,000 salt farmers, we are making 180 million people buy salt at Tk40 per kg, while it could cost Tk10 in an open market," he said.

He added that similar distortions exist in edible oil, onions, fruits, sugar and beef, where high import duties and restrictive trade policies keep prices artificially high.

Shafiquzzaman also pointed out a policy contradiction. "The NBR's sole target is revenue collection, while the commerce ministry's responsibility is to ensure stable markets for consumers. These two objectives often clash." 

He added that stronger energy security could reduce the need for Tk6,000-8,000 crore in cash incentives currently provided by the government.

Dhaka Chamber of Commerce and Industry President Taskeen Ahmed said protectionist policies may have initially supported local industries but have now created an "anti-export bias."

Referring to Vietnam and Thailand, he said sustained growth depends on trade openness and competitiveness rather than prolonged protection. "With LDC graduation approaching, we can no longer afford to maintain these barriers," he said.

He added that many manufacturers and retailers are operating on narrow 5%-6% margins due to high import costs of raw materials and intermediates under the current tariff structure.

Taskeen urged the government to speed up free trade agreements and rationalise tariffs to reduce costs and expand consumer choice.

Presiding over the event, PRI Chairman Zaidi Sattar said the current tariff structure is costing consumers more than $20 billion annually through higher prices and inefficiencies. 

Criticising the persistent gap between input and output tariffs, he said it continues to shield inefficient domestic industries for too long while raising costs for consumers.

Policymakers, economists, business representatives, and others attended the event.