Budget FY26: What corporate Bangladesh expects

As the interim government prepares to unveil the FY2025-26 budget today, business leaders are concerned over the withdrawal of tax exemptions for key local industries, rising VAT, import duties and corporate taxes, and significant tax hikes earmarked for construction, e-commerce and textile sectors.

According to four business leaders that TBS spoke to, a people-centric and business-friendly budget amid the rising inflation and production costs is of utmost necessity at the moment. 

Budget should prioritise investment and employment

Ahsan Khan Chowdhury 

Chairman and CEO, PRAN-RFL Group 

At present, the economy is going through a difficult time. Soaring inflation has placed immense pressure on people, while industries are grappling with rising production costs and operational challenges. Amid this situation, we hope that the new budget will be both people-centric and business-friendly.

The agriculture sector is extremely important for our country. During times of high inflation, if we cannot increase internal food production and supply, inflation will not ease. Reducing inflation is not possible through imports alone — we must enhance domestic food production. Therefore, the government must increase allocations to the agricultural sector, not just through subsidies, but by supporting modernisation projects. 

It should also facilitate agro-processing initiatives to ensure better marketing of farmers' products. Additionally, spending on education and health must be increased to provide relief to the general public.

Simultaneously, focus should shift from costly megaprojects to smaller, labour-intensive ones. These are easier to implement, deliver faster results, and create widespread employment opportunities. Projects that remain stalled due to poor implementation serve little purpose and waste valuable resources.

The business community is under considerable stress due to rising production costs. The budget should reflect all possible measures to reduce production costs in factories. If costs come down, consumers will benefit, and businesses will remain sustainable. We also expect policy consistency and tax reductions to protect local industries.

Currently, Bangladesh's tax-to-GDP ratio is just 7.5%. If the government wants to increase revenue, there are effective alternatives to raising tax rates. The budget should focus on expanding the tax net while reducing rates in various sectors. High tax rates often encourage evasion rather than compliance.

We are concerned that heavy tax burdens may be imposed on import-substitute industries. We believe that the government should reconsider this approach and instead reduce VAT and other taxes on both the import-substitute sector and essential food products. Such measures would help protect and encourage the growth of local industries, reduce reliance on imports, and ensure more affordable prices for consumers. 

The government should avoid tax hikes on electronics, textiles and plastic industries. If this happens, these sectors — and the broader economy — will suffer. Likewise, possible increases in corporate and turnover taxes could harm businesses and have long-term negative consequences for economic growth.

One of the most pressing issues for industrialists is the lack of uninterrupted energy supply, particularly gas. Despite rising energy prices in recent years, industries continue to struggle with shortages. The budget must include concrete measures to ensure a reliable gas supply to keep factories running.

High bank interest rates remain a major obstacle to investment, slowing down capital flows. As inflation has shown a slight downward trend in recent months, there is scope to reduce interest rates. We expect a clear and specific announcement on this in the budget. Furthermore, the government should reduce its own borrowing to allow for more credit availability in the private sector. Greater access to finance will encourage entrepreneurs to invest, leading to significant job creation.

To reduce business costs, the budget should support improvements in port capacity, customs efficiency, and reductions in shipping and transportation expenses. Special tax incentives should also be introduced for new industries to attract fresh entrepreneurs and boost investment.

Moreover, investors make decisions based on factors such as law and order, foreign exchange reserves, GDP growth, and good governance in the banking sector. The budget must offer clear policy direction on these critical issues.

While the government is rightly offering incentives to attract foreign investment, we also expect support for domestic entrepreneurs. Encouraging homegrown investment and innovation is essential for inclusive and sustainable economic growth.

However, we hope this year's budget will be truly inclusive and business-friendly — one that strengthens the investment environment and accelerates job creation.

Let the businesses sustain, wealthy people invest

Aameir Alihussain, Managing Director, BSRM Group

From the newspapers, we are learning about further tax-VAT hikes in the budget. Some increases and some decreases are okay, but it must be rational.

Businesses are in dire need for a reasonable tax-VAT burden to sustain, also we need easing of the tax-VAT and customs rules.

There is no doubt that the government needs more revenue, but it should not be through further taxing the existing taxpaying community. Excessive tax burden during these challenging economic conditions will further weaken industries as well as the economy.

Collection of more tax should be through significantly widening the tax net. We are waiting to see strategic plans, prudent moves by the interim government to create more and more taxpayers.

Taxing the wealthy individuals will not be a good move because they will be discouraged from disclosing wealth and income.

The higher tax will be paid only by the individuals who declare their wealth honestly, not by those who conceal and launder money abroad.

We expect the government to encourage more people and firms to pay taxes through lower rates.

The growing economy of Bangladesh, having a large population, really needs investment, be it from the local and non-resident individuals, or the conglomerates, foreign funds and multinationals.

Easing investors' lives is my top expectation from the interim government.

The annual development programme (ADP) is being cut, that is not a problem. Because the big spending targets were always unachieved.

However, government spending is behind a big part of the economic activities. Amid the slumped economic activities, we expect a proper implementation of the reduced development spending.

Aameir Alihussain spoke to TBS Special Correspondent Mahfuz Ullah Babu over the phone. 

Tax rates should be lowered to attract foreign investment

Mohammad Zaved Akhtar 

Chairman and Managing Director, Unilever Bangladesh and President, FICCI

Despite Bangladesh's attractive market, actual investment in real hard currency has remained minimal and in recent times, nearly stagnant. This is despite some visible efforts by BIDA, NBR and Bangladesh Bank.

There are three fundamental reasons that can be attributed to this situation.

Firstly, our credibility as a trustworthy investment destination is in question, given we have failed to honour sovereign commitments multiple times, whether related to payments, energy support or arbitration outcomes. There are numerous instances where intellectual property rights have been disregarded. Moreover, while NBR promises lower tax rates, the effective tax rates remain among the highest.

Secondly, there is a lack of policy consistency. For example, commitments made under BEZA, EPZ, or Hi-Tech Park initiatives are often not fulfilled, and policies are frequently altered midstream. Moreover, tax rates and import valuations are sometimes increased arbitrarily.

Thirdly, there are capability issues with officers as they do not have the capacity or intent to understand business issues and use bureaucracy as a deterrent for investment. In some cases the whims get in the way of facilitating real  investments.

Investors look forward to a stable government, through which long-term and predictable policies can be ensured. It does not matter much who is in power; what matters is that the government builds trust among investors. 

Investors also expect a fully digital and data-driven ecosystem, enabling them to complete the investment process once and for all through a streamlined, online platform.

Once these are done, five big bold moves are needed for facilitating trade and investments.

Firstly, there is a pressing need for an integrated Investment Promotion Agency (IPA). Currently, investors face considerable challenges when navigating Bangladesh's investment landscape. The existence of multiple standalone agencies such as BIDA, BEZA, BEPZA, and the Hi-Tech Park Authority makes the approval process confusing, fragmented and unnecessarily complex.

Foreign investors often struggle to determine which agency to approach, causing delays, higher costs and uncertainty. A consolidated investment-promotion authority that acts as a one-stop service centre would be a fantastic solution. Instead of investors running between multiple agencies and departments, this unified platform would oversee the entire process-from securing land and utilities to obtaining permits and regulatory clearances. A streamlined system like this would not only enhance efficiency but also make Bangladesh a more attractive investment destination. If regional competitors simplify their investment frameworks while Bangladesh remains bogged down by bureaucracy, the country risks losing out on critical opportunities.

We need to separate the policy-making and administrative functions of the NBR. A recent positive step is the government's decision — now officially announced — to make this separation, something the Foreign Investors' Chamber of Commerce & Industry (FICCI) has supported for a long time. This change is expected to improve how tax policies are made and make revenue collection more efficient. However, it is important that this reform is carried out properly, so the original goals are met and accountability is not lost during the transition to two separate units.

We must protect intellectual property rights. Although Bangladesh already has laws for things like IT, trademarks, and other intellectual property, the main problem is weak enforcement. Without strong protection, the country could miss out on the economic benefits that come from innovation and new ideas. Businesses will be unwilling to share their technology or offer manufacturing services if they do not trust us to protect their intellectual property. We need to take quick steps to fix these problems and make sure our enforcement matches international standards.

Bangladesh needs to shift toward more responsible business practices. As the country prepares to graduate from Least Developed Country (LDC) status, it will be very important to protect workers' rights and follow strong regulations. With changes happening in global trade, businesses must adopt sustainable practices that follow Environmental, Social, and Governance (ESG) standards. 

FICCI has often stressed the need for policies that support fair wages, protect workers, and promote ethical business behaviour. To make a smooth transition after LDC graduation, the government must focus on policies that put worker welfare first. Without these protections, Bangladesh may face serious challenges in dealing with future economic changes.

Making digital banking accessible, affordable should be a priority

Syed Mahbubur Rahman

Managing Director and CEO, Mutual Trust Bank

In the upcoming 2025-26 fiscal year budget, the government must prioritise overall economic growth and the improvement of work culture above all else. 

To increase tax revenue, it is essential first to cultivate a strong tax culture.

The government should also focus the budget on industrial and entrepreneurial development, especially expanding financial inclusion opportunities for small and medium-sized enterprises (SMEs).

Allocating adequate funds in the budget for technology-driven employment is crucial. Equally important is ensuring incentives and support for startups and innovation-led sectors to create new job opportunities.

Policymakers must carefully balance GDP growth with inflation control. Emphasis should be placed on increasing investment in productive sectors. Effective measures are urgently needed to control inflation in agriculture, industry, food, and energy sectors.

Tax structures must be simplified to ease the burden on the middle class and stabilise the market. Achieving this goal requires urgent reforms in the banking sector.

The budget must give special attention to making digital banking easier, more affordable, and widely accessible. This will facilitate easier loan access and enable small entrepreneurs to avail financial services with ease. 

Non-performing loans need to be reduced, while transparency and accountability in the banking sector must be ensured. Introducing technology-driven modern management will further energise banking operations.

Most importantly, the reforms already initiated must be implemented swiftly. We need to assess how many measures remain at the policy level and how many have been effectively realised. These plans must be executed with practical strategies that reflect the country's realities and needs.

Particularly, government subsidies and social protection funds should be disbursed digitally through bank accounts. This will increase transparency, reduce corruption, and expand the customer base for banks and especially enable those with capital shortages to become more active in the rural economy.