Recovery roadmap: Budget unveils major investment push amid private credit slump, energy crunch
Despite the reform drive, energy insecurity remains a key concern, with gas and power shortages continuing to constrain production and deter new investment
Bangladesh's national budget has been presented as a comprehensive "recovery roadmap" for private sector revival, investment and job creation, at a time of deep structural pressures, including energy shortages, dollar constraints and historic lows in private credit growth.
In his budget speech today (11 June), the finance minister described the fiscal framework as a "3R strategy" – recovery and stabilisation, restoration, and reconstruction for acceleration – aimed at reviving investment and restoring economic momentum.
The government announced a broad reform and incentive package, including deregulation, free trade zones, stimulus financing, tax and VAT simplification, bonded warehouse expansion and sector-specific investment incentives.
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However, the budget comes at a critical juncture. Bangladesh Bank data show private sector credit growth has fallen to 4.7%, the lowest on record.
Economists and business leaders attribute the slowdown to weak investment demand, energy shortages and foreign exchange constraints, with industrial output hit by gas supply uncertainty and dollar shortages, forcing many factories to scale back or shut.
Against this backdrop, the finance minister announced a Tk60,000 crore stimulus package through Bangladesh Bank to revive credit flows and support recovery.
Despite the reform drive, energy insecurity remains a key concern, with gas and power shortages continuing to constrain production and deter new investment.
Stimulus package for investment revival
The stimulus focuses on five priority areas: Tk20,000 crore has been allocated to reopen closed factories and support the services sector, Tk10,000 crore for agriculture and rural activities, Tk5,000 crore for CMSMEs, Tk3,000 crore for export diversification, and Tk3,000 crore for developing northern Bangladesh as an agricultural hub.
The government will also provide a 6% interest subsidy to lower borrowing costs. Officials estimate the package could create jobs for more than 25 lakh people.
Economist and Policy Exchange Chairman Masrur Reaz said the package could play a major role in reviving industrial activity. "If closed factories and new investments can effectively access this financing, it will be a highly impactful intervention."
He said proper monitoring would be essential to ensure effective fund utilisation.
The package also includes an additional Tk2,000 crore SME financing allocation through IDCOL, BIFFL and SME Foundation to support small entrepreneurs and expand credit access.
Private sector recovery strategy
Chattogram Chamber President Amirul Haque said, "Many firms were on the verge of collapse. This package will help them restart operations. Lower VAT and tax burdens will also encourage new investment."
However, he stressed that resolving the gas crisis remains essential for any recovery effort.
PRAN-RFL Group Chairman and CEO Ahsan Khan Chowdhury said the budget introduced several positive measures for investment and consumption.
He highlighted lower advance tax on raw material imports, reduced withholding tax on export incentives and lower tax on foreign loan interest as steps that could boost industrial activity and attract foreign investment.
He also welcomed duty cuts on consumer goods and the government's push for renewable energy as a long-term stability measure.
A key pillar of the budget is an ambitious deregulation agenda aimed at improving the ease of doing business. The finance minister described it as a "transformational shift".
Under the proposed framework, company registration would be completed within 48 hours, licences within seven days, investor visas within 10 days and work permits within seven days. A deemed approval system would also be introduced, allowing applications to be automatically approved if deadlines are missed.
Tax and VAT returns will be fully digitised, while customs, licensing and regulatory approvals will be integrated into a single digital platform.
Dhaka Chamber President Taskeen Ahmed welcomed the move, saying long-standing business demands for a single-window system and faster approvals were finally addressed.
Investment expansion and industrial incentives
The government has also announced a broad package of structural investment incentives, including free trade zones, expanded bonded warehouse facilities, tax exemptions for industrial setup, and sector-specific support for the creative economy, automobiles, semiconductors and other emerging industries.
Masrur Reaz said the budget introduces tools such as a unified digital business platform, FDI heat maps covering 19 sectors, and new economic zones in Patuakhali, Jashore, Kurigram, Nilphamari, Chandpur and Kushtia.
The zones are expected to create around 2.50 lakh jobs. He added that duty-free import facilities for export-oriented sectors, including agriculture, pharmaceuticals, electronics and light engineering, could help diversify Bangladesh's export base.
Freelancers, content creators, startups
One of the notable proposals is the expansion of tax benefits for freelancers. Previously limited mainly to IT-enabled services, the incentives will now cover all categories of freelancing income.
Content creators will also receive full income tax exemption, reflecting the growing importance of Bangladesh's digital creator economy.
Startups and technology-based businesses will enjoy zero turnover tax and full VAT exemption on local transactions, service imports and space rentals until 2035.
