Budget FY27's deregulation push needs legal muscle

Illustration: TBS

The present government envisions transforming Bangladesh into a $1 trillion economy by 2034, with targets including a tax-to-GDP ratio of 10% in the medium term and 15% by 2035, 6.5% GDP growth next fiscal year, and 10 million new jobs — including 1 million in ICT and 500,000 in the creative economy — alongside raising FDI to 2.5% of GDP from around 0.45% currently.

Meeting these targets demands a vibrant, expanding private sector. Creating a million jobs annually requires at least 100,000 new entrepreneurs a year, which in turn requires a business environment that is simple, predictable, and investment-friendly. 

Deregulation, lower compliance costs, and simpler business procedures must therefore be national priorities — not merely desirable, but fundamental to the government's economic and employment goals.

The FY27 budget and related policy documents reiterate this commitment, renewing private sector confidence that longstanding regulatory bottlenecks will finally be addressed.

We have summarised Chapter 8 of the Budget and the Finance Act 2026 into eight priority reform areas.

The first is business registration. The budget promises 48-hour company registration (paragraph 282) and seven-day business-start approvals (paragraph 280) — encouraging commitments that need legal teeth to succeed. 

The term "complete application" should be clearly defined to prevent inconsistent interpretation across agencies, and the timelines themselves must be legally enforceable — through official directives, inclusion in agencies' Citizens' Charters, and mandatory compliance — or businesses may not see the intended benefits in practice. 

We recommend these timelines be backed by legal provisions, administrative instructions, and performance monitoring across all relevant agencies.

The second pillar is tax administration. The budget proposes automated tax refunds and risk-based audits — reforms that could improve transparency and taxpayer confidence, provided they are implemented through a proper statutory framework. Separately, the NBR has introduced new revenue measures to raise the tax-to-GDP ratio. 

But a heavier tax burden on the private sector, particularly SMEs, risks discouraging the very business expansion and formalisation the reforms aim to encourage. Tax administration reform should be paired with a balanced policy that rewards voluntary compliance rather than deterring it.

The third, and perhaps most significant, pillar is customs modernisation. The most mature reform package this year expands bonded warehouse access (SRO No. 208; paragraph 297; amendments to the Bonded Warehouse Licensing Rules, 2024), bringing four export sectors — leather goods and footwear, terry towels, linen, and home textiles — under facilities similar to those the RMG sector already enjoys. Leather was already under a supervised bonded warehouse system.

The reform stops short of universal access, however: it extends the facility to selected sectors rather than an economy-wide, risk-based system, leaving many non-RMG exporters outside it. The budget's new Free Trade Zone provision (clause 134Ka, Customs Act 2023) doesn't fill this gap — a Free Trade Zone is not a substitute for a bonded warehouse, and businesses outside FTZs still need direct warehouse access to stay competitive. The next phase should extend universal, risk-based bonded warehouse access — and the RMG sector's broader trade facilitation benefits — to all eligible exporters.

The fourth reform simplifies VAT. Quarterly filing in place of monthly, appeal reform, and reduced compliance burden are welcome steps, as is e-VAT, which promises a genuine cut in compliance costs. VAT Challan 9.1 and 6.3 need to be linked to the BIN for automated refunds to work. Of the 17 modules now operational, many still operate in silos; connecting BSW and IVAS would provide businesses with more cohesive support.

The fifth pillar concerns investment repatriation. The Budget promises faster repatriation, but three overlapping policies currently govern it — profit-based (8%, Income Tax Act), turnover-based (6%, foreign exchange policy), and a separate BIDA policy. These need to be streamlined into one coherent framework.

The sixth pillar is capital market development. Digital IPOs and corporate bond financing could deepen the capital market and reduce reliance on bank credit. BUILD supports both, but recommends phased implementation: newly licensed projects could first be encouraged, then required, to raise capital via the stock market, improving transparency and governance. 

Once Phase 1 proves out and market regulation strengthens, this could extend to selected greenfield projects — carefully. Pre-revenue greenfield equity carries real disclosure, valuation, and investor-protection risks; internationally, such projects are typically financed through project or infrastructure bonds rather than public equity. Any expansion here needs a robust regulatory framework and strong investor safeguards alongside it.

The seventh pillar is the Unified Single Window. Replacing sequential, agency-by-agency approvals for construction, environmental, and local government clearances with one integrated digital platform could meaningfully cut processing time and cost — if implemented well. That's a big if: success hinges on the digital readiness and interoperability of numerous agencies, especially local government bodies. Existing platforms — BanglaBiz, BSW, and various legacy OSS portals — already overlap in function, so clear institutional ownership will be essential to avoid duplication and fragmented service.

The eighth and final pillar concerns governance and accountability. A high-level Reform Task Force and public complaint portal are welcome but represent the weakest link in the agenda. A task force and grievance portal alone aren't enough oversight for a programme spanning a dozen-plus agencies and thousands of daily transactions — it needs defined institutional responsibilities, measurable performance indicators, enforceable service standards, and independent monitoring to actually translate policy into improved service delivery.

A manufacturing unit in Bangladesh currently needs 19 licences, 154 documents, 351–457 days, and dealings with roughly 16 government agencies — with eight of those licences requiring annual renewal. 

We propose a binding Deregulation Action Plan, published within 90 days, naming a lead agency, an accountable officer at Deputy Secretary level or above, and a gazetted timeline for each of the eight pillars — institutionalised as a standing mechanism that outlasts any single budget cycle or government. 

Deemed approval and SLA enforcement should be legislated, turning administrative intent into statutory rights that survive a change of minister or budget year. The deregulation push is welcome; now it needs consistent, disciplined implementation to match

Ferdaus Ara Begum is the CEO of BUILD, a public-private dialogue platform that works for private sector development.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.