From logistics to digital governance: What should the new budget look like for a competitive economy?

In today's global economy, growth alone is no longer enough to maintain a competitive position. Efficient logistics systems, technology-driven administration and effective digital governance are equally important.

Bangladesh is now at a stage where coordination between infrastructure development and digital transformation will determine the country's future economic direction.

Therefore, the budget for fiscal year 2026–27 should not be treated merely as a statement of income and expenditure. Rather, it should serve as a strategic roadmap for strengthening the country's competitiveness.

Bangladesh's national budget is being prepared at a time when the economy is facing high inflation, pressure on foreign exchange reserves, revenue shortages and global uncertainty.

Although GDP growth has remained between 5% and 6% in recent years, rising business costs, inefficiencies in supply systems and administrative complexities are weakening economic competitiveness.

In this context, the new budget should not only be viewed as a fiscal management document, but also as a strategic plan to make the economy more efficient, technology-driven and investment-friendly.

According to estimates from the World Bank and several international research organisations, logistics costs in Bangladesh account for nearly 15% to 20% of total production costs. In developed economies, the figure generally remains between 8% and 10%.

This indicates that Bangladesh still has a relatively expensive supply chain system from production to product distribution.

Excessive pressure on Chattogram Port, limitations in rail-based cargo transportation and weaknesses in warehousing systems are affecting export competitiveness.

Therefore, the 2026–27 budget should include a dedicated strategic allocation for the logistics sector.

Significant investment is especially needed for the development of the Dhaka-Chattogram economic corridor, connections with Payra and Matarbari ports, dry ports, cold-chain facilities and multimodal transport systems.

At present, nearly 90% of goods transportation in Bangladesh depends on road transport, increasing both costs and delivery times.

If incentives are provided in the budget for rail-based container transportation and the use of inland waterways, logistics costs could decline significantly in the long run.

At the same time, it is also important to establish dedicated logistics zones for export-oriented industrial areas.

The new budget should treat digital governance as one of the central pillars of economic reform.

Although many services related to business registration, VAT, taxation, customs and licensing have already been digitised, they are still not fully integrated.

The lack of data coordination among institutions and the continued use of manual processes increase both business time and costs.

If Bangladesh truly wants to implement the vision of a "Smart Bangladesh," the upcoming budget will require large-scale investment to bring government services under a unified digital platform.

Experts say effective digital governance could reduce administrative costs by as much as 20% to 30%.

At the same time, transparency in tax collection would increase and revenue leakage would decline.

Bangladesh's revenue-to-GDP ratio currently remains between 8% and 9%, which is lower than that of many South Asian countries.

Therefore, instead of increasing tax rates, strengthening digital tax administration has become essential.

The introduction of AI-based tax audits, e-invoicing and automated VAT management could significantly improve revenue collection.

The 2026–27 budget also needs to place greater emphasis on technology and digital infrastructure.

Although the number of internet users in the country has exceeded 130 million, limited access to high-speed internet and digital services in rural areas remains a major challenge.

As a result, allocations should be increased for 5G infrastructure, national data centres, cloud services and cybersecurity.

At the same time, tax benefits and venture funds could be introduced for startups, fintech and AI-based innovation sectors.

The budget can also play an important role in diversifying Bangladesh's exports.

At present, more than 80% of the country's export earnings come from the ready-made garments sector.

To reduce this dependency, sectors such as pharmaceuticals, agro-processing, ICT, light engineering and healthcare should receive tax incentives and infrastructural support.

In particular, non-traditional export sectors could expand rapidly if digital trade facilitation and faster customs clearance are ensured.

However, the biggest challenge will remain budget implementation.

In Bangladesh, many projects under the Annual Development Programme (ADP) are not completed on time, resulting in higher costs and lower economic returns.

Therefore, the upcoming budget must ensure project monitoring, e-governance-based tracking and complete digital transparency in public procurement.

This would reduce corruption and waste while improving investment efficiency.

At the same time, building a digital economy is not possible without human resource development.

Although Bangladesh's young population presents a major opportunity, the shortage of skills remains a significant barrier.

Therefore, allocations should be increased for technical education and training in supply chain management, AI, data analytics and cybersecurity.

If stronger coordination between industry and education can be established, the next generation will be better prepared for the global labour market.

Ultimately, the budget for fiscal year 2026–27 must be designed to ensure not only short-term economic stability, but also long-term competitiveness.

Bangladesh will be able to face the economic challenges of the coming decade only by strengthening four key pillars: logistics efficiency, digital governance, technology investment and skilled human resources.

With the right policies, realistic allocations and effective implementation, Bangladesh can establish a stronger position in both regional and global economies.

Sakif Shamim, is chairman of the Center for Strategic and Economic Research (CSER) and managing director of Labaid Hospital Group and Lifeplus Group.

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