Business leaders in Bangladesh have voiced concerns over high interest rates, which they say are pushing up business costs and causing the country to lag behind regional competitors. They have urged the government to reduce the policy rate and implement reforms in the revenue system.
While the International Monetary Fund (IMF) has recommended tighter policies to control inflation, business leaders at a meeting yesterday argued that the government should not automatically follow the advice of development partners.
They also called for the re-establishment of the Export Development Fund (EDF), improvements to law and order, and measures to reduce traffic congestion in Dhaka.
During the dialogue held at the Bangladesh Investment Development Authority (Bida) headquarters in Dhaka, key officials such as Energy Adviser Muhammad Fouzul Kabir Khan, Special Assistant to the Chief Adviser Lutfey Siddiqi, Bangladesh Bank (BB) Governor Ahsan H Mansur, Bida Executive Chairman Ashik Chowdhury, and National Board of Revenue (NBR) Chairman Abdur Rahman Khan answered questions from around 100 business leaders and entrepreneurs.
Syed Nasim Manzur, President of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), addressed the central bank governor, saying, “I have a humble request, businessmen can no longer bear this interest rate. It is becoming impossible for us to bear it.”
He added, “The cost of doing business is rising drastically. We cannot compete with market peers, particularly in Vietnam and India.”
Manzur, who is also the Managing Director of Apex Footwear Ltd, warned that export orders may remain sluggish until February or March of the coming year, as Western buyers look for alternatives.
He commended the NBR for recent reforms, such as automated bonds and relief from the “HS Code terrorism.” “Now we want relief from advance tax and tax at source,” he said.
He also remarked, “It is not often questioned whether only businessmen have become wealthy or whether bureaucrats have also become wealthy.”
“The money that has been laundered, bureaucrats have siphoned off the most. We businessmen do not want to take this responsibility,” he added.
Tapan Chowdhury, Managing Director of Square Pharmaceuticals, urged the government to take stern action against willful loan defaulters. He argued that these individuals have misused depositors’ funds without facing repercussions.
“The real culprits remain untouched, while legitimate businesses are unjustly labelled as corrupt,” he said.
At the dialogue, BB Governor Mansur stated, “We must protect the economy without punishing industries. The law will be applied, but productive assets and jobs must be protected.”
He further commented that the central bank aims to reduce inflation to 5 percent by the end of the fiscal year, down from over 12 percent last year.
“Food inflation has dropped to 7.3 percent, and overall inflation to 8.2 percent. Once inflation is consistently below 7 percent, we will reduce the policy rates to 8 to 9 percent,” he said.
Mansur also explained that the exchange rate remains market-driven, with occasional interventions to support reserves and imports. On the Export Development Fund, he mentioned that the BB supports its revival once reserves can cover six months’ worth of imports, even if it exceeds IMF recommendations.
Acknowledging concerns over non-performing loans (NPLs), he said actual NPLs could be as high as 35 percent.
He also recognised the private sector’s frustration with advance income tax and tax deducted at source but mentioned that reforms are in progress to automate refunds and allow excess payments to be carried forward.
Ashik Chowdhury, Executive Chairman of Bida, stated that investment reforms are starting to show results through improved inter-agency coordination and monthly consultations with the private sector.
He pointed out the progress made on the long-awaited National Single Window, the Authorised Economic Operator system, and the launch of the BanglaBiz digital portal to streamline business services.
To encourage foreign investment, he said Bida is offering cashback incentives for non-resident Bangladeshis and providing a platform to connect foreign investors with local partners. The number of planned economic zones has been reduced from 100 to 10, with a Free Trade Zone (FTZ) in Chattogram pending final approval.
“We have completed 24 out of 32 reform goals. Our aim is transparency, not perfection,” Chowdhury concluded.
NBR Chairman Abdur Rahman Khan defended the current tax policies but stressed the importance of fiscal discipline and reforms.
He also advocated for protecting local manufacturers through appropriate duty structures and criticised excessive tax waivers.
“Foreign banks earning profits in Bangladesh must be taxed,” he remarked.
Energy Adviser Muhammad Fouzul Kabir Khan acknowledged a shortfall in gas supply of over 1,000 Million Cubic Feet per Day and proposed reforms to streamline gas distribution and reduce interference.
Khan also suggested a shift from road transport to river and rail transport, as more than 90 percent of goods are currently moved by road.
He highlighted the progress on a locally developed integrated energy and power sector master plan and proposed refinery partnerships with global firms like ExxonMobil.
“Wealth must come from production and innovation, not from evasion or default,” Khan concluded.
Lutfey Siddiqi, Special Assistant to the Chief Adviser, called for a shift away from a “rotting system” towards performance-based governance.
“We may have improved from 1 to 5 percent, but we are still sitting on a 95 percent broken system,” he said, urging a redesign of outdated business rules and ministry structures.
The dialogue was attended by notable business leaders including former FBCCI president Mir Nasir Hossain, Meghna Group MD Mostafa Kamal, East Coast Group Chairman Azam J Chowdhury, Transcom Group CEO Simeen Rahman, City Bank MD Mashrur Arefin, and Uttara Motors Chairman Matiur Rahman.