Entrepreneurs across industrial sector have urged the government to focus on cost reduction, tax simplification, and access to low-interest financing in the upcoming national budget.
They emphasised that such measures are crucial to stabilising the sector amid both global and domestic challenges.
With the budget set to be presented on 11 June – the first under the BNP government led by Prime Minister Tarique Rahman – business leaders have called for realistic, supportive steps to sustain businesses and attract fresh investment.
Industry leaders pointed to a prolonged period of economic strain since March 2020, during which the sector faced several shocks. These included the Covid-19 pandemic, the Russia-Ukraine war, global trade volatility, Trump-era tariffs, domestic political instability, and the ongoing Middle East conflicts.
The compounded effect of these disruptions has left industries struggling to recover.
Additionally, the decline in global demand, particularly in export-oriented sectors, has exacerbated the financial pressures on businesses, they said.
Entrepreneurs argue that without a comprehensive and forward-looking budget, the prospects for long-term growth and stability remain uncertain.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TIMES of Bangladesh that the workers’ wages have risen by nearly 95 per cent over the past six years, while energy prices have surged by around 180 per cent and electricity tariffs by 50 per cent.
At the same time, financing costs now stand at 14-15 per cent, while transport expenses have nearly doubled, he added.
“Forget new investment – sustaining existing industries has become a major challenge. We expect the budget to reflect measures to reduce production costs, provide tax incentives, and ensure policy stability,” he added.
Despite signalling a cautious and conservative approach, the government is set to frame a large national budget for the 2026-27 fiscal year.
The budget size is likely to be around Tk9 lakh crore, roughly Tk1 lakh crore or about 12.5 per cent higher than the current fiscal year’s Tk7,97,000 crore.
The industrial sector contributes around 35-37 per cent to Bangladesh’s economy and accounts for 20-25 per cent of total employment, directly supporting the livelihoods of nearly 15 to 20 million people.
Mohammad Mustafa Haider, director of TK Group, said the current situation calls for a tax and duty policy that not only focuses on revenue collection but also protects production and investment.
He identified rising production costs and energy shortages as the most pressing challenges for businesses.
In this context, he stressed the need to reform or reduce Advance Tax (AT) and Advance Income Tax (AIT) on raw material imports. Currently, a significant amount of funds remains stuck as tax at the import stage, and refunds take a long time, creating working capital constraints for industrial enterprises.
“Lowering these taxes would improve liquidity in the market and help maintain smooth production,” he said.
Mohammad Shamsher, general manager of Jamuna Group, called for further easing of duty concessions on capital machinery imports and at least a 2.5 percentage point cut in corporate tax rates.
“This would encourage new investment and accelerate job creation,” he said.
Business leaders also emphasised the need to modernise the tax system. Full digitalisation and automation of tax payments would reduce harassment and lower the cost of doing business, they said.
They also urged the government to raise the tax-free income threshold for small and medium enterprises (SMEs) and simplify VAT procedures.
Entrepreneurs proposed phasing out tax holiday benefits gradually instead of abrupt withdrawal. A clearly defined timeline would allow investors to prepare in advance, while ensuring that such incentives are prioritised for sectors that generate employment and diversify exports.
Shams Mahmud, managing director of Shasha Denims, highlighted rising production costs as one of the sector’s biggest challenges. High lending rates, along with increased energy, electricity, and transport costs, have significantly driven up expenses, he told TIMES.
“However, due to high inflation, we cannot raise product prices, making it increasingly difficult to remain competitive,” he said.
He also pointed out that loan tenures for capital investment in Bangladesh are relatively short, typically requiring repayment within five to six years, whereas competing countries offer low-interest loans with maturities of 12 to 15 years.
“As a result, short-term, high-interest loans are becoming increasingly risky for many businesses,” he added.
Mahmud, also former president of Dhaka Chamber of Commerce and Industry (DCCI), stressed the importance of ensuring energy security, noting that uninterrupted gas and electricity supply is essential to control production costs.
Recommending a special incentive package in the upcoming budget to revive the SME sector, he also called for policy continuity, a business-friendly environment, rule of law, and easier access to government services.
He emphasised providing easy-term loans and tax benefits to support new industrial ventures and reopening closed factories.
Shovon Islam, managing director of Sparrow Group, said the export sector would also require policy support beyond the budget.
He proposed raising the existing 2.5 percent cash incentive on exports to at least 3 percent for one year.
He also called for increasing the Export Development Fund from $2 billion to $4 billion and reinstating the export credit scheme for at least two years.
