Focus on economic stability, spurring investment to sustain BD's growth

The two-day Economic Reform Summit 2025 has made a set of recommendations including ensuring macroeconomin stability, reviving investment and creating jobs.

For doing so, the summit stressed the need for overhaul of financial governance, trade policy, skills development and SME transformation.

Speakers at the concluding session of summit on Tuesday said in the city Bangladesh can no longer rely on incremental policy adjustments, and must instead pursue a "new growth model" focused on productivity, diversification and stronger institutions.

They also observed that the fiscal space has narrowed due to rising interest payments and chronically low revenue mobilisation, while both the public and private investment trends remain below the required levels.

Without decisive reforms, they cautioned, the economy risks sliding into a prolonged low-growth cycle that would erode competitiveness and reduce job creation capacity.

A key recommendation of the summit was to strengthen financial sector stability through the recapitalisation of the 'stressed banks' and ensuring greater regulatory independence of Bangladesh Bank.

Discussants also called for the rapid development of non-bank financing instruments, including treasury and corporate bonds, mutual funds and pension schemes, to lessen the exiting overdependence on commercial banks for long-term capital.

Speakers called for the abolition of the existing 1.0 per cent export tax and simplification of customs procedures to help reduce cost and time for exporters.

They argued that Bangladesh would struggle to move beyond ready-made garments unless foreign direct investment is prioritised for emerging sectors such as food processing, light engineering and toys.

The prevailing logistics and energy constraints were also highlighted, particularly the need for modernization of the country's ports to help shorten shipment times and expand LNG imports to ensure uninterrupted energy supply for man-made fibre-based production.

Besides, participants recommended removing duties on solar equipment to support a transition towards greener and more energy-efficient industrial operations.

Speakers prominently highlighted the job creation issue in the two-day discussions, stressing that youth unemployment cannot be addressed through macroeconomic policy alone unless education and labour market reforms are aligned.

The SME sector - responsible for nearly 80 per cent of employment but only 24 per cent of GDP - was cited as a critical weak link in Bangladesh's industrial development trajectory.

Discussants said the economy is stuck with a large number of small, informal enterprises and they are unable to flourish due to lack of access to credit and formal markets.

The summit concluded that without labour market reform, skills upgradation and faster expansion of modern service sectors, the economy risks creating a generation of educated but underemployed youth.

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