Gap between govt and private sector must narrow: Business leaders
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Business leaders in Bangladesh remain uncertain and hesitant about expanding operations and making fresh investments, largely due to concerns over energy supply, said Mahbubur Rahman, President of the International Chamber of Commerce (ICC).
He noted that entrepreneurs are still unsure whether they will have access to adequate gas and electricity, which is dampening investment sentiment.
To overcome the situation, he stressed the need to bridge the gap between the government and the private sector and to ensure greater clarity in economic policy planning. “The government and businesses must work together for the country,” he added.
He made the remarks as the chief guest at a dialogue titled “Macroeconomic Insights: Evolving Global Landscape for Trade and Growth”, held at the Policy Research Institute of Bangladesh (PRI) on Thursday.
The event was organised by PRI’s Centre for Macroeconomic Analysis (CMEA), with support from the Department of Foreign Affairs and Trade (DFAT), as part of ongoing efforts to promote informed and evidence-based policy dialogue.
The session was chaired by Zaidi Sattar, Chairman of PRI, while Ashikur Rahman delivered the keynote presentation.
Mahbubur Rahman said uncertainty in the energy sector is one of the key reasons behind sluggish investment. A lack of confidence in gas and electricity supply is discouraging entrepreneurs from undertaking new ventures. Weaknesses in the banking sector, uncertainty in accessing credit, and the rising risk of non-performing loans are also deterring investors.
He pointed out that the recent decline in machinery imports reflects stagnation in investment, noting that without new investments, there is little scope for increased import of industrial equipment.
He further said Bangladesh still remains heavily dependent on imported raw materials to sustain exports. Although local value addition in the ready-made garment sector has improved somewhat, import dependence has not significantly declined. While exports to the US market remain relatively stable, the decline in European demand is a matter of concern.
Highlighting macroeconomic challenges, he said high inflation is putting pressure on ordinary people, particularly low- and middle-income groups. Policymakers must remain cautious to contain inflation and avoid excessive money supply or unnecessary public spending.
He also noted clear discipline gaps in the banking sector, with many banks in a fragile condition, and hinted that tough decisions, including possible bank mergers, may be necessary.
Emphasising collaboration, he said sustainable economic progress requires the government and private sector to work as partners rather than competitors. Coordinated efforts, he added, are essential to boost investment and accelerate economic growth.
Speakers at the event observed that many of the conditions set by the International Monetary Fund (IMF) could help restore discipline and drive reforms in the economy, though their implementation must consider domestic realities.
In his keynote, Ashikur Rahman said the government has resumed printing money, warning of inflationary risks. He noted that the government borrowed Tk 200 billion from Bangladesh Bank in March alone, describing it as “high-powered money” that could further fuel inflation.
He cautioned that ongoing global economic instability—particularly tensions in the Middle East, policy uncertainties worldwide, and a lack of clarity over Bangladesh’s LDC graduation—are putting pressure on the country’s economic stability. Moving away from reform at this stage would be “self-defeating,” he warned.
“Backtracking on reforms would be suicidal. The government’s retreat has created unnecessary tensions regarding the IMF,” he said, adding that reforms should not be viewed merely as IMF conditions but as essential for Bangladesh’s own long-term economic sustainability.
Joining the discussion, Khondokar Shakhawat Ali, Visiting Research Fellow at the BRAC Institute of Governance and Development (BIGD), said Bangladesh is currently navigating a difficult economic phase both domestically and externally.
He noted that shifts in the country’s political economy have contributed to the rise of “crony capitalism,” which is disrupting normal investment flows. Although deposit growth in banks remains positive, concerns persist over governance and management.
He said that despite some relief in remittance inflows due to past central bank measures, overall confidence has yet to recover. Ongoing decisions regarding bank mergers and ownership structures must be carefully evaluated for their impact on business sentiment.
He stressed that there is no scope to retreat from economic reforms and called for continued strict action against money laundering. Such irregularities, he said, may involve not only businesses but also influential groups across sectors, requiring coordinated responses.
Warning against inflationary financing, he said excessive money printing to support subsidies could further drive up prices, directly affecting ordinary citizens. With employment already under pressure, declining income and purchasing power could deepen economic risks.
He also cautioned that prolonged “bleeding” in the economy could undermine national capacity, urging policymakers to turn the crisis into an opportunity by advancing structural reforms. He further highlighted the importance of remittances and suggested that policy decisions, including on dual citizenship, may be necessary.
Calling on the business community to play a more responsible role in dismantling crony capitalism, he urged identifying and, if necessary, boycotting dishonest investors, noting that institutions like Bangladesh Bank possess relevant data.
PRI Chairman Zaidi Sattar said that the global economy has been disrupted by the ongoing Israel-USA and Iran war and tensions surrounding the Strait of Hormuz, which have also affected Bangladesh’s economy.
He noted that the country is navigating multiple challenges in the post–global financial crisis period, raising concerns over issues such as fuel stock security. Global uncertainty has intensified in the Bangladesh economy.
The new government also has the challenge of LDC graduation.
He pointed out that Bangladesh has faced five major economic shocks in recent years, from 2019 to 2026 —the COVID-19 pandemic, the Russia-Ukraine war, exchange rate volatility, domestic political changes, and the latest geopolitical tensions—putting pressure on overall economic stability.
In such abnormal times, he said, growth expectations should remain modest, around 5–6 per cent, in line with the government’s projection of about 5 per cent, although there is optimism for improved growth in FY27.
He also observed that the tax reform agenda remains largely unaddressed, while export performance in FY26 has been on the downside. Persistently high inflation, he warned, is not conducive to the balance of payments for a country like Bangladesh.
Furthermore, he noted that the country’s trade regime remains highly restrictive, emphasising the need for greater openness to support economic growth.
He said the proposed reforms should be seen not merely as IMF conditions but as “national economic imperatives.” The government has already initiated such measures, with IMF support reinforcing the process.
He warned that failure to implement these reforms would amount to “self-inflicted wounds” for the economy, stressing that they are fundamental and necessary under current conditions. An elected democratic government, he said, is capable of undertaking such difficult reforms.
Sattar added that energy prices significantly influence overall price levels, and global pressures—such as those stemming from the Strait of Hormuz—are affecting economies worldwide. He called for bold reform initiatives from an elected government.
Recalling history, he noted that Bangladesh successfully implemented major economic reforms under an elected government in 1991, which played a pivotal role in reshaping the economy. The current situation, he said, similarly demands deep structural reforms, with IMF support potentially proving helpful.
Special guest Clinton Pobke, Deputy Head of Mission at the Australian High Commission, also spoke at the event. Former NBR Chairman Muhammad Abdul Mazid and Meghna Group of Industries Director Tanjima Mostafa participated in the discussion.
The event concluded with closing remarks by PRI Research Director Dr Bazlul Haque Khondker.