LOCAL ECONOMY

Inflation control, investment attraction prioritised in upcoming budget

May 17, 2025

• The finance division is set to focus on inflationary pressure, which has remained high for over two years. Top priorities are reducing the budget deficit, cutting subsidies, and increasing revenue collection.

• The budget aims to attract both international and domestic investments and create a business-friendly environment to boost investor confidence while implementing initiatives for economic reforms.

US buyers may turn to countries with lower tariff exposure, fears BFTI

May 17, 2025

• BFTI warns that the reciprocal tariff, which is 37%, is significantly higher than the competitors like Vietnam(10%) and India (26%). This disparity can challenge Bangladesh’s competitiveness in the US market, which is the largest export base, accounting for 17.09% of its total exports.

• Bangladesh is currently the second-largest RMG exporter. However, concern remains: if US buyers attempt to diversify their RMG imports, then it can pose a threat to the entire RMG industry. If buyers continuously look for countries with cheaper tariffs, then it could reduce Bangladesh’s market share in RMG exports, which could lead to reducing the export volume.

Ending the stalemate and thereafter: The IMF loans in Bangladesh

May 17, 2025

• The IMF approved the release of the fourth and fifth tranches, totaling $1.3 billion from its $4.7 billion loan program. The loan will be used to adopt a flexible exchange rate and split the NBR into two separate divisions, with the goal of improving efficiency and transparency.

• Bangladesh has requested an additional $762 million from the IMF to boost its foreign reserves and support ongoing economic reforms. These funds will help combat macroeconomic challenges and ensure the country’s financial stability.

CA for establishing Microcredit Bank

May 17, 2025

Chief adviser proposed the idea of creating a Microcredit bank to provide collateral-free small loans to young entrepreneurs. He emphasized Microcredit should transform and manage by banking institutions rather than being entirely managed by NGO’s. Dr. Yunus described microcredit as a real banking and suggested it should be entirely manage by banks at a point to enhance its impact.

Integrate informal trading channels into formal tax system

May 17, 2025

• Policy Exchange Bangladesh, during a national roundtable, proposed incorporating informal trading channels, particularly in the agro-industries and fast-moving consumer goods (FMCG) sectors, into the formal tax system. This initiative aims to enhance domestic resource mobilization and ensure efficient resource allocation for inclusive and sustainable growth.

• Experts at the roundtable emphasized the need for radical tax reforms over incremental changes. They highlighted that 80% of Bangladesh's taxes are indirect, which is unsuitable for a developing economy. Recommendations included reducing high tax deducted at source (TDS) rates, addressing multiple VAT rates, and implementing automation to improve compliance and reduce harassment.

Semiconductor industry eyes $1b export by 2030, seeks govt backing, policy changes

May 17, 2025

• Bangladesh Semiconductor Industry Association (BSIA) has set an ambitious goal to achieve $1 billion dollar by exporting semiconductors by 2030. BSIA seeks for policy reforms such as cash incentives, tax and vat exemption and establishing special economic zones for semiconductor manufacturing.

• BSIA called for strategic transition from traditional manufacturing to high-tech industries to focus on chip design, embedded system and focusing on other important aspects. BSIA advocates for educational reforms to create skilled workforce and creation of dedicated semiconductor policy to place Bangladesh as a competitive player in the market.

Private sector must play active role in reform initiatives: Debapirya

May 17, 2025

• Dr. Debapirya stated the importance of private companies in the current economy. He also stated without their involvement it is not possible to make the reforms successful.

• He suggested a solid investment climate and called out financing, energy, logistics and labor related issues and regulatory challenges to foster sustainable business practices.

Stock Market BD

Stock market rout deepens with Tk 243b wiped out in six weeks

May 17, 2025

• Market declined by 425 points, standing at 4,781, the lowest level since 2020. Market capitalization incurred a loss of BDT 243 billion. Investors are stressed, mostly due to the adoption of the market-based exchange rate. Letting the market control the movement of currency hit the confidence of investors and led to widespread selling of stocks.

• The Chief Adviser introduced a 5-year plan to stabilize the stock market, which includes offloading government stakes in state-run and multinational companies and engaging foreign experts for comprehensive reforms to battle against market manipulation and corruption. Still, investor confidence seems low.

Stocks rebound in early trading

May 17, 2025

• DSEX rebounded and rose by 15.9 points to reach 4,796.95 on May 17, breaking the curse of a three-day losing streak. Trading sessions are going on Saturday as well due to government orders to keep operations open on May 17 and May 24 ahead of the upcoming Eid.

• So far, the market is showing positive momentum, with 232 entities enjoying steady advancement, 69 declining, and 75 unchanged. Turnover stood at around 78 crore during the session. The biggest winner is Sonargaon Textiles, rising more than 9%, and Aziz Pipe appeared as the biggest loser, with a 5% decline in stock price.

Country’s first private equity fund winding up amid poor investor response

May 17, 2025

• The country’s first private equity fund, launched with a goal of a 10-year tenure, is shutting down after only 6 years of operation. A lack of investor confidence is the main catalyst.

• The fund was established to explore alternative investment instruments beyond traditional investments in Bangladesh. Institutional investors and wealthy individuals are barely investing their capital in these funds. Alternative investment professionals blame the poor investor response on a lack of awareness and a weak capital market.

Banking Industry

Banks struggle in their core business as net interest income falls

May 17, 2025

In the first quarter of the season, Banks faced susbtential decline in their core business — net interest income. MTB’s net interest income plummeted by 72%, City bank by 62% and prime bank by 33%.

Banks blame the growing volume of classified loans, leading to higher provision of bad debt. Bank's profitability is hit hard due to this and they are forced to aside more funds to cover potential loan defaults.

Global economic headlines

EU Exports to U.S. Surge Ahead of Trump Tariffs (WSJ)

US overtakes China as the second-largest shareholder in US treasury (FT)

Indian Companies, Consumers Snub Pakistan and Its Allies (Bloomberg)

US Loses Last Top Credit Rating With Downgrade From Moody’s (Bloomberg)

Asian Currencies May Chart Different Paths After Recent Rally (Bloomberg)

OpenAI to join US-UAE plan to build vast data centre in Abu Dhabi (FT)

Nvidia to Set Up Research Center in Shanghai, Maintaining Foothold in China (wsj)

Global Earnings

• SolarMax Technology (SMXT): Reported a Q1 net loss of $1.3 million, indicating ongoing financial challenges in the renewable energy sector. (Yahoo Finance)

• LG Display (LPL): Posted a Q1 loss of $180.8 million, reflecting continued struggles amid declining demand for display panels. (Yahoo Finance)

• Flowers Foods (FLO): Missed Q1 earnings and revenue estimates, with sales down 1.4% year-over-year due to volume declines and increased promotional activity. (Yahoo Finance)

• Alibaba (BABA): Surpassed Q4 earnings estimates with non-GAAP earnings of $1.73 per ADS, driven by growth in core e-commerce and cloud segments, despite revenue falling slightly short of expectations. (Yahoo Finance)

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