Bangladesh is facing a deepening energy challenge as natural gas shortages disrupt industrial production, electricity generation, and transportation networks. The crisis is increasing costs for businesses and placing additional strain on an economy that has become increasingly reliant on imported energy supplies. Manufacturers are reporting operational difficulties, while policymakers search for solutions to stabilize fuel availability and support economic growth. As demand rises and supply constraints persist, concerns are growing about the long-term impact on exports, investment, and industrial competitiveness. How serious is Bangladesh's energy crunch, and what could it mean for the country's economic future?

Bangladesh faces mounting energy crisis

Rising oil prices triggered by escalating tensions in West Asia are putting pressure on South Asia's most vulnerable economies. Pakistan and Bangladesh, both heavily dependent on imported energy, face risks of higher inflation, weaker currencies, and mounting fiscal challenges. This edition of This Week in Asia explores how a potential oil shock could impact millions across the region.

Pakistan, Bangladesh brace for oil shock

Bangladesh is losing an alarming $355 million in tax revenues each year due to corporate profit shifting and tax evasion by individuals, particularly through the use of offshore tax havens. According to the State of Tax Justice 2024 report, corporations account for the largest share of the losses, shifting $335.9 million abroad, while $19.1 million is lost to individuals evading taxes by holding wealth in foreign properties.&nbsp;

This loss represents 21.4% of Bangladesh's annual health expenditures.

The report also highlights an alarming $492 billion in tax losses each year resulting from income underreporting and tax haven use by multinational corporations and rich individuals. Almost half of these losses are facilitated by eight countries: Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK, and the US.

Bangladesh's Struggling Revenue System and Moody's Downgrade

Widespread&nbsp;tax evasion and irregularities&nbsp;have&nbsp;contributed&nbsp;to&nbsp;Bangladesh's fiscal&nbsp;problems.&nbsp;Bangladesh&nbsp;tried&nbsp;to reduce&nbsp;corporate tax rates to attract investment,&nbsp;but&nbsp;its&nbsp;corporate&nbsp;multinationals&nbsp;shifted&nbsp;all their potential&nbsp;profits abroad&nbsp;--&nbsp;a&nbsp;record&nbsp;of&nbsp;$1.3 billion&nbsp;last&nbsp;year&nbsp;alone.

This tax revenue shortfall coincides with Bangladesh's broader economic struggles, as highlighted by a recent downgrade by Moody's. The downgrade&nbsp;resulted&nbsp;from&nbsp;increasing&nbsp;political risks,&nbsp;poor&nbsp;growth&nbsp;outlooks, and a&nbsp;worsening&nbsp;law and order situation. While the immediate impact on the economy may be limited, experts warn that it could lead to higher borrowing costs and more stringent credit reviews for businesses, affecting both local and foreign investments.

The downgrade is a big setback for Bangladesh in consolidating its steps to stabilise the economy and attract foreign investment. Experts feared that the downgrade could increase the cost of doing business significantly, particularly with regard to international trade, and further difficulties in accessing financing. Confirmation charges for letters of credit may increase, and the overall climate for FDI will suffer due to the lack of political stability perceived.

Although the interim government has initiated reforms, the absence of a clear election roadmap and the ongoing political uncertainty raise concerns among international investors. Until these issues are addressed, experts predict a continued struggle to boost investment and stabilise the economy.

Bangladesh is losing an alarming $355 million in tax revenues each year due to corporate profit shifting and tax evasion by individuals, particularly through the use of offshore tax havens.

Bangladesh is losing an alarming $355 million in tax revenues each year due to corporate profit shifting and tax evasion by individuals, particularly through the use of offshore tax havens. According to the State of Tax Justice 2024 report, corporations account for the largest share of the losses, shifting $335.9 million abroad, while $19.1 million is lost to individuals evading taxes by holding wealth in foreign properties. This loss represents 21.4% of Bangladesh's annual health expenditures. The report also highlights an alarming $492 billion in tax losses each year resulting from income underreporting and tax haven use by multinational corporations and rich individuals. Almost half of these losses are facilitated by eight countries: Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK, and the US. Bangladesh's Struggling Revenue System and Moody's Downgrade Widespread tax evasion and irregularities have contributed to Bangladesh's fiscal problems. Bangladesh tried to reduce corporate tax rates to attract investment, but its corporate multinationals shifted all their potential profits abroad -- a record of $1.3 billion last year alone. This tax revenue shortfall coincides with Bangladesh's broader economic struggles, as highlighted by a recent downgrade by Moody's. The downgrade resulted from increasing political risks, poor growth outlooks, and a worsening law and order situation. While the immediate impact on the economy may be limited, experts warn that it could lead to higher borrowing costs and more stringent credit reviews for businesses, affecting both local and foreign investments. The downgrade is a big setback for Bangladesh in consolidating its steps to stabilise the economy and attract foreign investment. Experts feared that the downgrade could increase the cost of doing business significantly, particularly with regard to international trade, and further difficulties in accessing financing. Confirmation charges for letters of credit may increase, and the overall climate for FDI will suffer due to the lack of political stability perceived. Although the interim government has initiated reforms, the absence of a clear election roadmap and the ongoing political uncertainty raise concerns among international investors. Until these issues are addressed, experts predict a continued struggle to boost investment and stabilise the economy.

Bangladesh Faces Annual Tax Loss of $355 Million Due to Tax Evasion

Bangladesh is surpassing Pakistan in various fields. The nation is levelling up from its "impoverished" status and is now the 33rd largest economy in the world. What does this mean for Pakistan? Molly Gambhir tells you more.

Gravitas: Bangladesh performs better than Pakistan in most matrix

Months of power cuts and fuel hikes have created frustration among the Bangladeshis. Tensions have now taken on to the streets, where members of opposition parties are calling for fresh elections. @MaroWardak gets you a report on this week's #SouthAsiaDiary.

South Asia Diary | Bangladesh on the boil

Bangladesh has hiked fuel prices by 51%. This is the biggest hike in the country's history. Demonstrations have begun in Dhaka, the protesters are angry at the ongoing economic turmoil. Is Bangladesh heading toward a Sri Lanka-like crisis? Palki Sharma reports.

Gravitas: Is Bangladesh heading toward a Sri Lanka-like crisis?

Bangladesh has sought a multibillion-dollar loan from the International Monetary Fund (IMF) after rising food and fuel prices severely impacted its forex reserves.

Notably, it is the third South Asian country to approach IMF seeking a financial rescue package after Sri Lanka and Pakistan.

According to the Daily Star newspaper, the country wanted $4.5bn from the IMF, including budgetary and balance-of-payment support.

“The IMF stands ready to support Bangladesh, and the staff will engage with the authorities on programme design as per the established policies and procedures of the fund,” The Guardian quoted an IMF spokesperson.

“The amount of support will be part of the programme design discussions,” the spokesperson added, without mentioning the potential size of the package.

This comes at a time when the Russia-Ukraine conflict has caused a massive spike in energy and food prices, sending Bangladesh’s balance of payments into deficit.

Since the onset of the pandemic, around 90 countries have approached the IMF, however, only a select few have been forced to seek bailouts to avoid defaulting on loans or being unable to pay bills.

But Bangladesh’s economy has performed better than other South Asian countries partly thanks to its robust export sector, especially the garment trade which brings in valuable foreign currency into the country.

Bangladesh’s finance minister AHM Mustafa Kamal has denied that the country’s facing any economic woes saying that the government would take an IMF loan only if conditions were favourable.

“If the IMF conditions are in favour of the country and compatible with our development policy, we’ll go for it, otherwise not,” Kamal told reporters.

“Seeking a loan from the IMF does not mean Bangladesh’s economy is in bad shape.”

Bangladesh’s foreign exchange reserves fell to $39.7bn in July down from $45.5bn a year earlier. It would cover over five months worth of imports.

(With inputs from agencies)

WATCH WION LIVE HERE

<iframe allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="350" src="https://www.wionews.com/live-tv/embed?autoplay=1&amp;mute=1" width="100%"></iframe>

Bangladesh has sought a multibillion-dollar loan from the International Monetary Fund (IMF) after rising food and fuel prices severely impacted its forex reserves.

Bangladesh has sought a multibillion-dollar loan from the International Monetary Fund (IMF) after rising food and fuel prices severely impacted its forex reserves. Notably, it is the third South Asian country to approach IMF seeking a financial rescue package after Sri Lanka and Pakistan. According to the Daily Star newspaper, the country wanted $4.5bn from the IMF, including budgetary and balance-of-payment support. “The IMF stands ready to support Bangladesh, and the staff will engage with the authorities on programme design as per the established policies and procedures of the fund,” The Guardian quoted an IMF spokesperson. “The amount of support will be part of the programme design discussions,” the spokesperson added, without mentioning the potential size of the package. This comes at a time when the Russia-Ukraine conflict has caused a massive spike in energy and food prices, sending Bangladesh’s balance of payments into deficit. Since the onset of the pandemic, around 90 countries have approached the IMF, however, only a select few have been forced to seek bailouts to avoid defaulting on loans or being unable to pay bills. But Bangladesh’s economy has performed better than other South Asian countries partly thanks to its robust export sector, especially the garment trade which brings in valuable foreign currency into the country. Bangladesh’s finance minister AHM Mustafa Kamal has denied that the country’s facing any economic woes saying that the government would take an IMF loan only if conditions were favourable. “If the IMF conditions are in favour of the country and compatible with our development policy, we’ll go for it, otherwise not,” Kamal told reporters. “Seeking a loan from the IMF does not mean Bangladesh’s economy is in bad shape.” Bangladesh’s foreign exchange reserves fell to $39.7bn in July down from $45.5bn a year earlier. It would cover over five months worth of imports. (With inputs from agencies) WATCH WION LIVE HERE

Bangladesh seeks bailout package from IMF as huge import bill takes toll on economy

When Bangladesh emerged as an independent country in 1971, it was arguably the poorest country in the world or close to it.

Today, the country is growing rapidly and ranks ahead of its big neighbour India.

Planning Minister of Bangladesh MA Mannan informed the country's cabinet that the per capita income of Bangladesh has now increased from $2,064 to $2,227.

Bangladesh's per capita income is now $280 higher than India’s per capita income which is $1,947.

“Our per capita income stands at $2,227 in the fiscal year 2020-21, but the previous fiscal year's per capita income was $2,064. So, the growth rate is 9%,” said Bangladesh's Cabinet Secretary Khandker Anwarul Islam while briefing reporters.

One of the most densely populated countries in the world, Bangladesh has been battling poverty and under-development for almost five decades. 
 
In 2007, the per capita income of Bangladesh was half of that of India.

Bangladesh will overtake India in per capita GDP once again in 2025 if IMF’s latest World Economic Outlook is to be believed.

The Bangladeshi government is understandably happy and proud of this accomplishment.

Once dubbed as a “bottomless basket” by former US secretary of state Henry Kissinger, Bangladesh is now among the most vibrant economies in the world with great prospects.

According to several analysts, at present, Dhaka ranks ahead of its neighbours in terms of development. The country displays a stable civilian government and has benefited from good relations with India, its big neighbour.

As post-COVID pick-up of the Indian economy is unlikely to be as smooth as that of Bangladesh. Bangladesh matches or bests India on many fiscal, economic and social indicators. Foreign aid is less than 2% of its GDP; it’s no longer Kissinger’s ‘basket case’.

(With inputs from agencies)

When Bangladesh emerged as an independent country in 1971, it was arguably the poorest country in the world or close to it. Today, the country is growing rapidly and ranks ahead of its big neighbour India.

When Bangladesh emerged as an independent country in 1971, it was arguably the poorest country in the world or close to it. Today, the country is growing rapidly and ranks ahead of its big neighbour India. Planning Minister of Bangladesh MA Mannan informed the country's cabinet that the per capita income of Bangladesh has now increased from $2,064 to $2,227. Bangladesh's per capita income is now $280 higher than India’s per capita income which is $1,947. “Our per capita income stands at $2,227 in the fiscal year 2020-21, but the previous fiscal year's per capita income was $2,064. So, the growth rate is 9%,” said Bangladesh's Cabinet Secretary Khandker Anwarul Islam while briefing reporters. One of the most densely populated countries in the world, Bangladesh has been battling poverty and under-development for almost five decades. In 2007, the per capita income of Bangladesh was half of that of India. Bangladesh will overtake India in per capita GDP once again in 2025 if IMF’s latest World Economic Outlook is to be believed. The Bangladeshi government is understandably happy and proud of this accomplishment. Once dubbed as a “bottomless basket” by former US secretary of state Henry Kissinger, Bangladesh is now among the most vibrant economies in the world with great prospects. According to several analysts, at present, Dhaka ranks ahead of its neighbours in terms of development. The country displays a stable civilian government and has benefited from good relations with India, its big neighbour. As post-COVID pick-up of the Indian economy is unlikely to be as smooth as that of Bangladesh. Bangladesh matches or bests India on many fiscal, economic and social indicators. Foreign aid is less than 2% of its GDP; it’s no longer Kissinger’s ‘basket case’. (With inputs from agencies)

Bangladesh outpaced India on per capita income

The 1971 India-Pakistan war was a military confrontation that led to the birth of a new country in South Asia, Bangladesh.

And after emerging as an independent nation, Bangladesh was in economic turmoil, wracked by poverty and famine, for several years.

Once dubbed as a “bottomless basket” by former US secretary of state Henry Kissinger, Bangladesh is now among the most vibrant economies in the world with great prospects.

Olivier Guillard for the Asialyst writes that at present, Dhaka ranks ahead of Islamabad in terms of development. The country displays a stable civilian government unlike recurrent military coups in Pakistan and has benefited from good relations with India, its big neighbour.

Earlier this month, Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina inaugurated the Friendship Bridge, a 2 km-long interstate structure linking Bangladesh and Tripura. It will partially open up the North-East of India by opening a road towards Chittagong. Hasina has on numerous occasions recalled how much Indian assistance had been crucial n the realisation of the desire for independence of the people.

Since the establishment of India's external doctrine 'neighbourhood first', both countries have intensified their bilateral relationship under the leadership of the same two heads of government - a rarity in the regional landscape.

Indian PM Modi is set to visit Bangladesh on March 26 to attend the 50th anniversary of the independence of its eastern neighbour, which will further strengthen the historical ties connecting India and Bangladesh. 
Guillard further writes that New Delhi has made significant efforts to strengthen relations with Bangladesh, one notable example of which is the entry into service at the end of 2020 of a fifth cross-border rail line.

Meanwhile, governance in Bangladesh has essentially been civil as compared to recurrent military coups in Pakistan. Unlike Pakistan and its conflicts with India between 1947 and 1999, Bangladesh has not been faced with the pain of war since its secession in 1971, according to Asialyst.

The country ranks 35th in the global economy, as compared to Pakistan in 43rd place, while in terms of human development, the former nation is ranked 133rd out of 189 countries in the United Nations Development Program's (UNDP) 2020 report, higher than Pakistan in 154th place.

Citing a leading columnist of a major Pakistani daily, Guillard wrote that the annual income per capita for a Bangladeshi citizen is over USD 2,000 as compared to USD 1,130 for his Pakistani counterpart, while access to primary education is 98 per cent in Bangladesh and 72 per cent in Pakistan. Furthermore, the level of infant mortality in Bangladesh is 25 per 1,000, while in Pakistan it is 59 per 1,000.

(With inputs from agencies)

The 1971 India-Pakistan war was a military confrontation that led to the birth of a new country in South Asia, Bangladesh. And after emerging as an independent nation, Bangladesh was in economic turmoil, wracked by poverty and famine, for several years.

The 1971 India-Pakistan war was a military confrontation that led to the birth of a new country in South Asia, Bangladesh. And after emerging as an independent nation, Bangladesh was in economic turmoil, wracked by poverty and famine, for several years. Once dubbed as a “bottomless basket” by former US secretary of state Henry Kissinger, Bangladesh is now among the most vibrant economies in the world with great prospects. Olivier Guillard for the Asialyst writes that at present, Dhaka ranks ahead of Islamabad in terms of development. The country displays a stable civilian government unlike recurrent military coups in Pakistan and has benefited from good relations with India, its big neighbour. Earlier this month, Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina inaugurated the Friendship Bridge, a 2 km-long interstate structure linking Bangladesh and Tripura. It will partially open up the North-East of India by opening a road towards Chittagong. Hasina has on numerous occasions recalled how much Indian assistance had been crucial n the realisation of the desire for independence of the people. Since the establishment of India's external doctrine 'neighbourhood first', both countries have intensified their bilateral relationship under the leadership of the same two heads of government - a rarity in the regional landscape. Indian PM Modi is set to visit Bangladesh on March 26 to attend the 50th anniversary of the independence of its eastern neighbour, which will further strengthen the historical ties connecting India and Bangladesh. Guillard further writes that New Delhi has made significant efforts to strengthen relations with Bangladesh, one notable example of which is the entry into service at the end of 2020 of a fifth cross-border rail line. Meanwhile, governance in Bangladesh has essentially been civil as compared to recurrent military coups in Pakistan. Unlike Pakistan and its conflicts with India between 1947 and 1999, Bangladesh has not been faced with the pain of war since its secession in 1971, according to Asialyst. The country ranks 35th in the global economy, as compared to Pakistan in 43rd place, while in terms of human development, the former nation is ranked 133rd out of 189 countries in the United Nations Development Program's (UNDP) 2020 report, higher than Pakistan in 154th place. Citing a leading columnist of a major Pakistani daily, Guillard wrote that the annual income per capita for a Bangladeshi citizen is over USD 2,000 as compared to USD 1,130 for his Pakistani counterpart, while access to primary education is 98 per cent in Bangladesh and 72 per cent in Pakistan. Furthermore, the level of infant mortality in Bangladesh is 25 per 1,000, while in Pakistan it is 59 per 1,000. (With inputs from agencies)

'From bottomless basket to vibrant economy': Bangladesh is far ahead of Pakistan in development indicators

Think of Bangladesh and chances are that you will think of a garment manufacturing hub, with a goal to dominate the world in the textiles sector.

That’s precisely what the South Asian nation has done since the turn of this century.

From being a little-known entity in the business, it has spun an amazing yarn of success to become the world's second-largest exporter of readymade garments, just behind mighty China.

The textile sector contributes around 20 per cent of the country’s GDP now. The RMG (readymade garments) sector currently accounts for 80 per cent of Bangladesh’s net exports.

Just before the coronavirus pandemic hit, industry circles were abuzz with achieving the target of $50 billion in RMG exports by 2021 and doubling it to $100 bn by 2025.

A casual scan of the textile sector would suggest that cheap labour was an advantage, with minimum wages still lower than China, India, Vietnam and others. But that would be an oversimplistic explanation of a success story. Bangladesh has been using different factors to its advantage to become a garmenting powerhouse.

While supportive government policies continue to play a part in encouraging foreign direct investment in the textile sector, Bangladesh has also used preferential access to the European Union market to its advantage.

With its Least Developed Country status, Bangladesh enjoyed duty-free access to markets in over 50 countries.

In particular, the EU’s duty-free, quota-free exports policy under its ‘Everything But Arms’ mandate helped Bangladesh increase its apparel exports from $7 bn in 2007 to over $21 bn in 2017.

But what makes Bangladesh an enduring success story is the willingness of the industry to adapt to the changing environment.

While 37 universities in the country now produce textile graduates every year, FDI in setting up spinning and weaving factories is being encouraged to meet the raw material demand internally, cutting dependency on countries like China and India.

Learning from Vietnam, Bangladesh remains acutely aware that its labour cost advantage will fritter away in the years to come.

The CEO of Bangladesh Apparel Exchange, Mostafiz Uddin, recently pointed out that the country will lose its labour advantage to automation sooner than later.

It must, therefore, be ready with adequate investment in research and development and well-educated professionals to provide tech solutions for the industry to adapt and grow, he said.

It is with this keen eye on the future that in 2019, Bangladesh decided to create the RMG Sustainability Council to ensure workplace safety in the garment sector.

If done and delivered right, the safety and sustainability monitoring system could be the country’s calling card in a highly competitive market in the years to come.

Think of Bangladesh and chances are that you will think of a garment manufacturing hub, with a goal to dominate the world in the textiles sector. That’s precisely what the South Asian nation has done since the turn of this century.

Think of Bangladesh and chances are that you will think of a garment manufacturing hub, with a goal to dominate the world in the textiles sector. That’s precisely what the South Asian nation has done since the turn of this century. From being a little-known entity in the business, it has spun an amazing yarn of success to become the world's second-largest exporter of readymade garments, just behind mighty China. The textile sector contributes around 20 per cent of the country’s GDP now. The RMG (readymade garments) sector currently accounts for 80 per cent of Bangladesh’s net exports. Just before the coronavirus pandemic hit, industry circles were abuzz with achieving the target of $50 billion in RMG exports by 2021 and doubling it to $100 bn by 2025. A casual scan of the textile sector would suggest that cheap labour was an advantage, with minimum wages still lower than China, India, Vietnam and others. But that would be an oversimplistic explanation of a success story. Bangladesh has been using different factors to its advantage to become a garmenting powerhouse. While supportive government policies continue to play a part in encouraging foreign direct investment in the textile sector, Bangladesh has also used preferential access to the European Union market to its advantage. With its Least Developed Country status, Bangladesh enjoyed duty-free access to markets in over 50 countries. In particular, the EU’s duty-free, quota-free exports policy under its ‘Everything But Arms’ mandate helped Bangladesh increase its apparel exports from $7 bn in 2007 to over $21 bn in 2017. But what makes Bangladesh an enduring success story is the willingness of the industry to adapt to the changing environment. While 37 universities in the country now produce textile graduates every year, FDI in setting up spinning and weaving factories is being encouraged to meet the raw material demand internally, cutting dependency on countries like China and India. Learning from Vietnam, Bangladesh remains acutely aware that its labour cost advantage will fritter away in the years to come. The CEO of Bangladesh Apparel Exchange, Mostafiz Uddin, recently pointed out that the country will lose its labour advantage to automation sooner than later. It must, therefore, be ready with adequate investment in research and development and well-educated professionals to provide tech solutions for the industry to adapt and grow, he said. It is with this keen eye on the future that in 2019, Bangladesh decided to create the RMG Sustainability Council to ensure workplace safety in the garment sector. If done and delivered right, the safety and sustainability monitoring system could be the country’s calling card in a highly competitive market in the years to come.

Readymade in Bangladesh: A future-proof success story in textiles