Exporters Criticise High Bank Interest Rates

Top business leaders have criticised high interest rates for driving up the cost of doing business in Bangladesh, which they say is causing the country to fall behind its regional competitors. They have called for a reduction in the policy rate and reforms to the country’s revenue system.
While the International Monetary Fund (IMF) has advised a stricter policy to curb inflation, business leaders at an event yesterday stated that the government should not follow every suggestion from development partners.

They also called for the revival of the Export Development Fund (EDF), improvements to law and order, and measures to ease traffic congestion in Dhaka.
During the dialogue at the Bangladesh Investment Development Authority (Bida) headquarters in Dhaka, key figures including Energy Adviser Muhammad Fouzul Kabir Khan, Special Assistant to the Chief Adviser Lutfey Siddiqi, Bangladesh Bank (BB) Governor Ahsan H Mansur, Bida Executive Chairman Ashik Chowdhury, and National Board of Revenue (NBR) Chairman Abdur Rahman Khan responded to questions from around 100 business leaders and entrepreneurs from various sectors.

Addressing interest rates, Syed Nasim Manzur, president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), told the Bangladesh Bank Governor, “I have a humble request, businessmen cannot bear this interest rate anymore. It is becoming impossible for us to bear it.”

“The cost of doing business is rising significantly. We cannot compete with our market peers, especially with Vietnam and India,” he added.
Manzur, also the managing director of Apex Footwear Ltd, said that export orders could remain sluggish until February or March next year, as Western buyers turn to alternative sourcing countries.

He praised the NBR for recent reforms, such as the automation of bonds and relief from “HS Code terrorism.” “Now we want relief from advance tax and tax at source,” he said.

Manzur also remarked that it is not often questioned whether only businessmen have become rich or whether bureaucrats have become wealthy too. “Of the money that has been laundered, bureaucrats have siphoned off the most. We businessmen do not want to take this responsibility.”

“Those businessmen who steal money or gas should be caught and brought to justice. Their responsibility should not fall on us,” he added.

Tapan Chowdhury, managing director of Square Pharmaceuticals, urged the government to take strong action against willful loan defaulters. He said they had misappropriated depositors’ money without facing any consequences.

“The real offenders remain untouched, while genuine businesses are unfairly labelled as corrupt,” he said.

At the dialogue, BB Governor Mansur said, “We must protect the economy without punishing industries. The law will apply, but productive assets and jobs must be protected.”

He added that the central bank aims to reduce inflation to 5 percent by the end of the fiscal year, down from a peak of over 12 percent last year.

“Food inflation has dropped to 7.3 percent, and overall inflation has come down to 8.2 percent. Once inflation stays below 7 percent, we will cut policy rates to 8 percent to 9 percent,” he said.

Mansur mentioned that the exchange rate remains market-based, with occasional interventions to support reserves and imports. Regarding the Export Development Fund, he said the BB supports its revival once reserves can cover six months of imports, even if it exceeds IMF preferences.

Acknowledging concerns about non-performing loans (NPLs), he said actual NPLs could be as high as 35 percent.

He also recognised private sector frustration with advance income tax and tax deducted at source, but he said reforms to automate refunds and carry forward excess payments are underway.

Ashik Chowdhury, Executive Chairman of Bida, mentioned that investment reforms are starting to show positive results, thanks to better inter-agency coordination and monthly consultations with the private sector.

He highlighted progress on long-delayed projects such as the National Single Window, the operationalisation of the Authorised Economic Operator system, and the launch of a digital platform called BanglaBiz to streamline business services.

To attract foreign investment, he said Bida is offering cashback incentives for non-resident Bangladeshis and providing a platform to connect foreign investors with local partners. The number of proposed economic zones has been reduced from 100 to 10, with a Free Trade Zone (FTZ) in Chattogram awaiting final approval.

“We have completed 24 out of 32 reform goals. Our aim is transparency, not perfection,” Chowdhury said.

NBR Chairman Abdur Rahman Khan defended the current tax policies but stressed the need for fiscal discipline and reforms.

He emphasised the importance of protecting local manufacturers through appropriate duty structures.

“Foreign banks earning profits in Bangladesh must be taxed,” he said, criticising excessive tax waivers and calling for rationalisation of both revenue and expenditure.

Energy Adviser Muhammad Fouzul Kabir Khan acknowledged a gas supply shortfall of over 1,000 Million Cubic Feet per Day and proposed reforms to streamline gas distribution and reduce interference.

Khan advocated a shift from road to river and rail transport, noting that more than 90 percent of goods are currently moved by road.

He also highlighted progress on a locally developed integrated energy and power sector master plan and proposed refinery partnerships with global firms such as ExxonMobil.

“Wealth must come from production and innovation, not from evasion or default,” he concluded.

Lutfey Siddiqi, Special Assistant to the Chief Adviser, called for a shift away from a “rotting system” towards performance-based governance.

“We may have improved from 1 to 5 percent, but we are still sitting on a 95 percent broken system,” he said, urging a redesign of outdated business rules and ministry structures.

Among the business leaders present at the event were former FBCCI president Mir Nasir Hossain, Meghna Group MD Mostafa Kamal, East Coast Group Chairman Azam J Chowdhury, Transcom Group CEO Simeen Rahman, City Bank MD Mashrur Arefin, and Uttara Motors Chairman Matiur Rahman.

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