BCI fears losses for industries as budget ‘follows’ IMF formula

The proposed national budget “reflects” International Monetary Fund (IMF)-driven priorities that may come at the cost of domestic industry, the Bangladesh Chamber of Industries (BCI) has warned.

In a statement issued on Tuesday, the organisation said the budget leans heavily on corporate and personal income tax without offering a roadmap for expanding the tax base or fixing systemic inefficiencies in revenue collection.

“This budget is built around revenue collection,” said BCI President Anwar-Ul-Alam Chowdhury Parvez.

“While tax collection remains weak due to structural flaws, we see no clear steps to broaden the tax net.”

He added: “Reducing inflation, supporting businesses and creating jobs are named as priorities -- but these goals look difficult to meet under this plan.”

The chamber flagged serious concern over increased value added tax (VAT) on raw materials for large industries, warning that it will raise production costs across the board.

“I honestly don’t understand how raising input VAT will help bring down inflation,” Anwar said. “This entire package looks like it’s been designed by IMF playbook.

“If we follow that, industries will take the hit.”

He noted that manufacturers are already struggling with high production costs, persistent energy shortages, and elevated lending rates--yet even competitive firms are now being asked to pay more in taxes and duties.

Incentives for export-oriented industries are also being gradually withdrawn, Anwar said.

The BCI warned this could reduce their ability to compete globally, especially for ready-made garments-- the country’s top export.

It pointed to a rise in VAT on cotton and man-made fibres, up from Tk 3 to Tk 5 per kg at the production stage.

With local spinning mills already strained by fuel shortages, this change may push the sector towards reliance on imported yarn, the organisation warned.

In steel and cement, the chamber flagged steep increases in input tax.

Duties on steel raw materials have been raised from 15 percent to 25 percent, while cement inputs now face 15 percent VAT, up from 5 percent.

The BCI fears these hikes will significantly raise costs in the construction and housing sectors.

The turnover tax for small enterprises has also been raised --from 0.6 percent to 1 percent — which, according to the BCI, could severely affect cottage, micro, small and medium enterprises (CMSMEs).

The chamber urged the interim government to reconsider the move.

It also called the rise in VAT on e-commerce -- tripled from 5 percent to 15 percent --a heavy blow to digital and SME entrepreneurs.

“This will hit a growing sector at its core,” it said, recommending a rollback to 5 percent.

The chamber, however, welcomed the proposed allocation of Tk 1.25 billion for women entrepreneurs and Tk 1 billion for young entrepreneurs, describing them as “encouraging steps”.

It also praised the budget’s inclusion of SME formalisation and digital credit access --two longstanding BCI recommendations -- and thanked the finance advisor for including them.

The BCI called for timely and full execution of key allocations in health, education, infrastructure, energy and power.

“Budgets only work when funds are released on time and spent where needed,” the chamber said. “If implementation fails, neither the economy nor the people will benefit.”