High taxes hurting investment run
The Japan-Bangladesh Chamber of Commerce and Industry has warned that high taxes, weak logistics and policy uncertainty are hurting Bangladesh’s investment competitiveness ahead of the 2026–27 national budget.
At a pre-budget press conference at a city hotel on Sunday, JBCCI leaders urged the government to reduce corporate tax and VAT, withdraw minimum tax for loss-making companies and modernise the fiscal framework to support investment and industrial growth.
They said the upcoming budget should focus on investment, competitiveness and fiscal reform instead of placing excessive emphasis on revenue collection.
The event, moderated by JBCCI Executive Director Tahera Ahsan, brought together business leaders representing the chamber’s 370 member companies.
They discussed challenges linked to post-LDC graduation, persistent inflation and rising energy costs.
JBCCI President Tareq Rafi Bhuiyan said Bangladesh has a major opportunity through the Japan-Bangladesh Economic Partnership Agreement, but warned that global competition for investment is intensifying.
He said investors now compare Bangladesh not only with neighbouring countries but also with economies such as Vietnam, India and Indonesia, which are offering more attractive tax structures.
To improve competitiveness, the chamber proposed reducing the standard corporate tax rate for the private sector from 25 percent to 20 percent.
JBCCI Board Director and Secretary General Maria Howlader said the current fiscal framework creates major obstacles for businesses and weakens industrial competitiveness.
She called for a fully automated and time-bound VAT and income tax refund system, saying delayed refunds block working capital and create liquidity pressure for local firms.
The chamber also recommended reducing the standard VAT rate from 15 percent to 7.5 percent and introducing a simplified unified VAT structure to ease compliance and reduce business costs.
JBCCI leaders expressed concern over the textile sector, saying the industry enjoyed a 15 percent tax rate until 2025 but is now subject to the standard rate.
They urged the government to restore the 15 percent rate to protect employment and sustain Bangladesh’s position in global supply chains amid rising production costs.
Speaking on the logistics sector, JBCCI Adviser and Past President Asif A Chowdhury said logistics costs in Bangladesh account for 12–15 percent of GDP, compared with 8–10 percent in competing countries.
He proposed introducing 24-hour night navigation for vessels and expanding automated off-dock facilities to improve trade efficiency.
Chowdhury also suggested reducing corporate tax gradually by 1 percentage point per year from July 1, 2026, over the next five years.
He said the phased approach would help the government manage revenue while sending a stable and positive signal to investors.
JBCCI Founding President and Uttara Group Chairman Matiur Rahman said the automobile sector could become a potential engine of export-led growth if the government adopts a clear and time-bound roadmap.
He projected that domestic vehicle sales could exceed 500,000 units annually by 2030 if proper policy support is ensured.
The chamber also cited data from the Japan External Trade Organization, saying Bangladesh’s administrative framework, involving 47 ministries, creates bureaucratic complexity that discourages Japanese investors.
JBCCI noted that Japanese investment in Vietnam has reached around $79 billion, while investment in Bangladesh remains between $350 million and $400 million.
To narrow the gap, the chamber called for strategic priority for agro-processing, textile and pharmaceutical sectors, along with a formal commitment to policy stability.
The chamber proposed a quarterly dialogue between ministries and private sector stakeholders to ensure that policy decisions are made through consultation.
Closing the event, Manabu Sugawara called for better port facilities, easier customs procedures at airports and seaports, improved road connectivity and stable power supply to support investment and industrial growth.
