ORAWEK
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THURSDAY, 14 MAY 2026
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Bangladesh Business & Economy
Fitch cuts Bangladesh outlook to Negative — and the government responds with its boldest investment reform in a decade
In a statement issued yesterday from Hong Kong, Fitch Ratings revised Bangladesh's outlook to 'Negative' from 'Stable' while affirming the 'B+' credit rating. The trigger: significant exposure to the Middle East conflict, which threatens both energy imports (15% of total imports, ~$10 billion in 2025) and remittances (nearly 50% from the region, 3.5% of GDP). Fitch also flagged weak banking governance, a revenue-to-GDP ratio that slipped to 7.9% in FY25, and uncertainty over the IMF programme. It projects Bangladesh GDP growth at just 3.7% for FY26 and 3.5% for FY27. On the same day, Commerce Minister Khandakar Abdul Muktadir announced the government is moving ahead with a plan to unify BIDA, BEZA, BEPZA, Hi-Tech Park Authority, MIDA and PPP Authority under a single Investment Promotion Agency — to be designed by an independent international consultancy and implemented by the elected government. The merger would create a one-stop investor platform and eliminate six parallel sets of rules, land prices, and incentive structures that currently confuse both local and foreign investors.
NBR presents FY27 budget proposals to PM today: wealth tax revival, export incentive tax doubled, digital VAT for all businesses
The National Board of Revenue is meeting Prime Minister Tarique Rahman today (Thursday) to present its FY2026-27 tax proposals. The headline proposals: reintroduce a wealth tax (replacing the existing wealth surcharge, calculated initially on net declared wealth); double the TDS on export cash incentives from 10% to 20% — which could generate ~Tk900 crore in additional revenue but has sparked sharp pushback from RMG exporters; and impose a new advance income tax on high-capacity motorcycles and battery-run rickshaws. On the business-friendly side, NBR is proposing mandatory online VAT registration for all businesses from FY27 with a concessional VAT rate for new registrants — a direct compliance expansion play. The budget is expected to be announced June 11. RMG exporters say the incentive tax hike would be "completely unreasonable" given ongoing US tariff pressure and declining incentive rates in recent years.
Agent banking handles Tk8,960cr in remittances in Q1 — FY26 total now $30,775M, up 20.9% YoY
Bangladesh Bank's latest quarterly report shows agent banking disbursed Tk8,959.8 crore in inward remittances in January–March 2026, up 15% year-on-year through 20,339 active outlets serving mostly rural households. More than 85% of outlets are in rural areas. The strong Q1 numbers sit inside an even stronger full-year picture: FY26 remittances through May 11 reached $30,775 million — up 20.9% year-on-year, with a record single-day inflow of $251 million on May 11. Eid-ul-Adha demand in late May could push monthly inflows to new records. This remittance surge is Bangladesh's most important near-term buffer against the Fitch downgrade risk — but it is the same buffer Fitch cited as vulnerable if the Middle East conflict persists.
Sequenced privatisation missing from next budget — NBR expands digital tax system to reduce discretion
The FY27 budget is expected to lack a credible privatisation agenda, despite the government's stated reform agenda, according to analysis from The Daily Star. Privatisation — sequenced and transparent — was identified as the single structural lever most likely to both reduce fiscal burden and signal reform seriousness to multilaterals. Separately, NBR is expanding its digital tax system: online tax filings, e-TDS challans, and digital audit trails are being extended to additional taxpayer categories to reduce human discretion in assessments — a direct response to persistent complaints about corruption in tax administration. The digital expansion is expected to bring more of Bangladesh's estimated 10 million TIN-holders (only ~35% currently compliant) into active filing.
ECNEC approves 9 projects worth Tk36,696cr — FAO warns global food prices rose for second month
The Executive Committee of the National Economic Council approved 9 development projects totalling Tk36,696 crore in its latest session, focused on infrastructure, energy, and social protection — providing a demand anchor for contractors and suppliers ahead of the budget. Separately, the UN Food and Agriculture Organisation warned that global food prices rose for the second consecutive month in April, driven by higher cereal, dairy, and vegetable oil prices — a signal that Bangladesh's 8.24% food inflation may face upward pressure in coming months as import costs climb alongside Brent crude.
📌 Fitch + Reform Context — The 'Negative' outlook is not a downgrade — it is a warning signal. It means a downgrade to 'B' (deeper junk territory) is possible within 12–24 months if conditions deteriorate. The simultaneous push to merge six investment agencies is the right directional response. The test is execution speed: if the new IPA is not functional before LDC graduation, the reform window may close.
📌 Export Incentive Tax — Doubling the TDS on cash incentives from 10% to 20% is a fiscal convenience that may cost more in competitiveness than it earns in revenue. Bangladesh earns ~Tk900 crore in exchange for potentially signalling to buyers that operational costs are rising. RMG sector is already fighting a 19% US tariff. This is not the moment for domestic cost shocks to exporters.
Economy Watch
Data Point · Updated 14 May, 8 AM
USD / BDT
122.75 ৳
BB interbank · May 12 last close · Taka stable last 30 days
YUAN / BDT (CNY)
~18.07 ৳
Xe mid-market estimate · 14 May 8 AM via EBL rate sheet
DSEX Close — May 13
~5,205–5,243 pts
May 13 range per Investing.com · Full close pending DSE official release · May 12 confirmed close: 5,229 ▲+24
Gold 22K / Bhori
2,44,711 ৳
▲ +2,216 from Tk2,42,495 · BAJUS rate effective May 7 · No change since
Inflation Rate (Apr '26)
9.04%
▲ Rose from 8.91% in Mar · Food inflation: 8.24% (Mar) · Fitch projects ~9% in FY27
Policy Rate (BB)
10.0%
Bangladesh Bank repo rate · Unchanged · Business lobby pushing for 12% lending cap
Bad Loans (NPL) Dec '25
30.60%
▼ Down from 35.73% peak (Sep '25) · Fitch warns NPL could rise again once forbearance lifted · Islami Bank: 51%
GDP Growth FY26
3.7–4.7%
Fitch: 3.7% · WB: 3.9% · ADB: 4.0% · IMF: 4.7% · FY25 actual: 3.49%
Global Signal
Overnight — What Reaches Dhaka by Thursday Morning
| Brent Crude TradingEconomics / Fortune · 13 May 2026 | ~$105.79–$107/bbl ▲ · Rose for 3 straight sessions before trimming · Hormuz effectively closed 12+ weeks · IEA: inventories fell at record ~4M bbl/day in Mar–Apr · Saudi Aramco CEO: market losing ~100M barrels/week · Ceasefire "on massive life support" (Trump, May 12) |
| WTI Crude TradingEconomics · 13 May 2026 | ~$100.98–$102/bbl · Steadied after +7.6% rally over prior 3 sessions · Crude inventories fell 4.3M barrels (EIA, double expectations) · US gasoline avg $4.52/gallon · 52-week range: $54.98–$117.63 |
|
US PPI — April 2026 (RELEASED YESTERDAY) BLS / CNBC · Released 13 May 2026 |
Headline PPI +6.0% YoY (est. 4.9%) · +1.4% MoM — largest monthly jump since Mar 2022 · Core PPI: +5.2% YoY, +1.0% MoM (est. +0.3%) · Energy +7.8% MoM · Services +1.2% MoM · "Inflation is sticky and accelerating" — TradeStation · Economists now see CPI above 4% in May report |
| US CPI — April 2026 BLS · Released 12 May 2026 | Headline CPI +3.8% YoY (beat 3.7%) · +0.6% MoM · Core CPI: +2.8% YoY, +0.4% MoM · Gasoline +28.4% YoY · Food +3.2% YoY · Real wages fell 0.3% YoY — first decline since Apr 2023 · Highest headline since May 2023 |
| Wall St — 13 May close TheStreet · 13 May 2026 | S&P 500 7,444 ▲ +0.58% (new record close) · Nasdaq 26,402 ▲ +1.20% (new record) · Dow ~49,636 ▼ –0.25% · Russell 2000 2,844 ▲ +0.07% · Hot PPI absorbed; Nvidia +2.5% (Huang joins Trump–Xi summit delegation) · VIX: 18.06 |
| US Fed Rate Federal Reserve · Apr 29, 2026 | 3.50–3.75% · Held Apr 29 (3rd consecutive hold) · Kevin Warsh confirmed as Fed Chair · After PPI shock: 10Y Treasury hit 4.473% (2026 high) · 20Y and 30Y eclipsed 5% · Zero cuts priced in for 2026; BofA sees no cut until H2 2027 |
| Bitcoin CoinDesk · 13 May 2026 | ~$80,000 · Briefly dipped below $80K on hot PPI · Recovered to ~$80,200 · Down 0.8% in 24hrs · Crypto market cap ~$2.76T · $63M in longs liquidated at dip · Solana –2%, XRP –1% |
| Strait of Hormuz / Iran War EIA / TradingEconomics · 13 May 2026 | Effectively closed — Week 12+ · Iran rejected US naval blockade end demand · Trump met NSC on potential return to military operations · IEA: market could remain severely undersupplied until Oct even if conflict ends soon · Iranian export shipments now stalled — first sustained interruption since conflict started |
| BD–US Tariff US Embassy Dhaka · May 2026 | 19% base rate · ART implementation talks concluded May 5–7 · Trump appealed court ruling on Section 122 tariff — if appeal fails, BD exporters may reclaim 10% paid since Aug 2025 · Today's NBR budget meeting could signal how BD plans to respond to ongoing trade pressure |
| US–China Trade / Xi Summit TradingEconomics / TheStreet · 13 May 2026 | Trump–Xi summit ongoing in Beijing · Nvidia CEO Jensen Huang joined US delegation · Trump: trade talks take precedence over Iran · US tariffs on China ~45% · BD RMG still ranked #2 US apparel supplier but capturing zero incremental share from China's exit — Vietnam and Cambodia winning that race |
| Goldman Sachs / IEA Warning IEA Oil Market Report · May 13, 2026 | IEA: largest oil supply shock on record · Inventories fell at record pace in Mar–Apr · Market may stay severely undersupplied until Oct · Goldman: energy shock inflationary for all of 2026 · JPMorgan: "demand destruction beginning as consumers adjust" · EIA projects Brent at $89/bbl by Q4 if Hormuz reopens |
| Asian Markets TradingEconomics · 14 May AM | Tracking Wall St Wednesday surge; Nasdaq/S&P new record highs positive for EM risk-on · Japan Nikkei supported by AI/semiconductor rally (Nvidia CEO Xi summit presence) · South Asian EM under dual pressure: strong USD + ongoing oil shock · Watch: DSE opens today post-Fitch negative outlook |
| India–BD Relation Daily Star / ADB | India supplying diesel via pipeline amid LNG shortage · BD seeking $3B additional ADB budget support for energy overruns · Hormuz closure driving energy import bill up est. $4.8B annually · ADB $100M pension loan adds to BD–multilateral partnership track |
AI This Week
Practical Intelligence — Never Hype
For Your Work
Anthropic quietly shipped a feature called "Dreaming" for Claude Managed Agents on May 6 — and it solves a problem that anyone building AI-powered workflows in Bangladesh will recognise. The problem: AI agents are sharp within a single session but forget everything when the session ends. You have to re-explain context every time. Dreaming is a scheduled background process that runs between sessions, reviewing past conversations, extracting recurring patterns, pruning outdated or conflicting instructions, and updating the agent's memory store automatically. The agent gets better without any manual intervention. The practical translation for a Dhaka finance or compliance team using AI agents for document review, credit analysis, or client onboarding: you no longer have to rebuild context each day. An agent running Dreaming will remember that your internal templates use a specific approval hierarchy, that one client always requires dual sign-off, or that your team prefers Bangla output for internal notes. Over two weeks of use, the agent measurably improves. If you are building on Claude's API, Dreaming is now available in research preview. For non-developers, this is the strongest sign yet that the next generation of AI tools will feel less like calculators and more like colleagues that remember.
ORAWEK Note
A Real Observation. From a Real Person.
“
Fitch said 'Negative' yesterday morning and by the afternoon the Commerce Minister was at a press conference announcing the biggest investment agency reform in a decade. I do not think that is a coincidence. What I noticed is how the statement was framed: "implementation will be left to the elected government." That sentence is doing a lot of work. It means the structural intent is real but the execution risk is on the next political cycle. For a foreign investor doing due diligence on Bangladesh today, that sentence is both reassuring and insufficient. Reassuring because it signals cross-party policy continuity. Insufficient because the foreign investor has heard this language before. The honest question this morning is not whether the merger is the right idea — it clearly is — but whether Bangladesh has the institutional patience to build a truly independent IPA that does not immediately become a patronage vehicle for the ruling coalition. That is the test that comes after the design consultancy finishes its report. The design is the easy part.
— Founder · Thursday morning · Dhaka