Predictable tax policy, rate a must for attracting investment
To attract new investment and rebuild investor confidence, the government must introduce a predictable tax policy and maintain a stable corporate tax rate in the upcoming budget for the fiscal year 2025–26. Additionally, it should take concrete measures to institutionalize ongoing reforms and foster a more conducive, business-friendly environment, said Zaved Akhtar, President of the Foreign Investors’ Chamber of Commerce and Industry (FICCI) and Chairman and CEO of Unilever Bangladesh Limited (UBL), in an interview with Jago News Special Correspondent Ibrahim Hossain Ovi while sharing his thoughts on the FY 2026 budget.
Jago News: What should the 2025–26 national budget look like?
Zaved Akhtar: Both domestic and foreign investment are essential to driving Bangladesh’s economic growth and ensuring long-term prosperity. For this, we hope the FY2025–26 national budget will introduce measures that foster a business-friendly environment—one that supports entrepreneurs rather than placing unnecessary hurdles in their path.
However, several key areas must be addressed:
First, our tax system remains heavily dependent on indirect taxation. It’s time to strategically shift toward direct taxation, which not only helps reduce tax evasion and corruption but also contributes to building a more transparent and equitable fiscal framework.
Second, the current Value Added Tax (VAT) system is overly complex. A simplified, unified VAT rate should be considered for all businesses. The government must design a clear, phased roadmap to introduce a harmonized VAT structure across sectors. This would significantly ease compliance and likely increase overall tax revenue.
Third, there is a long-standing misconception that the Customs Department’s main role is revenue collection. In fact, its core responsibility should be to facilitate trade. Customs must prioritize smooth and efficient clearance of imported goods, enabling businesses to operate with greater agility.
Fourth, the government should work toward building an interoperable digital ecosystem where agencies can exchange data in real time. This would allow for accurate assessment of import volumes, corresponding VAT, and tax obligations—enhancing transparency and efficiency in the tax system.
Fifth, as Bangladesh transitions from Least Developed Country (LDC) status to a developing economy, we must raise governance standards and strengthen labour rights. These reforms are critical to meeting global expectations and ensuring sustainable growth in the post-LDC era.
Jago News: What kinds of measures should be taken in the budget to attract foreign investment?
Zaved Akhtar: For any investor arriving in Bangladesh, one of the first challenges is determining where to go for investment-related services. Should they approach the Bangladesh Investment Development Authority (BIDA), the Bangladesh Export Processing Zone Authority (BEPZA), or the Bangladesh Economic Zones Authority (BEZA)? The overlapping roles of multiple agencies often create confusion and inefficiency.
The investment process becomes unnecessarily complicated due to this fragmentation. To address this, it is crucial to establish a single, integrated service window—a streamlined platform where investors can access all necessary services under one roof.
If an investor must secure approvals or navigate through four or five different agencies, it increases complexity, slows decision-making, and discourages potential investment. In contrast, countries like India and South Korea have implemented effective single-window systems—Invest India and Invest Korea—which significantly simplify the investment process and enhance investor confidence.
In short, Bangladesh must move toward a unified investment service agency. There is no alternative if we truly want to attract and retain foreign investment.
Jago News: Why is a predictable tax policy and rate necessary?
Zaved Akhtar: We are hoping for a forward-looking and consistent tax policy in the upcoming national budget for FY2025–26—one that helps restore investor confidence and ensures long-term planning.
When an investor considers putting capital into a country, they assess how many years it will take to achieve a return on that investment. In this context, predictability in tax policy and rates is absolutely crucial.
If tax rates or related policies are frequently revised, it increases the cost of doing business and delays the return on investment. Such unpredictability creates uncertainty, which can discourage both domestic and foreign investors.
In contrast, countries with stable and transparent tax regimes are more attractive to investors. They allow businesses to plan ahead, manage risks effectively, and confidently commit to long-term investments. Bangladesh must move in that direction if it wishes to remain competitive in the global investment landscape.
Jago News: How does investor confidence now compare to before August 5?
Zaved Akhtar: Investor sentiment has improved somewhat compared to the past, but this improvement is mostly limited to existing investors—not new entrants. Over the past few months, institutions like Bangladesh Bank, the Ministry of Commerce, the Bangladesh Investment Development Authority (BIDA), and the National Board of Revenue (NBR) have made noticeable progress in service delivery. Their continued efforts to raise standards further are certainly encouraging.
However, when it comes to attracting new investors, the current political climate presents a degree of uncertainty. A key question for many foreign investors is: Who will form the next government? Political stability and clarity about the future are essential for making long-term investment decisions.
If an investor knows that a particular government will remain in power for the next five years, they feel more secure about investing. On the other hand, uncertainty surrounding political leadership can act as a deterrent.
Ultimately, investors are less concerned with which party is in power and more focused on whether there is a stable, elected government that can provide a clear and consistent trade and investment policy. Political predictability, above all, is a cornerstone of investor confidence.
Jago News: What is your view on the ongoing reform initiatives?
Zaved Akhtar: Reforms are absolutely essential—whether it’s to attract new investment or to restore the confidence of both domestic and foreign investors.
Following the events of August, we’ve seen positive strides from several key institutions, including the National Board of Revenue, Bangladesh Bank, and the Bangladesh Investment Development Authority (BIDA). There have been meaningful improvements in service delivery to the business community. However, to ensure these gains are sustainable, we now need to take reform efforts to the next level.
What’s crucial at this stage is to institutionalize the existing reform initiatives. Without a structured framework, the progress we’ve made risks losing momentum. Of course, reforms will always face resistance—that’s part of the process—but bold and decisive action is necessary.
Reforms are like giving birth to something new: once started, you can’t stop halfway. While the process may be difficult, the results are worth it. We must not retreat from this path. Instead, the upcoming national budget should introduce concrete steps to deepen and formalize these reform efforts.
Jago News: What problems do you see currently that are hindering investment?
Zaved Akhtar: One of the biggest challenges right now is the lack of credibility behind our commitments. It’s not enough to make promises—we must back them up with consistent and visible action.
Following the August movement, investor confidence had started to recover. However, recent incidents—including attacks on branded stores and instances of mob justice—have once again shaken that confidence. While law enforcement agencies did respond swiftly, such events damage our international image and create a sense of instability.
To attract and retain investment, we must go beyond improving the business environment—we must also guarantee the safety of investors and their assets. We need to send a strong, consistent message through our actions: Bangladesh is a safe and secure place to do business. Only then can we rebuild long-term trust and attract meaningful investment.
