Economy
Price Surge on Select Products Following Budget Changes
Finance Minister AH Mahmood Ali presented the national budget for the fiscal year 2024-25, amounting to Tk 797,000 crore, in the Jatiya Sangsad today. The presentation took place under the chairmanship of Speaker Dr. Shirin Sharmin Chaudhury and in the presence of Prime Minister Sheikh Hasina.
This marks the 53rd budget of independent Bangladesh, the first for the current government’s fourth consecutive term, the 16th continuous budget, and the 21st under the Awami League-led administration. Notably, this is the inaugural budget presented by Finance Minister AH Mahmood Ali.
The proposed budget includes increased taxes and duties on various products, leading to higher prices for items such as cigarettes, water filters, cashews, refrigerators, air conditioners, ice cream, beverages, bricks, LED bulbs, tobacco products, unrefined edible oil, tube lubricating gel, synthetic corundum, aluminum oxide, fluorescent lamp parts, glass, plastic, medical equipment, capital machinery, construction materials, SIM cards, auctioneers, security services, and lottery tickets. Consequently, household expenses and travel costs are expected to rise.
Increased Costs Due to Tax Changes:
- Cigarettes: The budget proposes increasing the supplementary duty on all types of cigarettes, with a suggested 65.5% supplementary duty on three tiers of cigarettes, raising their prices. The maximum retail price for 10 grams of jorda is set at Tk 48, and for guli, Tk 25.
- Water Filters: Import duty on water filters, now produced domestically, is raised from 10% to 15%.
- LED Bulbs: Import duties on LED and energy-saving bulb components are increased by 10%, likely raising their prices.
- Cashews: Import duty on shelled cashews is raised from 5% to 10% to protect domestic cultivation.
- Refrigerators and Air Conditioners: VAT and duties on components used in the production of refrigerators and air conditioners are increased, leading to higher prices.
- Construction Costs: Import duties on LRPC wire are increased, impacting construction expenses.
- Vehicle Conversion Kits: Import duties on CNG-LPG conversion kits and related components are raised from 3% to 5%, increasing conversion costs.
- Generators: A 1% import duty is introduced on components used in assembling and producing generators, affecting prices.
- Imported Mackerel: VAT and advance income tax on imported mackerel are set at 15% and 5%, respectively, increasing their cost.
- Industrial Raw Materials: A 1% import duty is imposed on 33 types of raw materials used in industries, such as unrefined edible oil, aluminum ingots, and components for
- LED bulbs and fluorescent lamps.
- Economic Zones: Concessions on capital machinery and construction materials for industrial establishments in economic zones and high-tech parks are withdrawn, introducing a 1% import duty.
Sectoral and Service Tax Changes:
- Tour Operators: The existing VAT exemption for tour operator services is withdrawn.
- Entertainment: VAT for amusement parks and theme parks is increased from 7.5% to 15%, affecting leisure costs.
- Auction Houses and Security Services: VAT is raised from 10% to 15% on auction houses, security services, and lottery tickets.
- Bricks: Specific taxes on bricks are proposed to increase from 10% to 20%, impacting construction costs.
- Ice Cream and Beverages: VAT increases on ice cream and carbonated beverages are proposed, raising their prices.
- SIM Cards: Supplementary duty on mobile phone SIM usage is raised from 5% to 20%, increasing the cost of mobile communication and internet usage. VAT on e-SIM provision is increased from Tk 200 to Tk 300.
The proposed budget’s theme is “Commitment to Building a Happy, Prosperous, Developed, and Smart Bangladesh.” The overall budget size is set at Tk 797,000 crore, a 4.60% increase from the current budget of Tk 761,785 crore. The Annual Development Programme (ADP) is fixed at Tk 265,000 crore, up from Tk 263,000 crore in the previous fiscal year. The total deficit is projected at Tk 256,000 crore, down from Tk 283,785 crore in the revised budget for the current fiscal year.
Revenue targets are set at Tk 545,400 crore, compared to Tk 500,000 crore in the previous year. GDP growth is targeted at 6.75%, with inflation expected to be 6.5%.
To cover the budget deficit, loans of approximately Tk 300,000 crore are anticipated from domestic and foreign sources. The budget also includes allocations to prepare the youth for a “Smart Bangladesh” and measures to enhance social safety programs to mitigate inflation’s impact. Climate change’s effects on the economy are also analyzed in this budget, and efforts to broaden the tax base will include introducing taxes in new areas.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
