FROM PAGE B1

The National Board of Revenue (NBR) has been implementing tariff rationalisation in phases since FY23, following recommendations from a committee formed to prepare the economy for LDC graduation. But economists and trade experts say the changes fall well short of what is needed.

Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said the budget did not provide a clear roadmap for tariff rationalisation ahead of graduation.

“Based on what we have been advocating for LDC graduation, the changes are not significant enough. Some supplementary duties have been adjusted, but it is not enough,” he said.

Razzaque acknowledged that Bangladesh could not replicate the sweeping tariff reforms undertaken by countries such as Pakistan, given the size and depth of its domestic manufacturing sector.

A more gradual approach was necessary, he said -- but it had to be structured.

“Given Bangladesh’s strong manufacturing sector, we need to move systematically. But we should have seen a roadmap showing how tariffs would be reduced over the next three or four years,” he said.

Without such a roadmap, he warned, future free trade agreement negotiations would become more complicated, and the risk of trade diversion would rise.

“If we maintain high tariff rates while negotiating future trade agreements, the risk of trade diversion will be much higher,” he said.

Razzaque also argued that the NBR’s tariff decisions remain too heavily driven by revenue considerations.

“The NBR is fundamentally revenue-oriented. It believes that reducing import tariffs will reduce revenue collection, so it tends to focus on protecting revenue rather than improving export competitiveness,” he said, adding that LDC graduation should have featured as one of the country’s top stated priorities in the budget.

While acknowledging that some sector-specific concessions were justified, Razzaque said political considerations often influence budget decisions.

“Those who can lobby more effectively often secure greater benefits. That is why budget-making needs clear objectives and a medium-term policy framework,” he said.

Trade expert Mostafa Abid Khan said the proposed budget did not signal any major shift in tariff policy, though it introduced incentives for a few selected sectors, including electric vehicles.

“I don’t see any major changes in the tariff policy. Some sectors have received support, but overall, there has not been any significant shift in direction,” he said.

Khan cautioned that sector-specific concessions were not a substitute for the broader tariff reform Bangladesh needed.

“Industries cannot remain under high protection indefinitely. Protection has to be reduced gradually, and regulatory duties need to be rationalised because, ultimately, we will not be able to retain them forever,” he said.

He added that while the budget provides targeted support for specific sectors, it falls short of outlining a clear roadmap for lowering trade protection and improving competitiveness in the post-LDC era.

“The broader direction towards tariff rationalisation is still not visible,” Khan said.