The overall trade and investment climate in Bangladesh remains under strain due to high VAT and tax rates and a deteriorating law and order situation, according to business leaders who spoke at a Dhaka Chamber of Commerce and Industry (DCCI) event today.

At a view exchange meeting held at the Tokyo Square Convention Centre, traders from the Dhanmondi, Mohammadpur, Shyamoli, and Adabar areas voiced a range of concerns affecting business operations.

DCCI President Taskeen Ahmed chaired the meeting, which brought together representatives from various sectors to discuss the current challenges facing trade and investment.

According to a press release, participants identified high interest rates on bank loans, limited access to financing, complex VAT and tax systems, bureaucratic harassment, lack of automation in regulatory processes, and severe traffic congestion as major obstacles to smoother business operations.

These issues, they argued, are impeding economic activity and discouraging investment, particularly for small and medium enterprises (SMEs).

DCCI President Taskeen Ahmed underscored the gravity of the situation, citing a combination of global economic uncertainty and domestic structural challenges as key factors impacting the country’s economic trajectory. He pointed to the complexity of the tax and VAT system, delays in export-import activities, foreign exchange management issues, and weaknesses in maintaining law and order as critical concerns.

“The current global economic situation, compounded by domestic hurdles, is having an adverse effect on our economy, particularly impacting our SME entrepreneurs,” Ahmed said. “There is no alternative to building a safe, stable, and predictable business environment.”

In a bid to improve the situation, Ahmed outlined several proposals submitted by the DCCI for the upcoming national budget. These include fully automating revenue management systems, rationalising tax rates, introducing a single-digit VAT rate, fixing a 1% VAT for the informal sector, and launching a VAT return mobile application to streamline processes and reduce human interaction, which could minimise harassment.

He stressed the importance of easy credit access, the need for automation in export-import operations to enhance efficiency, and timely policy support from the government to sustain industrial growth. “Businessmen are willing to pay taxes and VAT, but they do not want harassment,” he said. “It is inevitable that the rule of law and its proper enforcement will be ensured to keep business activities active at all levels.”

Representatives from regulatory authorities also addressed traders’ concerns. Mohammad Mostafizur Rahman, Additional Director of the SME and Special Programs Department at Bangladesh Bank, highlighted recent initiatives to boost SME financing.

He informed the gathering that a new master circular issued on 17 March aims to enhance credit flow to the SME sector by extending the term loan period to seven years from the previous five, acknowledging the time needed for factory establishments.

Rahman further noted that the central bank has created a Tk25,000 crore fund exclusively for SME entrepreneurs, with loans available at a maximum interest rate of 7%. For women entrepreneurs, the rate is even lower at 5%, while agro-entrepreneurs also benefit from concessional rates. Additionally, he mentioned that the Cash Reserve Ratio (CRR) has been reduced from 5.5% to 3% to facilitate increased credit availability to the private sector.

On the issue of VAT and tax administration, Milon Sheikh, Additional Commissioner of Customs, Excise, and VAT Commissionerate, Dhaka (West), defended the government’s position. He said that about 80% of the national revenue target is being collected through the National Board of Revenue (NBR), describing it as a challenging achievement.

He added that VAT collection growth in areas like Mohammadpur has surged by 15–20% this year, with 98% of small businesses in the area brought under VAT registration in the past three months.