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Bangladesh needs infrastructure investments

Bangladesh will need to boost productive investment by addressing infrastructure bottlenecks and strengthening the banking sector to maintain the ongoing momentum.
Boosting public investment will upgrade infrastructure (such as roads and electricity coverage), spur more private sector activity, and ultimately create more jobs.

Tax revenues in Bangladesh are currently low at nine per cent of GDP, and the country needs more revenues to finance infrastructure investment and social spending.

The country is undergoing a transformation from a low-income to a middle-income economy. Growth in Bangladesh has averaged more than six per cent over the last decade, significantly lifting per capita income.

Poverty has declined steadily and other social indicators, like gender disparity in education and maternal mortality, have also improved.

Throughout this process, the country has diversified away from an agrarian to a more manufacturing-based economy with rapid growth in the readymade garment industry.

The average tax revenue to GDP ratio for non-resource rich, low-income countries is around 15 per cent. Therefore the priority is to implement the delayed value-added tax, preferably with a single rate, reaching a broad base to help raise the much-needed revenue.

Tax policy reform should also be supported by continued efforts to strengthen tax administration and improve tax compliance with online registration and filing of tax returns.

 
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