Bangladesh to Shift from Consumption-Led to Investment-Driven Growth Model: Economic Advisors Outline Reform Priorities

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Economic and Planning Advisor to the Prime Minister, has emphasized the need to move away from the country’s long-standing consumption-led growth model, calling it unsustainable. “For a long time, the country followed a consumption-controlled growth approach, but it was never meant to be sustainable. We now aim to rapidly transition to an investment-driven model,” he said.

He made these remarks on Wednesday at a roundtable discussion titled “Bangladesh’s Development: Short- and Medium-Term Priorities for the New Government”, held at the BRAC Center Inn in Mohakhali, Dhaka. During his speech, Rashed Al Mahmud Titumir outlined a comprehensive framework for restructuring the national economy, including a target to raise the tax-to-GDP ratio to 15% by 2035, steering the country toward an investment-led growth trajectory. Currently, Bangladesh’s tax-to-GDP ratio remains one of the lowest globally.

Rashed Al Mahmud Titumir explained that the government has set intermediate milestones—initially increasing the ratio by 2%, then 10%—before reaching the final target of 15% by 2035.

The roundtable was jointly organized by the private research organization Centre for Policy Dialogue (CPD) and the English daily The Daily Star, with CPD Executive Director Fahmida Khatun moderating the event.

Key Economic Challenges Highlighted

The advisor pointed out that the previous growth model relied heavily on debt accumulation. Between 2009 and 2024, a massive debt burden developed, with private sector investment stagnating or even negative. Addressing these issues is essential for sustainable development.

Regarding revenue and social protection, Rashed Al Mahmud Titumir noted that the government has already taken several steps within 10 days of assuming office, including waiving crop loans up to BDT 10,000 with interest for 1.2 million farmers. Clear directives were also issued to ensure timely wage payments in the ready-made garment (RMG) sector, enabling workers to celebrate Eid without labor unrest.

He added that digitalization will be central to tackling inefficiencies in social protection programs, aiming for a “One Citizen, One Card” system.

Investment in Energy and Job Creation

Business leaders stressed the importance of boosting energy sector investment to stimulate employment. Former FBCCI President and Ha-Meem Group Managing Director A.K. Azad highlighted that inadequate gas connections are hindering industrial growth and job creation. He also called for strict action against defaulters who fail to invest in businesses.

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Other experts, including Daily Star Editor Mahfuz Anam, suggested forming advisory groups in key ministries to monitor progress and guide digital transformation. BGMEA President Mahmud Hasan Khan stressed that stakeholders must be involved in policymaking to reduce operational bottlenecks in the garment sector.

Strategic Reforms

Policy research expert Sadiq Ahmed emphasized that coordinated reforms in revenue, foreign exchange, and banking are essential to restore macroeconomic stability. Rashed Al Mahmud Titumir further discussed the government’s plan to reduce energy subsidies worth BDT 60,000 crore through three strategic measures.

Expanding Employment Opportunities

Executive Vice-Chairman of the Microcredit Regulatory Authority, Mohammad Helal Uddin, stressed the need to expand employment in informal sectors and self-employment initiatives rather than relying solely on institutional jobs. CEOs and industry leaders echoed that revitalizing stalled industries would be more realistic than creating entirely new ones in the short term.

Tackling Loan Defaults

Experts including Professor Main Uddin of Dhaka University and former banking officials called for a zero-tolerance policy against defaulted loans and strict measures to prevent money laundering. They emphasized that future loans must be concessional and carefully monitored.

Participation of Industry Experts

The roundtable also featured insights from former members of Bangladesh Trade and Tariff Commission, Dhaka Chamber of Commerce, BASIS, BGMEA, energy specialists, and leaders of micro and cottage industries, highlighting the importance of coordinated efforts across public and private sectors.

The session underscored that without structural reforms, increased investment, digitalization, and enforcement against defaulters, Bangladesh’s ambition for a sustainable, investment-driven growth path could face significant hurdles.