Bangladesh must act swiftly and decisively to implement broad-based economic and institutional reforms or face an 'existential threat', warned Lutfey Siddiqi, Special Envoy on International Affairs to Chief Adviser Professor Muhammad Yunus.
Siddiqi issued the stark warning during a discussion marking the launch of Bangladesh 2030: Pathways to Shared Economic Prosperity, a new book by noted economist Dr Sadiq Ahmed.
Speaking at the event organised by the Policy Research Institute (PRI) at a hotel in Dhaka on Saturday (10 May), Siddiqi underlined the urgency for action, arguing that the challenge is no longer about identifying what needs to be done, but rather how to get it done.
"We need to focus on how to get it done," he emphasised, urging a shift from endless policy dialogue to implementation. He noted that the window for leveraging the privileges associated with Least Developed Country (LDC) status is rapidly closing-if not already shut.
"In many ways, LDC graduation has already happened," Siddiqi said, describing the impact of national events in 2024 and global economic disruptions in 2025 as a "continuity break of the highest order".
Siddiqi also pointed to a fundamental contradiction in Bangladesh's development model. "We claim it is a private-sector-led economy-essentially a capitalist model with a very communist, planned structure. But unlike communist regimes elsewhere, we don't deliver efficiency," he stated. This paradox, he argued, hampers the country's ability to carry out essential reforms.
According to Siddiqi, the issue is no longer a lack of technical expertise or understanding. "We know the reforms. They are well-documented. The issue is behavioural-sequencing, pacing, and managing resistance," he said, stressing that political economy constraints, rather than policy gaps, are stalling progress.
In a particularly candid moment, Siddiqi criticised elements of the private sector for undermining reform efforts. "Members of the private sector strike their own deals with the government. Many who advocate systemic reform from public platforms have separate arrangements behind closed doors. This undermines change."
Despite painting a rather grim picture, Siddiqi cited examples of real-time progress. "We're not just drafting white papers; we are using them in our workflow daily," he said, citing reforms in port operations, labour regulations, and migration processes. "For instance, we've processed over 150,000 permits under the new National Single Window system, and within weeks, all 19 required departments will be integrated."
He shared a revealing anecdote from a Bangladeshi garment manufacturer with operations in both Bangladesh and Vietnam. "He pays his Vietnamese workers 40 percent more, yet that operation is more profitable. Where does the 40 percent go in Bangladesh? Partly to poor logistics and infrastructure, but much of it to rent-seeking at multiple levels. That 40-percent productivity gap is unforgivable."
Reiterating his commitment to structural change, Siddiqi responded to criticism that the white paper on reform had lost momentum. "Some may feel the white paper's outcomes have faded or stalled. But I can say with certainty that both I and many colleagues actively apply its recommendations in our daily work. The Chief Adviser is doing the same."
He did not shy away from addressing the issue of syndicates either. "Many individuals come to seminars and speak boldly about structural change. Yet later, we often discover they have entered covert agreements with ministries-undermining the reform agenda."
While acknowledging the lack of visible progress, Siddiqi insisted that efforts are underway to implement the white paper's recommendations. "Our primary focus remains on how best to translate those recommendations into action."
Siddiqi's remarks resonated with a host of leading economists and business figures at the event, who collectively warned of a looming stagflation-like crisis. Their suggestions included reforming the tax regime and state-owned enterprises, liberalising the healthcare sector, and investing in urban infrastructure and skills development.
However, it was Siddiqi's candid acknowledgment of political and institutional inertia-and his framing of reform as a behavioural and political challenge-that most powerfully underscored the gravity of Bangladesh's current crossroads.
Joining the discussion were leading figures like CPD's Fahmida Khatun, SANEM's Selim Raihan, MCCI President Kamran T. Rahman, Apex Footwear's Syed Nasim Manzur, and IFC's Martin Holtmann, with the session moderated by PRI Chairman Dr Zaidi Sattar.
Introducing the book, PRI Vice Chairman Dr Sadiq Ahmed said the publication offers a comprehensive roadmap for Bangladesh's economic development, exploring the structural reforms necessary to ensure equitable and sustained growth by 2030.
Speakers expressed concern that the recent white paper submitted to the interim government has yet to result in concrete actions. They stressed that meaningful reform cannot be delayed if Bangladesh is to realise its development ambitions.
Prominent business leader Syed Nasim Manzur delivered a scathing critique of the current economic trajectory, warning that many of the country's earlier strengths, including macroeconomic discipline, low inflation, and favourable demographics, are now under pressure.
Calling for a fundamental rethink of Bangladesh's economic strategy, Manzur outlined key challenges in the private sector, tax policy, exports, healthcare, and urban infrastructure. "The government should not be running mills of any kind," he said. "Taxpayer money is being used to run jute and textile mills. Why has the discussion on privatisation completely stalled?"
He described the country's fragile tax system as "primitive even by lower-middle-income country standards" and accused the National Board of Revenue (NBR) of being "addicted to import-based revenues." He warned that unpredictable export tax rates are deterring investors.
On export diversification, Manzur noted that while the RMG sector has enjoyed consistent support, non-RMG exports continue to face structural disincentives. "As long as import substitution remains more profitable than exports for non-RMG sectors, diversification will remain elusive," he said. He also condemned discriminatory practices in customs and taxation that favour domestic sales over exports.
Participants at the event agreed that Bangladesh's economic model must evolve through bold policy actions, institutional reform, and a reinvigorated commitment to empowering the private sector.
Martin Holtmann of the IFC offered reflections on a range of policy challenges, including urbanisation, healthcare, export diversification, and taxation.
On healthcare, he acknowledged Bangladesh's gains in life expectancy but warned of emerging pressures due to demographic change and an ageing population. He called for removing barriers to entry in the healthcare sector. "We've effectively shut the sector down. That is very unwise."
Holtmann also criticised the country's tax system, describing it as "Kafka-esque". "If you've ever read Franz Kafka, you'll know what I mean. Even within South Asia, our tax take is worse than Nigeria's."
He strongly advocated for investment in girls' education, calling it "the single-best policy intervention for development," and urged both government and the private sector to collaborate on vocational, technical, and digital skills training. "The private sector also has a role. Don't just complain the government isn't producing the right kind of workers-help us. Open academies, run vocational programmes, provide factory-based training."
Dr Selim Raihan of SANEM stressed that without a meaningful political transition and institutional reform, Bangladesh's economic achievements may fall short of delivering sustainable progress. "The centre-point for our future development is a successful, sustainable, and meaningful political transition-something more important now than ever."
He added that the very successes of Bangladesh's past economic model have now become constraints or "hostages to past success". While acknowledging the importance of the RMG sector, he said, "It has created obstacles for other sectors to grow. The political economy around RMG has entrenched vested interests that inhibit export diversification."
Dr Fahmida Khatun of CPD noted that despite decades of economic growth, Bangladesh is seeing a reversal in earlier social gains due to entrenched governance failures, rising inequality, and policy capture by vested interests.
She warned that the current pattern of growth-marked by corruption, weak institutions, and lack of inclusive policymaking-is unsustainable and risks undoing earlier progress. "Bangladesh has achieved macroeconomic stability at times, but growth without domestic investment, employment, and reform has proved fragile," she said, adding that the financial, energy, and infrastructure sectors-central to economic progress-have become hotspots for rent-seeking and policy capture.
Delivering the keynote speech, Dr Sadiq Ahmed said his book is ultimately a message of hope that Bangladesh can transition from its current stagflationary phase to a path of shared prosperity.
He said this optimism stems not from wishful thinking but from Bangladesh's proven resilience-of its farmers, workers, migrant labourers, and the youth.
The book, a compilation of thirteen essays, explores key themes such as macroeconomic management, employment, export diversification, inequality, gender empowerment, urbanisation, environmental sustainability, and governance. Each chapter offers practical, actionable reform recommendations.
Among the proposals are: adopting a flexible exchange rate, modernising the tax system, improving corporate governance in state-owned enterprises, removing anti-export bias, increasing education expenditure, and undertaking redistributive fiscal and environmental reforms.
