The recent publication of two significant reports by the World Bank has highlighted pressing concerns for Bangladesh. The reports, titled “Industrial Policy for Development: Approaches in the 21st Century” and “South Asia Economic Update for April 2026: Working with Industrial Policy,” emphasize the need for immediate reforms to ensure sustainable growth.
The South Asia Economic Update reveals troubling statistics for Bangladesh, projecting a potential slowdown in growth to 3.9 percent in 2026. Over the past three years, poverty levels have escalated, with approximately 1.4 million more individuals slipping into poverty. Inflation remains high at 8.5 percent, while wages for low-income workers have failed to keep pace. The banking sector is also precarious, with non-performing loans reaching 30.6 percent by December 2025, and several banks lacking sufficient loss-absorbing capacity.
Having been involved in developing industrial policies for Bangladesh, particularly representing small and medium-sized enterprises (SMEs), I have witnessed firsthand the challenges faced. Despite the ambitious National Industrial Policy 2022 with 42 action points, minimal progress has been made on the ground, resulting in continued neglect of SMEs in practical terms.
The industrial policy report underscores the obstacles hindering small businesses, such as limited access to financing, high operational costs, and unreliable power sources. The report cites successful initiatives in other countries, like Brazil’s “Simples” program, South Korea’s targeted SME support, and Romania’s tax incentives for the software industry, which offer valuable lessons for Bangladesh.
Additionally, the World Bank economic update points out the significant hurdles confronting SMEs, including regulatory burdens and unstable power supply, with only large export firms experiencing substantial growth. The report highlights the decreasing tax-to-GDP ratio, limiting investment capacity in critical sectors.
Amidst discussions of global trends, the concept of “partial nationalisation” in industries, particularly in fast-growing sectors like AI, has gained traction. This strategy involves the state acquiring a modest stake in strategic projects, aiming to leverage profits for social programs, drawing examples from countries like Norway and Singapore.
As Bangladesh approaches a critical juncture in 2026, with preparations to transition from least-developed country status, urgent reforms are imperative to address challenges like the impending end of trade preferences and stricter subsidy regulations. The report also underscores the potential benefits of increased intra-South Asia trade through tariff reductions.
To navigate these complexities, the report advocates for immediate deregulation, robust competition policies, banking sector reforms, and enhanced electricity reliability. Emphasizing the need for autonomy in policy-making, the report cautions against external influences altering drafts at the eleventh hour, promoting a more transparent and steadfast approach to policy implementation.
In conclusion, the report stresses the importance of evolving policy frameworks to align with current challenges, urging a proactive stance in updating and implementing policies to prioritize SMEs and explore innovative strategies like partial nationalisation in strategic AI sectors as a pathway to genuine development.