Bangladesh Faces $4.12b Extra Energy Costs Amid Middle East Crisis

The ongoing Middle East crisis has added $4.12 billion to Bangladesh’s energy expenditure over the past eight months, putting further pressure on the country’s energy sector, Prime Minister’s Adviser on Finance and Planning Rashed Al Mahmud Titumir said on Monday.

Despite the fiscal pressure, the government has taken steps to develop the Matarbari area into a regional energy hub, he said.

Titumir made the remarks while attending an event as chief guest at the BGMEA Complex in Dhaka, where the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) launched a new platform to monitor environmental, social and governance (ESG) practices and strengthen compliance capacity in ready-made garment (RMG) factories.

He said competing in global markets on the basis of low-cost products alone was no longer sufficient. Adherence to environmental standards was essential for the future, he added.

Highlighting the government’s reform agenda to improve the investment climate, Titumir stressed the importance of policy consistency in attracting investment. He said efforts were underway to establish a predictable five-year framework for tax policies.

Policy Exchange Bangladesh Chairman and CEO M. Masrur Reaz, Brac Institute of Governance and Development (BIGD) Research Director Munshi Sulaiman, and Danish Ambassador to Bangladesh Christian Brix Møller attended the event as special guests.

Speaking about export market trends, Reaz said 70 per cent of European buyers and 73 per cent of US buyers preferred to work with environmentally friendly businesses. Buyers increasingly demanded transparency about carbon footprints during production, he added.

Noting that countries such as Vietnam and India had already made progress in similar initiatives, Reaz said ESG compliance had become an essential part of global market competitiveness.

Danish Ambassador Christian Brix Møller said proactive transparency and sustainability initiatives would significantly strengthen the competitiveness of the manufacturing sector.

BGMEA President Mahmud Hasan Khan said the association planned to make ESG compliance mandatory for all member factories. Discussions would also be held with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) on the matter, he added.

Khan further said that any potential extension of Bangladesh’s least developed country (LDC) graduation timeline would provide additional time to prepare for the transition.