In recent months, imports have noticeably declined in many sectors of industrial production due to several factors, including changes in global supply chains, rising domestic production capacity, and tightening fiscal policies.
One key contributor to the drop in imports is the increased self-reliance of domestic industries, particularly in sectors like textiles, chemicals, and machinery.
As local manufacturing has expanded and upgraded its capabilities, reliance on foreign goods has diminished. This trend is particularly evident in the growing capacity of local manufacturers to meet domestic demand without the need for imported raw materials and intermediate goods, said sources.
According to the Bangladesh Bank data, in the first seven months (July–January) of the current fiscal year 2024-25, the value of letters of credit (LCs) opened for capital machinery imports stood at $1.006 billion – a 33.68% drop compared to $1.517 billion during the same period in FY24.
Similarly, LC settlements for machinery imports fell to $1.243 billion, down 27.33% from $1.709 billion during the same period last year. The data reveal significant declines in key sectors.
LC openings for textile machinery and leather imports fell by 23.89% and 27.21%, respectively. LC settlement for the textile sector dropped by 20.93%, while it rose by 20.39% for the leather industries during the first seven months of the fiscal.
Meanwhile, LC openings for jute increased by 174.45% and for garments by 24.07%. However, LC settlements for these industries declined – jute by 27.85% and garments by 1.65%.
Similarly, LC openings for pharmaceuticals decreased by 20.49% and for the packaging industry by 47.83%. Corresponding LC settlements dropped significantly as well – pharmaceuticals by 49.62% and packaging by 33.46%.
The data also show that LC openings for miscellaneous industrial imports fell by 9.43%, while settlements increased by 15.32%.
Among these, LC openings for computers and accessories decreased by 5.78%, and settlements declined by 17.91%.
Meanwhile, LC openings for iron and steel products decreased by 11.61% and tractors and power tillers by 60.59%. Settlements for these sectors also dropped – iron and steel products by 6.61% and tractors and power tillers by 51.84%.
In the commercial sector, LC openings declined by 2.09% but settlements increased by 3.15%.
The data also revealed that LC opened and settlements for Intermediate goods declined by 7.37% and 13.94% respectively.
Among them, LC openings for coal imports rose by 29.91%, while settlements declined by 7.82%.
However LC openings for cement imports dropped by 13.37%, while settlements increased by 11.87%.
LC opened and settlements for Clinker & limestone declined by 10.74% and 10.25% respectively. LC opened for Scrap Vessels and Iron and steel scrap imports declined by 24.87% and 29.74% respectively. Also settlements declined by 31.16% and 19.27% respectively.
Political instability, including ongoing labour strikes and protests, has further exacerbated the situation. Since the new government took office, factory production has been disrupted, and business leaders’ concerns about the future have grown.
Economists and business leaders have urged the interim government to ensure the smooth operation of factories and businesses. Traders have also criticised the lack of meaningful dialogue with the business community.
Shams Mahmud, president of the Bangladesh Thai Chamber of Commerce and Industry, told, “Imports have become more restrictive due to the dollar crisis, making it difficult for entrepreneurs to acquire essential raw materials. As a result, it’s becoming increasingly hard to sustain existing industries, let alone make new investments. Additionally, banks are being directed to invest in treasury bonds.”
He further said, “Until the banks’ liquidity situation improves, there will be no new investment in the industrial sector, meaning no growth this time around.”
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), noted that the fuel crisis and a shortage of bank funds are also major issues. “I don’t see anything positive on the horizon. In such circumstances, who would invest?” he questioned.
Hatem also criticised the Bangladesh Bank’s policies, stating, “Currently, the priority is inflation control, not industrialisation. As a result, interest rates have risen, making it harder to secure loans. The central bank’s contractionary monetary policy is further stifling industrial growth.”
Rizwan Rahman, former president of the Dhaka Chamber of Commerce and Industry, expressed similar concerns. “When someone decides to invest in a country, their first concern is safety. If no one feels safe, why would they invest their money? We need to empower law enforcement agencies to ensure law and order,” he told the media.
Courtesy: Daily Sun.
Bd-pratidin English/Tanvir Raihan
