The country’s industrial and trade sectors remain paralysed amid enduring economic challenges, threatening to stifle entrepreneurial growth. Mounting inflation, a devalued taka, foreign exchange scarcity, and rising commodity prices are inflating business operating costs.
Meanwhile, political instability continues to erode investor confidence, deterring fresh capital inflows.
Business leaders say that both import dependence and high bank interest rates are now formidable barriers to business expansion.
Further compounding the situation, from 1 August, US authorities will impose a 35% reciprocal tariff on local exports, stirring logistical and financial concerns among exporters. They warn of a potential demand slump in key European and American markets. Additionally, power, gas, and transport shortages are disrupting production and casting a pall over recovery efforts.
Mostafa Azad Chowdhury Babu, former senior vice president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), said, “Since 5 August last year, deteriorating law and order has hampered investment. Many factories closed, leaving hundreds of thousands unemployed.”
He stressed that without improved security and political stability, both domestic and foreign investment will remain sluggish. “Fundamental reforms and the curbing of mob justice are essential to rebuild business confidence,” he said.
Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the delayed elections and absence of a substantive government have deterred investors in the ready-made garment (RMG) sector over the past year.
He cited recurrent factory closures fuelled by energy shortages and high interest rates.
Ashiqur Rahman Tuhin, Managing Director of Trade Group and former BGMEA board member, voiced concern over declining orders, saying, “August–September is typically a slow season. The 35% US tariff has unnerved buyers—many are delaying or suspending orders, dampening local exporter sentiment.”
He warned that these setbacks have resultantly suppressed further investment.
Capital machinery imports slump nearly 20%
Bangladesh Bank data reveals that capital machinery imports dropped by 19.6% between July and May compared to the previous fiscal year—falling from $3.26 billion to $2.62 billion. The decline reflects entrepreneurs’ reluctance to commit to large-scale investments amid political uncertainty, which also has contributed to softer dollar demand and currency depreciation.
Loan disbursement growth to the private sector fell below 8% for seven consecutive months, hitting 7.17% in May—down from 7.50% in April. Notably, October was the last month to exceed the 8% growth threshold. High lending rates—currently between 14–16%—and limited access to capital markets have further strained businesses.
On 15 July, Bangladesh Bank cut its policy (repo) rate by 0.50 percentage points—from 8.50% to 8.00%—to encourage lending. But business leaders say this move has so far had negligible impact.
Rashidul Hasan Rintu, former BTMA director and President of Narsingdi Chamber of Commerce and Industry, said that a political consensus is essential for reviving business confidence.
He also recommended comprehensive banking sector reforms, greater transparency, rationalised interest rates, and improved loan access for small enterprises.
Diversification beyond RMG—into sectors such as IT, agro-processing, and pharmaceuticals—alongside expanding export processing and special economic zones, he said, could strengthen foreign investment inflows and export resilience.
Courtesy: Kalerkantho
Bd-pratidin English/ ANI
