The industrial sector in the country is grappling with a deepening crisis, as political instability, financial hardship, and mounting law enforcement pressure combine to create a climate of fear among business leaders.
Entrepreneurs across the country are reporting widespread disruption, with some describing the situation as an “undeclared war” on the business community.
In recent months, several high-profile industrialists have come under intense scrutiny. Business leaders say they have faced frozen bank accounts, summons from the Anti-Corruption Commission (ACC), and even extortion threats disguised as legal action.
Alarmingly, there are also allegations of fabricated criminal charges – including murder – being brought against entrepreneurs, further fuelling panic and halting investment plans.
Data from the Bangladesh Bank also paints a troubling picture.
Letters of credit (LCs) – used for importing industrial goods – have declined sharply across key sectors during the first nine months (July to March) of the 2024-25 fiscal year (FY25). LC openings for textile machinery fell by 16.07%, while settlements declined by 21.66%. The leather industry also saw a drop in LC openings by 18.18%, although settlements rose slightly by 2.46%.
The pharmaceutical sector was hit even harder, with LC openings plunging by 21.44% and settlements down 42.52%. Packaging materials saw LC openings fall by 35.52%, with a 37.69% drop in settlements. For raw cotton, LC openings declined 9.29%, and settlements fell by 2.53%.
Other industrial imports, including iron and steel scrap, clinker and limestone, agricultural machinery like tractors and power tillers, computer hardware, and intermediate goods, all suffered double-digit declines.
There were a few exceptions. LC openings for jute increased by 53.84%, although settlements dropped 14.58%. The garment sector also showed some resilience, with LC openings up 20.74% and settlements rising 5.60%.
Capital machinery imports – a bellwether for industrial investment – registered a significant drop.
From July to March, LC openings fell by 28.68%, dropping from $1,804 million to $1,335 million. Settlements also declined by 23.86%, to $1,521 million from $2,133 million over the same period last year.
Experts say the fall in imports is the result of multiple factors, including the global economic slowdown, rising local production, and tighter monetary policy from the central bank.High interest rates and inflation-control measures have made bank loans costlier, further discouraging investment, they added.
Adding to the turmoil are political unrest, labour disputes, and a lack of dialogue between the government and the business sector.
Tensions escalated after the 2024 July uprising – that led to the fall of the previous autocratic Awami League regime – and were worsened by declining land trade, increased tariffs from the United States, and a weakening global market.
Industry insiders are warning of severe consequences if the situation is not addressed.
Concerns are mounting over rising unemployment, shrinking industrial output, and the potential for greater social instability.
Speaking at a press conference on Sunday, Abdullah Al Mamun, director of the Bangladesh Textile Mills Association (BTMA), made an emotional appeal to authorities. “If the cries of the businessmen go unheard, we may have to sacrifice factories after Eid,” he said.
“A reform against inequality is taking place in this country – a revolution is underway. We are major stakeholders in that revolution,” he added. “Through generating employment for millions, we are keeping the wheels of the economy moving. Please take that into cognisance. If you do not take these people into consideration, we can say unequivocally that this country will no longer remain a country in any real sense.”
He stressed the need for an inclusive partnership between industry and government to chart a way forward.
Shams Mahmud, president of the Bangladesh Thai Chamber of Commerce and Industry, expressed similar frustration.
“Until the banking sector regains liquidity, no new industrial investment will occur,” he warned. “Banks are being pushed to invest in treasury bonds, not industries, further tightening liquidity for entrepreneurs.”
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), highlighted additional challenges.
“There’s a fuel crisis, lack of bank financing, and overall policy neglect toward industrialisation,” he told the Daily Sun, adding, “The central bank’s current policies are choking industrial growth.”
Former president of the Dhaka Chamber of Commerce and Industry Rizwan Rahman also voiced concern.
“No one will invest where law and order is uncertain. The government must restore safety and trust in institutions,” he said.
Dr Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (INM) and former chief economist at Bangladesh Bank, warned that the overall business climate is rapidly deteriorating.
“The current environment is highly unfavourable for business,” he told the Daily Sun. “Rising incidents of lawlessness, extortion, frivolous lawsuits, and attacks on enterprises are not only harming the economy but also fuelling widespread social unrest.”
He cautioned that without immediate and decisive action, Bangladesh risks plunging into a deeper economic and social crisis.
Source: Daily Sun
