A factory named Chandra Towel Tex in Gazipur has been facing a gas supply crisis since 14 April. With no gas pressure, the factory has been manufacturing only one-third of its usual towel output using alternative methods powered by electricity. This has severely affected its exports. More than five hundred workers and employees are employed at the factory.
Informing Prothom Alo about the situation, Towel Tex Managing Director M Shahadat Hossain said on Monday, “We usually export towels worth an average of USD 600,000 per month. Due to the production collapse, we haven’t been able to export anything over the past month. This has raised concerns about paying salaries and allowances on time.”
Industries across the country have long been suffering due to the gas crisis. Several other challenges also persist—high interest rates on bank loans, a deteriorating law and order situation, and political uncertainty.
With high inflation weakening people’s purchasing power, demand for goods has also slowed. In addition, businesses face problems such as corruption, tax complexities, bureaucratic delays, long waiting times at the port, and more.
Overall, the state of business and investment is not encouraging. When business is sluggish and investment remains low, new jobs are not created. Unemployment rises. Job seekers are forced to settle for any form of income.
In this context, on 2 June, finance advisor Salehuddin Ahmed will announce the national budget for the fiscal year 2025–26. As there is no parliament in place, the budget speech will be delivered on television.
Dhaka Chamber president Taskeen Ahmed told Prothom Alo that industries are suffering immensely due to the gas and electricity crisis. The law and order situation has also worsened significantly.
Banks remain largely uncooperative. They are unwilling to offer loans. He added that unless law and order improves, gas and electricity supply is ensured, bank interest rates are reduced, and business confidence is restored, it will be difficult to revive trade and commerce.
Investment situation
In economic analysis, investment is often measured as a proportion of gross domestic product (GDP). In Bangladesh, the private sector investment rate as a share of GDP stood at 23.51 per cent in the fiscal year 2023–24, down from 24.18 per cent in the previous fiscal year. This indicates a decline in private sector investment.
To determine the current state of investment as a share of GDP, we will need to wait until the end of the ongoing fiscal year. However, investment trends can be inferred from indicators such as the import of industrial equipment, raw materials, and the rate of credit growth.
According to Bangladesh Bank data, in the first nine months of the current fiscal year 2024–25 (July–March), the opening of letters of credit (LCs) for capital machinery imports dropped by 26 per cent compared to the same period last year. Similarly, LC settlements for capital machinery imports declined by around 29 per cent. This decline in both the opening and settlement of LCs suggests a slowdown in new investments or industrial expansion.
Bank lending rates have remained around 15 per cent for some time. The high cost of borrowing has discouraged private sector loans. From July to March, private sector credit growth was only 7.57 per cent, while it typically exceeds 10 per cent in normal times.
Imports of intermediate goods commonly used as raw materials, fell by about 7.5 per cent during the same period. However, imports of raw materials specifically for industrial use rose by 10 per cent.
Maintaining existing business operations has become increasingly challenging, said Md. Alamgir Kabir, President of the Bangladesh Cement Manufacturers Association (BCMA). “The construction sector has slowed as people are spending less,” he noted. “There is a prevailing sense of uncertainty about the future. If this doesn’t change, business will not return to normal, and no new investments will come.”
The Purchasing Managers’ Index (PMI), jointly developed by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange, has also indicated a continued slowdown in business activity. The index covers four key sectors: manufacturing, agriculture, construction, and services. According to the PMI, the pace of economic expansion has been declining month by month since January. In April, the index dropped by 8.8 points.
One affected business is Exclusive Can, a factory located in Majukhan, Tongi, Gazipur, that manufactures cans, ice cream containers, medicine bottles, and other plastic items for various paint companies. Syed Nasir, the managing director of the company, told Prothom Alo, “Interest rates are very high. Yet we’re still not getting loans. The liquidity crisis in banks is clear. Last month, our factory experienced 130 hours of load shedding.”
He added, “Corruption in government offices continues as before. There are no signs of improvement.”
Low FDI response
Foreign direct investment (FDI) plays a crucial role in overall private sector investment. However, FDI has shown little to no growth in recent years.
According to Bangladesh Bank, net foreign investment stood at USD 860 million during the first nine months (July–March) of the current fiscal year 2024–25, compared to USD 1.61 billion in the same period last fiscal year. This represents a 26 per cent decline in net FDI.
Several entrepreneurs, speaking on condition of anonymity, said that foreign investors are generally encouraged when domestic business conditions are stable and promising. Unfortunately, that is not the case in the current context.
Ashik Chowdhury, Chairman of the Bangladesh Investment Development Authority (BIDA), told Prothom Alo that investment is a long-term and continuous process. “It never happens overnight,” he said. “Even if the interim or elected government undertakes policy or administrative reforms today, that does not mean investment will rise tomorrow.”
He added, “A specific timeframe is required for investment to grow—so that investors can plan, prepare, and make informed decisions. We are currently implementing various reforms to address the challenges identified in the investment sector.”
New employment opportunities low, unemployment increases
Over the past two years, several companies in the country’s textile sector have imported equipment worth USD 200 to USD 300 million to expand their factories. However, due to inadequate gas supply, the additional production capacity of these textile mills remains underutilised.
Khorshed Alam, Director of the Bangladesh Textile Mills Association (BTMA), told Prothom Alo that, due to the ongoing gas crisis, most textile mills are unable to utilise 60 per cent of their production capacity. As a result, financial losses are mounting. “There are almost no new recruitments; rather, layoffs are taking place in some factories,” he said.
The Ministry of Energy stated yesterday that gas supply to the industrial sector has improved. However, business leaders maintain that the crisis persists.
Due to sluggish trade and investment, fewer new jobs are being created. Consequently, unemployment is worsening. The number of unemployed people has increased by 150,000 in 2024 compared to 2023.
According to the Bangladesh Bureau of Statistics (BBS), the total number of unemployed people at the end of 2024 was 2.7 million, up from 2.5 million in 2023. This pushed the unemployment rate last year to 3.65 per cent.
M Masrur Reaz, Chairman of Policy Exchange Bangladesh, told Prothom Alo, “The central bank has taken strong steps, and the macroeconomic situation—especially the balance of payments—has improved. However, a new kind of challenge has emerged. Investment is not happening, and no new jobs are being created. The core issue is that there have been no meaningful reforms in the investment climate or trade facilitation over the past nine months.”
He further added that political uncertainty is the main barrier to investment. “In such a scenario, no one will commit to new investments. Without investment, employment will not grow. If both investment and employment decline, achieving 5–6 per cent economic growth will be difficult.”