The readymade garment (RMG) industry in Bangladesh is grappling with significant challenges as recent data reveals a sharp decline in capital machinery imports. This trend poses serious implications for the manufacturing sector and infrastructure development, both of which are vital for the country’s economic growth.
According to Bangladesh Bank statistics, the opening of letters of credit (LCs) for capital machinery imports fell by 33.68 per cent during the first seven months (July-January) of the fiscal year 2024-25 compared to the same period in the previous fiscal year. Additionally, settlements of these LCs decreased by 27.33 per cent, underscoring the mounting difficulties faced by the sector.
Industry experts attribute this decline to a combination of factors, including economic instability, supply chain disruptions, and rising inflation, which have made it increasingly challenging for businesses to invest in essential machinery. Regulatory hurdles and geopolitical tensions have further dampened foreign investment and trade prospects.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), expressed grave concerns about the current state of the industry. “Instability in industries and factories has created severe challenges, and they are going through an extremely tough time. A zero-tolerance policy should be enforced to improve the law and order situation,” he stated.
Hatem also pointed to the growing issue of “case trades,” where individuals exploit legal loopholes to file cases against traders over personal disputes. He urged authorities to take action against cases that do not pertain to criminal activities, which he believes exacerbate the existing challenges.
Dr. Mustafa K. Mujeri, executive director of the Institute for Inclusive Finance and Development and former Director General of the Bangladesh Institute of Development Studies, called for decisive government intervention. “The market-disrupting syndicates must be dismantled. Public and private investment must increase, and small and medium enterprises (SMEs) need revitalisation. Without a boost in production, inflation will persist,” he warned.
Echoing these sentiments, Dr. Zahid Hussain, former lead economist at the World Bank’s Dhaka office, emphasized the need for a stable and conducive environment for trade and investment. “To address this crisis, governments and industry stakeholders must work collaboratively. Unless these structural issues are tackled, industrial recovery will remain sluggish, undermining long-term economic prospects,” he concluded
