Bangladesh’s gross fixed capital formation (GFCF) has fluctuated between 30 and 32 percent of GDP for more than a decade. Compared to other developing countries, this ratio appears reasonable. However, in Bangladesh, a significant portion of this fixed capital is unproductive or has been wasted. That is, it does not contribute to the economy. This includes both public investments, such as infrastructure, and private-sector initiatives.
According to the World Bank data, Bangladesh’s GFCF stood at $138.19 billion last year. GFCF represents net investment at the national level, measuring expenditure on non-financial assets in both public and private sectors. Broadly, it includes the total value of assets — such as infrastructure, buildings, and machinery — created or acquired to enhance a country’s productive capacity. In calculating GFCF, public investments (including infrastructures, mega projects), private sector activity, and foreign direct investment (FDI) are taken into account. Such investments develop the foundation for future economic growth, generate employment, accelerate industrialisation, and strengthen infrastructure.
However, questions remain about how much of this fixed capital is contributing to GDP growth in Bangladesh. There are numerous instances of large-scale investments in mega projects that have remained idle. Projects built at unusually high costs are often unable to generate enough revenue to cover even operational expenses. Similarly, in the private sector, many large industries are operating at only half their capacity. Apart from these, some factories have shut down entirely. Instead of becoming assets, many industries have now turned into a burden on the economy. This situation is also contributing to the rise in non-performing loans in the banking sector.
Economists and investors argue that Bangladesh is among the highest-cost countries in the world for public infrastructure development. Despite such high expenditure, infrastructure quality often remains substandard. Moreover, many completed projects fail to generate productive economic output and remain underutilised. Consequently, even though total capital formation exceeds 30 percent of GDP, it is not translating into proportionate economic growth. Analysts attribute this to irregularities, corruption, and inefficiency.
An example of unproductive public investment is the Single Point Mooring (SPM) project built in Moheshkhali, Cox’s Bazar. The ousted Awami League government initiated the project to unload fuel oil from large tankers anchored in deep sea through pipelines. The government spent BDT 83 billion on the project. The construction of the pipeline and related infrastructure was launched in 2015 and completed two years ago. But the facility has yet to be utilised, even amid ongoing fuel supply challenges. Instead, this high-cost project remains largely unused.
Another prominent example of underutilised assets is the third terminal of Hazrat Shahjalal International Airport (HSIA), a mega project financed through Japanese loans. Built at a cost of around BDT 220 billion, the terminal was inaugurated in October 2023. However, it has yet to generate any economic productivity and has remained largely unused for about three years.
This trend is not limited to just these two major projects. Many public infrastructure projects undertaken over the past decade and a half either remain idle or have turned into liabilities even after becoming operational. For instance, the country’s first underwater tunnel beneath the Karnaphuli River in Chattogram, built at BDT 106.89 billion, has been operating at a loss since its inauguration in 2023. China’s Export-Import Bank financed more than BDT 60 billion for this project through loans. The tunnel’s revenue is insufficient even to cover its operational expenses, resulting in a daily loss of about BDT 3 million for the government.
Similarly, the Dasherkandi Sewage Treatment Plant, developed by Dhaka Water Supply and Sewerage Authority, has not been effectively serving residents despite being inaugurated. The project intended to treat sewage from a significant portion of the capital, which was built at BDT 37.12 billion. Despite inaugurating the project in 2023, the pipeline network to transport sewage from designated areas to the plant has not been constructed yet.
In the power sector, Bangladesh currently has a generation capacity of about 29,000 megawatts, while peak demand stands at around 15,000 megawatts. As a result, a substantial portion of capacity remains idle. Furthermore, with one unit of the Rooppur Nuclear Power Plant expected to become operational this year, several oil-based power plants may become redundant. A large share of investment in the power sector consequently is not contributing effectively to the economy.
Economist Dr Zahid Hussain, former lead economist of the World Bank Dhaka Office, argues that there is a reality to consider many publicly funded infrastructures as ‘assets’. Speaking to Bonik Barta, he said, “We define an asset as something that has productivity and economic value. If the Karnaphuli Tunnel were listed on the stock market, who would buy its shares? If a project cannot even cover its operational costs, it cannot be considered an asset. Many publicly funded infrastructures fall into this category.”
However, he cautioned against equating private investment with public investment. According to him, there may be different reasons for closure or inabilities to reach full operational capacity in privately funded industries. “For instance, if a factory shuts down due to gas shortages, the entrepreneurs cannot be held responsible for this. On the other hand, if someone establishes a factory even after knowing the unavailability of gas supply, it raises questions about their underlying intent.
Over the past two decades, both Bangladesh’s GDP and gross capital formation have increased multiple times, according to World Bank and Bangladesh Bank data. However, during the same period, government borrowing from both domestic and foreign sources has also risen sharply. According to IMF, Bangladesh’s GDP stood at only $61.79 billion in 2000, which has grown to $456 billion in FY 2024–25. Over this time, the expansion of the private sector and bank credit disbursement to the sector have also increased significantly.
World Bank data indicate that Bangladesh’s gross capital formation was only $12.71 billion in 2000. It rose to $17.95 billion in 2005, then to $30.26 billion in 2010, and $56.37 billion in 2015. By 2020, it had reached $117.09 billion. Most recently, it stood at $138.19 billion in 2025.
At first glance, these figures suggest that total fixed capital formation has increased about 11-fold over two decades. However, this estimation does not reflect the extent of unproductive assets created during this period. The private sector has also contributed to the buildup of underutilised or unproductive assets alongside the public sector.
The country currently has a cement production capacity of around 85 million tonnes, according to the Bangladesh Cement Manufacturers Association. Of this, only about 40 million tonnes, or 48 percent, is being utilised, leaving 52 percent of capacity idle.
The situation is even more pronounced in the steel sector. Data from the Bangladesh Steel Manufacturers Association show that the country has an annual steel production capacity between 13 million and 15 million tonnes, but only 30–40 percent of that capacity is currently being used.
This issue is not limited to cement or steel. Many heavy and medium industry sectors are operating far below capacity. More than half of the ceramics and glass factories have already shut down. Numerous textile and ready-made garment factories have also closed, while those still operating are unable to run at full capacity. In the current fiscal year, the country’s export sector is experiencing a negative trend. Due to a lack of orders, 20–40 percent of production capacity among top exporters remains idle, according to industry insiders.
One of the leading companies in Bangladesh’s ocean-going shipping and LPG sector is the East Coast Group. Its chairman, Azam J Chowdhury, told Bonik Barta, “The government issued licenses to 52 companies in the LPG sector without much scrutiny. However, only 14–15 of these companies are currently operational; the rest have shut down long ago. In the future, only seven to eight companies may survive in this sector. However, all the companies that got licences have taken loans from the bank. Now companies are closed; consequently, the bank loans have turned into defaults.”
He further said, “Many entrepreneurs have ventured into business and set up factories without conducting proper feasibility studies. Banks have also extended loans to these ventures without adequate scrutiny. Now both banks and entrepreneurs are in trouble. Around 60 percent of companies in the ceramics sector have shut down. In recent years, many firms have invested in glass production, but they are unable to compete with Chinese glass in terms of price and quality. The situation is similar for rod and cement companies. Even the well-performing firms are operating at only half of their production capacity.”
For the past several years, the country’s economy has been grappling with multiple challenges. Among the most pressing are stagnation in GDP growth and persistently high inflation. In the fiscal year 2024–25, GDP growth stood at only 3.49 percent, while the average inflation rate remained in double digits. As of last March, inflation was recorded at 8.71 percent. In the current FY 2025–26, export growth has turned negative. During the first nine months (July–March), export growth declined by 4.85 percent, while import growth remained below 4 percent. The only positive indicator in the economy is remittance inflow, which has grown by nearly 20 percent so far. Among all macroeconomic indicators, government debt is growing the fastest. In FY 2024–25, government debt grew by 14.90 percent, and from February last year to February this year, the growth rate more than doubled to 33.57 percent. In contrast, private sector credit growth during the same period was only 6.03 percent.
Over the past two decades, government debt has increased at a faster pace than both GDP and gross capital formation. The current government debt stock from domestic and foreign sources stands at approximately BDT 24 trillion, according to Bangladesh Bank data. In comparison, when the Awami League came to power in 2009, government debt stood at only around BDT 2.76 trillion. During its one-and-a-half-decade rule, the debt stock increased by more than BDT 15.5 trillion. Currently, external debt alone stands at $113 billion.
The private sector’s fragility has also contributed to an abnormal rise in non-performing loans (NPLs) in the banking sector. Irregularities, corruption, and looting in the bank sector over the past decade and a half have further exacerbated the situation. As of last December, total NPLs in the banking sector exceeded BDT 5.44 trillion, accounting for about 30 percent of total disbursed loans. Earlier, in September last year, NPLs had reached nearly BDT 6.5 trillion, with the ratio approaching 36 percent. However, banks managed to reduce the figure somewhat in the final quarter of the year through loan rescheduling.
Commenting on the mismatch between government development projects and the expansion of heavy industry capacity, Muhit Rahman, managing director of One Bank PLC, said, “Many investors haven’t conducted proper feasibility studies in the case of investment in Bangladesh. For this reason, both banks and entrepreneurs are now facing difficulties. Entrepreneurs in heavy industry expanded their production capacity in alignment with government development projects. Now the government has slowed down such projects. The question is how that capacity will be utilised fully.”
He further added, “There are also significant inaccuracies in our data and statistics. The data from institutions such as BBS does not always reflect the actual situation. If banks or entrepreneurs make investment decisions based on such data and later face losses, it would be unfair to place the entire burden solely on them.”