Although there was an upward trend in the growth of the country's industrial sector in the post-COVID period, this growth could not be sustained. Over the past three fiscal years, the development of this crucial sector of the economy has been consistently declining. During this period, investments, primary goods imports, and raw materials imports for various industries have also decreased. The production of clinker in the cement industry, textiles, and engine-powered motor industries has shifted to a negative trend. The market for luxury items such as wood and furniture also experienced negative growth. This scenario is reflected in the latest national accounts statistics for 2024 published by the Bangladesh Bureau of Statistics (BBS).

Under the recently ousted Awami League government, the investment environment in Bangladesh became increasingly adverse. The lack of increased investment led to stagnation in industrial growth and employment. Many investors resorted to money laundering using bank loans, further pressuring the production sector. The lack of a conducive investment environment, loan defaults, and weak bank management have all contributed to a weakened macroeconomic foundation, fostering an atmosphere of stagnation. Industry stakeholders also note that insufficient gas and electricity supply hindered production.

According to the latest national accounts statistics from the BBS, the industrial sector's growth was 10.29 percent in the fiscal year 2020-21. The following year, 2021-22, decreased to 9.86 percent. The downward trend continued into the fiscal year 2022-23, with growth falling to 8.37 percent. In the most recent 2023-24 fiscal year, industrial growth hit its lowest level in four years, reaching just 6.66 percent.

Dr. Mustafizur Rahman, a Fellow at the Center for Policy Dialogue (CPD), believes that the country's industrial sector depends entirely on individuals. He explains that the decline in industrial growth is due to the lack of increase in private-sector investment. He told Bonik Barta, "Interest rates were raised due to non-performing loans. The negative impact of currency devaluation has led to reduced private investment. The fall in reserves and lack of macroeconomic stability have disrupted the investment environment. However, it will take time to address these issues."

BBS statistics show little change in investment over the past three years, which has negatively impacted overall industrial growth and job creation. In the fiscal year 2021-22, the investment rate relative to GDP was slightly above 32 percent. In the following fiscal year, 2022-23, it dropped to 30.95 percent. In the most recent fiscal year, 2023-24, it remained limited to 30.98 percent.

Dr. Mustafa K. Mujeri, former Chief Economist of the Bangladesh Bank, believes that the lack of an investment environment has prevented both domestic and foreign investors from moving forward. The former Director General of the Bangladesh Institute of Development Studies (BIDS) told Bonik Barta, "Many investors have engaged in money laundering abroad using bank loans. Overall, corruption and money laundering have stalled investment. As a result, we have been unable to advance except in a few specific sectors."

Data from the Bangladesh Bank indicates that in the 2023-24 fiscal year, imports of various primary products decreased by 9.1 percent compared to the fiscal year 2022-23. During the same period, imports of raw materials for the garment sector fell by 15.5 percent. There was a significant decline in the import of clinker, a critical raw material for the cement industry, which dropped by 19.4 percent. Imports of plastics, rubber, iron, and steel products decreased by more than 10 percent. Overall, the import of capital machinery fell by up to 14.5 percent.

The Need for Efficiency in the Industrial Sector to Ensure Survival Dr. Mustafa K Mujeri believes that many sectors will struggle to survive without global competitiveness. He says, "We are an import-dependent economy. Therefore, if we cannot achieve competitiveness in terms of quality and price, it will be challenging to survive in the era of globalization. Thus, these industries must take all necessary actions to become efficient."

According to the BBS, in the first three quarters of the 2023-24 fiscal year, several large manufacturing sectors in Bangladesh, including textiles, engine-powered transportation, transportation parts, furniture, and wood and wood products, experienced negative growth compared to the fiscal year 2022-23.

The furniture sector contracted by 1.67 percent. When asked about the reasons, Sheikh Abdul Awal, former Vice Chairman of the Bangladesh Furniture Manufacturers Association, said, "After the pandemic, the war began. Our sales dropped to half. Now, our business is suffering due to the current political situation and economic downturn. We are trying to recover."

The textile industry also contracted. According to BBS data, the sector contracted by 0.52 percent in the first three quarters of the 2023-24 fiscal year.

When asked about this, Mohammad Fazlul Hoque, Vice President of the Bangladesh Textile Mills Association (BTMA), told Bonik Barta, "Where there is no gas and no electricity, how can production increase? We cannot continue. In such a situation, orders have also decreased. The global economic situation is not good either."

Meanwhile, the motor vehicle sector also experienced negative growth of more than 11.5 percent, and the transportation parts sector saw negative growth of over 14 percent.

Industry insiders point to several reasons for the decline in growth in this sector. Regarding this, Biplob Kumar Roy, CEO of TVS Auto Limited, told Bonik Barta, "Our growth has significantly decreased due to several factors. One reason was the uncertainty during the national elections. Additionally, inflation and economic downturns have been felt. Political instability has also led to a considerable drop in sales. The dollar shortage was another major factor, and the rise in fuel prices also had an impact."

Former Planning Minister Dr. Shamsul Alam believes that the decline in industrial production due to import controls has also impacted growth. The economist told Bonik Barta, "For the past two years, import restrictions due to the dollar shortage have reduced the import of raw materials and machinery for industries. To protect reserves, there were complications with Letters of Credit (LCs). Additionally, decreased private sector investment has led to a drop in industrial growth from 12 percent."

Regarding overcoming the current situation, he said, "The current government is taking various practical measures, including reforms in the banking sector. There is also the assurance of foreign aid. The exchange rate of the dollar remains stable. If the dollar shortage is resolved and industrial imports normalize, the industrial sector will recover."