A vicious troika of high interest rates, deteriorating law and order and an ever-looming political fog has been ravaging Bangladesh.
The phrase “cost of doing business” now seems less like a straightforward economic term and more like an existential crisis for many business operations.
The managing director of an RMG firm generating millions in revenue, now faces a grimmer reality: Reducing the investment, hoping that this might be the safe port in a storm that grows ever more violent.
For the 1,600 workers employed in his company’s three dyeing units, these changes may not just mean a shrinking of opportunities, but a freeze in any future progress.
The numbers may be cold and unemotional, but they speak volumes.
A mere $12.5 million in lost revenue could have brought 2,000 new jobs, a crucial buffer against the precariousness of the job market.
Instead, the situation reflects a larger economic malaise, with political instability compounding the challenges.
The backbone of any thriving economy is predictability, but when the very ground shifts beneath one’s feet, confidence is eroded like sand slipping through an open hand.
"When will the election be held? What policies will change under the new government?" asks another businessman, also wishing to remain anonymous.
These questions are not merely rhetorical; they underscore the very paralysis businesses face as they stand in limbo, waiting for some semblance of order to replace the current chaos.
Many in the business community, speak of disappointment with the interim administration’s lack of tangible reforms.
What business leaders had hoped for—a break from regulatory bottlenecks, simpler licensing procedures, and a reduction in the burdens of taxes—has yet to materialise.
It seems that in the interim period, all that businesses have received is more uncertainty.
What business leaders want is stability, a long-awaited promise that a government—whether political or interim—will provide.
But what they receive instead is policy ambiguity, coupled with an erratic enforcement of existing laws.
This is a perfect storm that has pushed even the most resilient investors to adopt a "wait-and-see" approach, crippled by fears of inflation, liquidity constraints, and inconsistent taxation policies.
Many say the situation has reached a crossroads. Yet the larger picture remains bleak.
The power shortages, gas supply issues, and liquidity problems persist, and these, rather than offering opportunities, now serve as obstacles that block the growth path of the industry.
Foreign investors, traditionally the lifeblood of any developing economy, are no exception to the fear that has gripped the country.
A staggering 71% plunge in foreign direct investment (FDI) post-political unrest is not a mere statistic—it’s a glaring red flag.
Standard Chartered Bank CEO Naser Ezaz Bijoy’s assessment is both pragmatic and grim: “For new investments, political and economic stability must be visible."
Currently, Bangladesh offers none of this.
The numbers are equally alarming—net FDI in the first quarter of FY 2024-25 has plummeted from $360 million to a mere $104 million, a dramatic shift that encapsulates the disillusionment of investors.
Moreover, the withdrawal of $865 million further reinforces the narrative that Bangladesh’s appeal as an investment destination is fading into the background of global financial considerations.
Foreign Investors’ Chamber of Commerce and Industry (FICCI), echoing these concerns, warns that abrupt policy changes—tax hikes, shifting regulations—further contribute to this erosion of confidence.
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, sums up the current situation: “Such uncertainty has not been witnessed in the last 15 years.”
For many, the sight of the economy’s fragile footing is enough to deter any major investments.
While Bangladesh’s export revenue and remittance inflows offer a glimmer of hope, the overall economic outlook remains perilously dim.
Other indicators—the true pulse of an economy—are faltering.
Revenue collections, foreign loan disbursements, and the pace of development project implementation are all on the decline.
The spectre of inflation, which has persisted like an unwelcome guest, has not been quelled despite repeated interest rate hikes.
At the same time, external debt servicing becomes increasingly burdensome as foreign exchange reserves dip below the $20 billion mark.
With GDP growth having slumped to a meagre 1.81% in the first quarter, the situation appears to be a stark post-pandemic reality check.
The private sector, now wrestling with a credit crunch, is seeing its lowest levels of borrowing in 42 months, while the non-performing loan ratio reaches an unsettling 16.93%.
As the nation teeters on the edge, business leaders cry out for stability, for clarity in policy, and for reforms that may rekindle the flames of growth.
Without these, Bangladesh risks becoming a nation of lost opportunities—one that might have been, but never quite was.
