There was a time-just a few years ago—when Bangladeshi industrialists spoke with bold ambition. Plans were drawn to launch new product lines, import modern European machinery, and break into emerging global markets with innovative exports. Today, those same voices tremble with anxiety and defeat. “Forget expansion. I don’t even know if I’ll be able to meet my bank installments next month,” said a garment factory owner from Narayanganj, who requested anonymity. “There’s no light ahead, just debt, uncertainty, and silence from policymakers.”
Bangladesh's once-energetic industrial sector is now at a standstill, grappling with a crisis of confidence as entrepreneurs retreat from starting new ventures, investing in capacity expansion, or even upgrading outdated production units.From textiles and leather to electronics and agro-processing, investors are hesitant to make any fresh moves, citing soaring interest rates, a prolonged dollar shortage, and policy instability.
A Crippling Shift in Sentiment: Multiple industry insiders say that what’s unfolding is not just a short-term slowdown, but a deep and structural deterioration in industrial morale. “There is no good news in establishing new industries or initiatives,” said Farooq Alam, Managing Director of a Dhaka-based footwear exporter. “Even seasoned entrepreneurs—who used to talk about importing robotics or scaling to five continents—have stopped. They are now worried about survival.” According to data from the Bangladesh Bank, industrial term loan disbursement declined by 18% in the first nine months of FY2024–25, compared to the same period a year earlier. At the same time, non-performing loans in the industrial sector increased to 15.6%, up from 11.8% the year before. Letters of credit  (LCs) for capital machinery imports have dropped by 27%, reflecting the sharp decline in industrial setup or expansion projects. “This is a reflection of fear,” said Dr. Ahsan H. Mansur, Executive Director of the Policy Research Institute (PRI). “No rational investor is going to borrow at 16% interest to build a factory, while the dollar is unstable, inflation is eating into returns, and power outages are routine.”
No One to Dream Anymore
In the past decade, Bangladesh’s industrial base—particularly in garments, plastics, pharmaceuticals, and agro-processing—was built on the relentless optimism of entrepreneurs who took risks, created jobs, and made the country an export powerhouse. But that entrepreneurial spirit is now disappearing.
“Those who once said, ‘This year, I’ll open a new line with German machines,’ are now saying, ‘Should I lay off half my staff to survive?’” said Salma Begum, an SME investor and owner of a light engineering firm in Gazipur.
According to the Bangladesh Investment Development Authority (BIDA), investment proposals dropped by 22% in the last two quarters. Domestic industrial investment applications—traditionally the most reliable engine for employment growth—have been almost stagnant since the beginning of 2024.
High Lending Rates Choking Ambition
The most immediate constraint on industrial ambition is the sky-high lending rate, which currently averages 16% for commercial borrowers. Compared to the single-digit rates of just three years ago, this has doubled the financial cost of doing business. “Interest rate hikes were necessary to control inflation, but we’ve overcorrected,” said Dr. Selim Raihan, Executive Director of SANEM. “Now we’re paying the price—businesses are suffocating.” Bankers also admit that lending to new ventures has become more conservative. “Unless it's an expansion by a long-standing client with a healthy balance sheet, we’re not approving new industrial loans,” said a senior executive at a private commercial bank. “There’s just too much macroeconomic uncertainty.”
Dollar Shortage and Import Crisis
The dollar crisis, which began in mid-2022, continues to throttle import-dependent industries. Capital machinery, essential raw materials, and even spare parts for maintenance are now delayed or unavailable due to import restrictions and LC opening hurdles.
“The delay in importing a single machine part can shut down a whole production line,” said Kazi Riaz, who runs a packaging factory in Chattogram Export Processing Zone (CEPZ). “We are constantly firefighting—not building.” The persistent mismatch between official exchange rates and market rates has further undermined transparency, with businesses often forced to pay a premium on the open market for dollars, eroding competitiveness.
Falling Behind in the Global Market
As other Asian countries ramp up industrial innovation and capitalize on supply chain diversification, Bangladesh risks falling behind. “Vietnam, Indonesia, even India are offering tax incentives, power subsidies, and fast-track industrial parks. We’re still stuck with power outages, NBR delays, and unpredictable policy,” said Abdul Haque, Vice-President of the Bangladesh Chamber of Industries (BCI). He warned that without a rapid policy shift and political stability, Bangladesh could miss out on billions in diverted global FDI as investors seek to de-risk from China.
Psychological Toll on Entrepreneurs
More worrying than the data is the emotional fatigue spreading through the business community. The inability to plan for the next six months, let alone the next five years, has created a psychological retreat among the country’s most vital economic actors.
“We’re not just talking about missed investments,” said M Masrur Reaz, CEO of Policy Exchange Bangladesh. “We’re talking about a loss of belief—when your private sector gives up on the future, the country has a very serious problem.”
Policy Uncertainty and Political Paralysis
The July uprising and the collapse of the previous government have created a vacuum in industrial policymaking. The interim government, focused on restoring order and preparing for elections, has not made significant policy announcements on investment facilitation, tax reform, or utility pricing.
“Without clarity on policy direction, no one is going to risk capital,” said Dr. Nazneen Ahmed, Country Economist at UNDP Bangladesh. “And the longer the uncertainty persists, the more we lose long-term opportunities.”
What Can Be Done? Experts Offer Solutions
To prevent a prolonged industrial recession, economists and business leaders recommend an immediate and coordinated response, including: Interest rate support schemes for productive industrial investments. Temporary loan restructuring options for struggling SMEs. Removal of LC opening bottlenecks for capital machinery and raw materials. Faster implementation of economic zones with utility and infrastructure guarantees. Restoration of political stability through a clear roadmap to elections and democratic transition. Tax reforms and automation to reduce compliance burden and eliminate discretionary practices. Creation of a National Industrial Revival Taskforce involving both government and private sector.
A Nation at a Crossroads: Bangladesh’s industrial engine is in danger of stalling. The dreams of building new factories, modernizing machinery, and conquering new markets are being replaced by survival anxieties, loan defaults, and shutdown fears. If this trend is not reversed soon, the consequences could be long-term loss of industrial capacity, jobs, export competitiveness, and national growth momentum. “Entrepreneurs don’t just need capital—they need confidence,” said Dr. Selim Raihan. “And right now, they have neither.. As the country awaits its political reset, the question remains: Will Bangladesh reignite its industrial ambition, or let it fade into stagnation?