Bangladesh’s ready-made garment (RMG) industry is facing a mounting crisis, with recent data highlighting a sharp decline in the import of capital machinery, a key driver for the sector’s growth and infrastructure development. This decline threatens to undermine the country’s economic prospects, particularly in manufacturing.
According to statistics from Bangladesh Bank, the number of letters of credit (LCs) opened for capital machinery imports dropped by 33.68% during the first seven months (July-January) of the 2024-25 fiscal year, compared to the same period last year. Additionally, the settlement of these LCs decreased by 27.33%, signaling deepening challenges in the sector.
Experts point to a combination of economic instability, inflationary pressures, supply chain disruptions, and regulatory challenges as the primary factors behind the downturn. The declining import of machinery has raised concerns about the future of manufacturing in Bangladesh, particularly in an industry that relies heavily on modernization and infrastructure improvements to remain competitive in global markets.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), expressed serious concerns over the current state of the RMG sector. “Factories and industries are grappling with severe instability. They are going through an extremely tough time. We need a zero-tolerance policy to improve the law and order situation,” Hatem said.
In addition, Hatem pointed to the rise of “case trades,” where individuals exploit legal loopholes to file frivolous lawsuits against traders over personal disputes. He urged authorities to address cases that do not involve criminal activities, which he believes exacerbate the existing difficulties in the industry.
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 urgent government intervention. “The market-disrupting syndicates must be dismantled. Public and private investment needs to increase, and small and medium enterprises (SMEs) must be revitalized. Without a boost in production, inflation will continue to rise,” he warned.
Dr. Zahid Hussain, former lead economist at the World Bank’s Dhaka office, echoed the need for a stable environment to foster trade and investment. “The government and industry stakeholders must work collaboratively to address the structural issues facing the RMG sector. Without tackling these challenges, industrial recovery will remain sluggish, which will hinder long-term economic growth,” he concluded.
The current downturn in capital machinery imports underscores the broader challenges confronting Bangladesh’s RMG sector, highlighting the need for a coordinated effort to stabilize the industry and protect the nation’s economic future.