Keep Business and Industry Moving to Revive Bangladesh’s Economy
Bangladesh’s economy is at a critical juncture. The country’s economic strength can no longer be assessed by the headline growth rate alone.
Investment, industrial production, employment, private-sector credit, investor confidence and the overall business environment are equally important indicators of economic health.
The immediate priority, therefore, should be to keep business, trade and industry moving while creating the conditions for productive investment and sustainable job creation.
The World Bank’s April 2026 Bangladesh Development Update projected economic growth of 3.9 percent for FY2025–26, while highlighting subdued private investment, persistent inflation, weaknesses in the banking sector and a difficult business environment.
The report called for structural reforms to strengthen the financial sector, improve the business environment, mobilize revenue and support job creation.
This is an important message for policymakers. Economic growth is ultimately sustained by production, investment and employment.
When businesses and industries expand production, supply chains become more active, demand for labour increases, incomes rise and purchasing power improves.
Increased production can also broaden the tax base and create greater opportunities for export earnings.
Conversely, when investment remains weak, new industrial ventures are delayed, existing businesses hesitate to expand and employment opportunities become more limited.
Bangladesh therefore needs both new productive investment and the expansion of viable existing businesses.
Investment Needs Confidence, Not Just Capital
The weakness of private-sector credit is one indication of the broader investment challenge.
Bangladesh Bank’s July 2026 data show private-sector credit growth of 4.64 percent year-on-year in July, while its June 2026 monthly indicators recorded 4.47 percent growth at the end of June.
However, credit availability alone does not determine investment. An entrepreneur deciding whether to establish a factory or expand an existing business looks beyond current financing conditions.
Questions about future taxation, energy availability, regulatory requirements, exchange-rate conditions, market demand and policy stability all influence investment decisions.
That is why restoring investor confidence should be treated as an economic priority.
Businesses need to know that policies will remain reasonably predictable, approvals will be transparent, infrastructure will function reliably and legitimate commercial decisions will not be subjected to unnecessary administrative uncertainty.
Banking Reform Is an Economic Necessity
The health of the banking sector is directly connected to the health of the wider economy. Weak banks cannot efficiently perform their essential function of mobilizing savings and allocating capital to productive activities.
The World Bank reported in June 2026 that Bangladesh’s banking-sector non-performing loan ratio had reached 32.6 percent at the end of March 2026. It also reported a system-wide capital-to-risk-weighted-assets ratio of negative 2.6 percent at the end of December 2025.
The World Bank identified weak corporate governance, regulatory capture and related-party lending among the major challenges facing the sector. (World Bank??)
These figures demonstrate why banking-sector reform cannot be treated merely as a matter concerning banks and their shareholders. It is an issue of economic stability.
Bank financing must increasingly flow toward viable productive enterprises and employment-generating activities. Lending decisions should be based on project viability, repayment capacity, risk assessment and economic potential rather than influence or relationships.
At the same time, legitimate borrowers and businesses should not be unnecessarily deprived of financing because of weaknesses created elsewhere in the financial system.
Make It Easier to Do Legitimate Business
Bangladesh needs a business environment in which legitimate entrepreneurs can operate without unnecessary barriers while ensuring that violations of law are dealt with effectively.
The objective should not be deregulation at any cost. Rather, it should be smart regulation—simpler procedures where regulation is unnecessary or duplicative, stronger oversight where risks are high, and predictable enforcement of the law
Tax evasion, money laundering, fraud, market manipulation, environmental violations and labour-rights abuses must be addressed through effective enforcement. At the same time, lawful businesses should not face excessive regulatory costs or uncertainty.
The World Bank has specifically pointed to high regulatory costs, unreliable infrastructure and limited access to finance as constraints facing many small and medium-sized enterprises in Bangladesh.
It has also emphasized targeted deregulation, stronger competition policy, streamlined trade policies and improved electricity reliability as important for private-sector-led growth and job creation.
SMEs Need Greater Attention
Small and medium-sized enterprises are central to employment, local production and entrepreneurship. Yet many SMEs struggle with access to finance, technology, infrastructure, markets and skilled workers.
Policy support should therefore extend beyond large corporations. SMEs need appropriate financing mechanisms, technological assistance, market linkages, business-development services and skills training.
At the same time, Bangladesh should create incentives for small businesses to gradually enter the formal economy.
Formalization should be encouraged through simpler registration, reasonable compliance costs, access to finance and better market opportunities—not merely through enforcement.
Diversify Exports Before External Shocks Force the Issue
Bangladesh’s export economy remains heavily concentrated in ready-made garments.
The World Bank notes that RMG accounts for approximately 82 percent of the country’s exports. It has identified leather goods, footwear, light engineering and plastics among the sectors with potential for export and job growth.
Export diversification, however, requires much more than identifying new markets.
Bangladeshi firms need better technology, skilled workers, product design, quality assurance, branding, environmental compliance and adherence to international standards.
There are encouraging examples. A World Bank-supported export competitiveness programme helped targeted non-RMG sectors increase exports and supported nearly 180,000 jobs, demonstrating that appropriate technical and market-support mechanisms can help firms integrate into global value chains.
The lesson is clear: export diversification requires an ecosystem that enables businesses to compete internationally.
Eight Priorities for a More Dynamic Economy
Bangladesh should give particular attention to the following areas:
First, ensure greater continuity and predictability in economic policy.
Second, strengthen corporate governance, supervision and risk management in the banking sector while directing more financing toward productive activities.
Third, improve access to finance, technology and markets for SMEs.
Fourth, ensure reliable electricity and gas supplies and improve ports, roads, railways and logistics infrastructure.
Fifth, simplify business registration, licensing and approval procedures and complete them within clearly defined timeframes.
Sixth, diversify exports beyond RMG by improving technology, skills, quality standards, design and branding in promising sectors.
Seventh, increase investment in technical and vocational education linked to actual labour-market demand.
Eighth, make the tax and customs system more transparent, consistent and predictable.
The Government Creates the Environment; Entrepreneurs Create the Activity
Bangladesh’s challenge is not simply to achieve a higher GDP growth rate. The more fundamental challenge is to build the foundations of productive, investment-driven and employment-oriented growth.
The government has an essential role in creating the policy, infrastructure and regulatory environment in which businesses can operate. But production, investment and a large share of employment will ultimately depend on entrepreneurs and the private sector.
This makes the distinction between legitimate business and unlawful conduct particularly important.
Unnecessary obstacles to lawful businesses can weaken investment and employment. At the same time, business activity cannot become a shield for fraud, corruption, tax evasion, environmental violations or other unlawful practices.
What Bangladesh needs is a balanced economic framework in which legitimate businesses can operate efficiently, productive investment can expand, competition remains fair and violations are dealt with according to law.
The country also needs reliable energy, efficient infrastructure, accessible finance, skilled human resources and a predictable regulatory environment.
The objective should be neither unrestricted business activity nor excessive regulation. It should be a competitive, transparent and rules-based business environment that rewards productive investment, innovation and employment while protecting the public interest.
Bangladesh cannot sustain long-term economic progress by allowing the wheels of business, trade and industry to slow down. The task now is to ensure that those wheels move with greater efficiency, accountability and productivity.
(Author & Economist, Social & Political Thinker, Geopolitical Analyst and Human Rights Activist)
