Staff Reporter :
Bangladeshi entrepreneurs have sharply reduced imports of heavy industrial equipment amid a year-long dollar crisis and ongoing political instability, according to industry insiders.
In the first five months of the current 2024-25 fiscal year (July-November), the import of capital machinery decreased by $256.3 million compared to the same period last year, according to a recently published Bangladesh Bank report.
The report highlights that letters of credit (LCs) worth $712.6 million were opened for capital machinery imports during this period, marking a 26.45 per cent decline compared to $968.9 million in the previous fiscal year.
Similarly, credit settlements for capital equipment imports amounted to $864.7 million, down from $1,107.3 million in the same period last year.
This decline has significantly slowed new initiatives for industrial setups and business expansion in the country. Entrepreneurs report stagnation in investment, attributing it to political uncertainty.
Many are hesitant to undertake new investments until there is a change in the political climate, which has subsequently impacted capital equipment imports.
Industry insiders also point to persistent global inflation, exacerbated by the Russia-Ukraine war, as a contributing factor. While many countries have managed to recover from inflationary pressures, inflation in Bangladesh remains high, hovering around 10 per cent.
The dollar crisis persists, coupled with increasing concerns over political instability, further compounding the issue.
The decline in imports is not limited to capital machinery. LCs for industrial intermediate goods also decreased during the first five months of the fiscal year. LCs worth $1.7024 billion were opened, a 15.38 per cent drop compared to $1.9240 billion in the same period last year.
Credit settlements for intermediate goods also fell by 12 per cent, totaling $1.8682 billion compared to $2.2071 billion in the previous fiscal year.
Conversely, raw material imports by industrial factories saw a modest increase. In July-November, LCs for raw material imports was opened for $9.891 billion, reflecting a 5.58 per cent increase compared to $9.3685 billion in the same period last year. However, credit settlements for raw materials decreased by 7.13 per cent during the same period.
This mixed trend underscores the challenges faced by Bangladeshi industries, as the dollar crisis, inflation, and political uncertainty continue to weigh heavily on the country’s economic landscape.
