The pressure of Rising Costs, Entrepreneurs Want to Shut Down Businesses

News Desk    |    ০২:০৮ পিএম, ২০২৫-০১-১৩

Currently, business owners are under pressure due to rising operational costs. This is compounded by high inflation and reduced purchasing power, leading to a decline in the sales of goods and services. As a result, they are facing opposing pressures. In this context, they are not interested in making new investments. Instead, business owners are seeking policies from the government to close down sick and struggling businesses in light of the difficult circumstances.

Even after 53 years of independence, the country has failed to become investment-friendly. To invest in Bangladesh, an investor still has to obtain 141 clearances from 29 institutions. Despite this complexity, the cost of government services and taxes continues to rise. Over the past three years, gas prices have increased by 250% to nearly 450%. There are also attempts to raise prices again. In addition, high interest rates, complications in letters of credit (LC), wages and bonuses, rising production costs, and a stronger dollar have placed business owners in a difficult situation.

On Sunday, a 13-member delegation from several organizations led by the Bangladesh Chamber of Industries (BCI) met with the Governor of Bangladesh Bank, Dr. Ahsan H. Mansur, and presented these concerns. During the meeting, they expressed a lack of interest in investing and mentioned that some businesses wish to close down to avoid further losses.

It is reported that since 2021, foreign investment in the country has stagnated. Even after a change in government, there has been no positive response to investment. According to the Bangladesh Investment Development Authority (BIDA), in 2021, 1,083 business projects received investment proposals worth 1,334.51 million USD. In the following year, 1,081 business projects were registered with proposals of 1,288.35 million USD. However, in 2023, this dropped further to 998 projects with proposals worth 897.85 million USD, and in the current year, 742 projects were registered, amounting to 1,163 million USD. In the April-June quarter alone, there were only 254 projects with 666.8 million USD, and during the July-September period, due to political instability and government transition, this fell to 186 projects and 186.71 million USD.

Foreign investment is following the trend of the country’s reserves: as reserves decrease, so does foreign investment. In the 2023-24 fiscal year, net foreign investment dropped by 8.8% compared to the previous year. According to the Bangladesh Bank report, net foreign investment in the 2023-24 fiscal year stood at 147 million USD, down from 161 million USD in 2022-23, marking a decline of 14.2 million USD over one year.

Although five months have passed since the fall of the autocratic Awami League government, a normal business environment has not yet returned to the country. On the contrary, there are risks arising from deteriorating law and order, political instability related to elections and reforms, and other issues. This situation is discouraging entrepreneurs and industrialists from making new investments. Economic downturns are prompting business owners to consider shutting down their operations.

After the meeting, BCI President Anwar-ul Alam Chowdhury (Parvez) told journalists, “Due to high inflation, sales have decreased in all sectors. The high interest rates, rising electricity and gas prices—all factors combined mean that businesses cannot operate at full capacity. Production has dropped by 30-40%. Letters of credit are not being opened as needed, private sector loan growth is 7.66%, and gas prices are increasing for new connections. On top of that, the IMF's recommendations have led to increased taxes on various goods. In this situation, it is a challenge for industrial institutions to survive.”

He further said, “We don’t have an exit or business closure policy. Like other countries, we need an exit policy. The Bangladesh Bank Governor has agreed that an exit policy is necessary, and a committee has already been formed for this purpose. We hope this will be implemented soon.”

Regarding loan defaults, he said, "The burden of intentional loan defaults should not be passed onto other businesses. Both Bangladesh Bank and other banks cannot avoid this responsibility. Without cash incentives, industries will die."

He also mentioned that export-oriented industries are facing delays of 9 to 12 months in receiving cash incentives, which is preventing businesses from paying operational costs and employee wages on time. The BCI President urged that the time for providing cash incentives be reduced to two to three months.

In addition, the BCI President proposed reducing the exposure limit for single borrowers in banks from 25% to 35% and suggested extending the deadline for default loans to six months instead of three months, which is currently the case.

He also called for a reduction in interest rates, especially for small and medium enterprises (SMEs), and emphasized the need for a special fund and low-interest arrangements for SMEs. Furthermore, he proposed a pilot program to support the sector through digital platforms in specific districts or clusters.

At the meeting, the Governor of Bangladesh Bank, Dr. Ahsan H. Mansur, acknowledged the concerns and mentioned that the main goal of the Bangladesh Bank is to reduce inflation, which is expected to drop to 7-8% by June. He added that efforts are being made to increase the flow of funds into the private sector and reduce government spending. He assured that the central bank is working to address the current challenges and that steps are being taken to ensure smooth supply chains during Ramadan. Furthermore, he mentioned that long-term financing would require moving to the bond market and that Bangladesh Bank would fully cooperate in this regard.

The meeting was attended by several other leaders, including senior members of the BCI and industry representatives from various sectors, all of whom raised their concerns about the ongoing challenges facing businesses.