BKMEA President Says Industrial Investment Environment Remains Unfavourable

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem has said the country's industrial investment climate is worsening due to persistent energy shortages, high lending rates, declining exports and a taxation system that he described as overly complicated and burdensome.

Speaking in an interview with Kaler Kantho, Hatem said there is currently no favourable environment for industrial investment, warning that many factories are gradually being pushed toward closure.

He noted that shortages of gas and electricity—both critical for industrial production—are preventing businesses from expanding and, in some cases, even maintaining existing operations. According to him, manufacturers are unable to increase production capacity because the additional energy required is simply unavailable.

Hatem also criticised the banking sector, saying limited access to credit and interest rates ranging from 14 to 16 percent have made borrowing commercially impractical for businesses.

He cautioned that loans taken at such high interest rates are unlikely to be repaid under prevailing market conditions and stressed the need for stronger oversight of lending practices.

Pointing to a prolonged slowdown in exports, he said export earnings have declined in most months of the current fiscal year, reflecting what he described as deep-rooted pressures facing the industrial sector.

Referring to recent investment promotion initiatives, Hatem said that despite high expectations surrounding investment summits, the anticipated inflow of foreign investment has yet to materialise.

He argued that potential foreign investors evaluate local conditions—including energy supply, access to finance and policy stability—and are often discouraged by the challenges they encounter.

The BKMEA chief also raised concerns over banking procedures related to export financing, alleging that delays in loan disbursement and rigid treatment of overdue payments are placing additional strain on exporters. Such delays, he said, can disrupt shipment schedules, force exporters to offer discounts or resort to costly air freight, and ultimately increase operational expenses.

According to Hatem, continued financial pressure on businesses can lead to factory closures, job losses and loan defaults, creating a cycle that further weakens the industrial sector.

On taxation, he described the current system as excessively complex, with multiple deductions, withholding taxes and adjustment mechanisms resulting in what he considers an unfair tax burden on businesses.

He claimed that companies often face additional tax liabilities even after advance tax payments have been deducted, creating liquidity constraints and reducing available working capital.

Hatem said the combined impact of energy shortages, elevated borrowing costs, declining exports, banking inefficiencies and tax-related complications is making it increasingly difficult for businesses to sustain industrial operations in Bangladesh.