Energy Crunch Worsens Crisis Facing Bangladesh's Industries

Industries in Bangladesh-particularly export-oriented large, medium, and small enterprises-are currently grappling with a multi-dimensional and deepening crisis. Spiraling inflation, high bank borrowing rates, and shrinking export markets-largely due to the eroding competitiveness of Bangladeshi goods have created daunting challenges. A persistent crisis in energy and power supply has forced many SMEs and mid-sized industries to shut down. Meanwhile, foreign direct investment (FDI) has virtually dried up due to the uncertain energy scenario and unstable political climate. Domestic investment has also taken a serious hit.

- Saleque Sufi

Industry owners, in an increasingly desperate situation, have rung the alarm bell. They are urging the government to introduce urgent contingency measures to support local industries. If the current conditions persist, more factories will close, mass layoffs will follow, export earnings will fall, and the broader economy will suffer serious setbacks.

To make matters worse, the US government has announced a 35% additional tax on Bangladeshi exports to the US market. If ongoing trade talks with the US fail to yield a win-win outcome, Bangladesh's exports could face a total tax burden of up to 50% (35% + existing 15%). In such a scenario, Bangladesh's products would be unable to compete with those of Vietnam, Sri Lanka, India, or Pakistan.

Regardless of the negotiation outcome, the interim government must engage with all stakeholders to devise and implement a package of fiscal and financial incentives for industries. It's time to assess how industrial performance can be improved through reliable power and gas supply.

How Additional US Taxes Could Affect Bangladesh's Export-oriented Industries

Former President Trump, in an effort to reduce the US trade deficit, introduced a policy of significantly increasing import duties and taxes on foreign goods. On April 2, 2025, the US proposed an additional 37% tax on imports from countries like Bangladesh, potentially subjecting Bangladeshi exports to a staggering 52% total tax burden. However, the US allowed countries until June 30 to renegotiate trade agreements. Vietnam and the UK have already reached agreements; India is reportedly close to concluding one.