By any measure, the recent closure of a Chinese-owned spectacles and optical frame factory in Nilphamari Uttara EPZ – employing nearly 4,500 workers – is an ominous signal for Bangladesh’s economy.
The reasons cited – acute shortages of electricity and gas, disruptions in raw material supply, and declining export orders – are not isolated issues. They reflect a deeper and more systemic crisis that has been unfolding since the political transition of 5 August 2024.
Prime Minister Tarique Rahman has assumed office at a particularly fragile moment. The economy he inherits is not only burdened by structural weaknesses but also shaped by a turbulent phase of governance following the removal of the government led by Sheikh Hasina and the subsequent interim administration under Dr Yunus.
That period, as widely perceived, was marked by weakened institutional authority, erosion of accountability, and a rise in informal power structures that disrupted economic activity. The consequences are now visible.
The closure or partial shutdown of nearly 500 factories across key sectors – including ready-made garments, textiles, steel, and small enterprises – has reportedly left around 150,000 workers without jobs.
These are not merely statistics; they represent families pushed into uncertainty and an economy losing productive capacity. It would be simplistic to attribute these closures solely to global economic pressures or energy shortages.
A significant part of the problem has been domestic. The emergence of what many describe as “mobocracy” – characterised by extortion, unauthorized demands, and breakdowns in law enforcement – has created an environment where businesses struggle to operate.
When contracts are not enforceable and security cannot be guaranteed, even profitable enterprises become unsustainable. This is why reopening shuttered factories is not just an economic imperative – it is a test of governance.
The government must begin by restoring the rule of law, particularly in industrial zones. Without security and predictability, no amount of financial incentives will revive investor confidence or industrial activity.
A coordinated effort involving law enforcement, local administration, and industry stakeholders is essential to dismantle extortion networks and reestablish order. At the same time, the government needs to move quickly to support viable but distressed industries.
A targeted recovery package – providing low-interest working capital, loan restructuring, and temporary tax relief – could help restart production. However, such support must be tied to transparency, accountability, and job retention to ensure that public resources are used effectively.
Equally troubling is the slowdown in new investment. Investors, both domestic and foreign, are waiting for clear signals of stability and policy direction. The situation has been further complicated by reports that trade and economic agreements with non-disclosure provisions were signed just days before the 13th parliamentary elections.
Such opacity raises legitimate concerns about national interest and fiscal sustainability. The new government should subject these agreements to transparent review and parliamentary scrutiny. Restoring trust requires not only good policies but also openness in decision-making.
Energy security remains a critical bottleneck. Frequent disruptions in electricity and gas supply have severely constrained industrial production. Addressing this challenge requires both immediate and long-term measures.
In the short term, better management of existing capacity and prioritisation of energy allocation to productive sectors can provide relief. In the longer term, governance reforms – ensuring transparency in procurement, rational pricing, and diversification of energy sources – will be essential.
Beyond industry and energy, the question of food security demands urgent attention.
Agriculture has traditionally served as a buffer during economic downturns, but farmers are now under pressure from rising costs of fertilizers, irrigation, and fuel. Making fertilizer affordable is not just a welfare measure – it is critical for maintaining production and rural stability.
Targeted subsidies, efficient distribution, and investments in productivity and climate resilience must form the backbone of agricultural policy. At the same time, food security must be understood in terms of access as well as availability.
Inflation has eroded the purchasing power of ordinary citizens, making basic food items less affordable. Strengthening public distribution systems, maintaining adequate reserves, and ensuring market stability will be crucial.
The challenge of job creation looms large. The closure of factories has already displaced a significant number of workers, and youth unemployment is rising.
Reviving labour-intensive sectors, supporting small and medium enterprises, and investing in skills development are essential steps. Employment generation must be placed at the centre of economic policy – not only for growth, but for social stability.
Underlying all these challenges is the issue of governance.
The events of the past two years have demonstrated how quickly institutional weaknesses can translate into economic decline. Rebuilding institutions – strengthening regulatory bodies, ensuring judicial independence, and improving administrative capacity – is not an abstract goal; it is fundamental to economic recovery.
Prime Minister Tarique Rahman thus faces a dual task: managing immediate economic pressures while rebuilding the foundations of governance. The mandate he has received reflects a public desire for stability, accountability, and opportunity.
Meeting these expectations will require decisive action and clear priorities. The path ahead is undoubtedly challenging. Yet it is not without opportunity.
By restoring rule of law, ensuring transparency, and implementing targeted economic reforms, the government can reverse the current trajectory. Reopening factories, creating jobs, securing energy supply, and protecting food security are achievable goals – but only if they are pursued within a framework of good governance.
The lesson from the post-August 2024 period is clear: economic progress cannot be sustained in the absence of credible institutions and accountable governance. If this lesson is acted upon, Bangladesh can not only recover from its current difficulties but also build a more resilient and inclusive economic future.
The author is a former ambassador and secretary at the Ministry of Foreign Affairs.
