Activities in the country's large and medium-scale manufacturing industries showed a sluggish trend in the first two months of the current financial year after registering a double-digit growth in the last fiscal.
Activities of the country's large and medium scale manufacturing industries showed a sluggish trend in the first two months of the current fiscal year 2015-16 (FY16) after registering a double digit growth in last fiscal year (FY15).
Latest Bangladesh Bureau of Statistics (BBS) data showed the Quantum Index of Medium and Large-Scale Manufacturing Industry down from 285.5 in June to 253.67 in July. The index, however, increased to 258.35 in August.
On an average, in these two months, manufacturing-output index rose 2.2 per cent from the level in the same period of last fiscal year, 2014-15.
Mining output, however, registered 5.9 per cent growth on average during the initial two months of FY2015-16 while electricity production increased by 1.13 per cent.
Both mining and electricity outputs showed upward trend after June while the trend was downward for manufacturing.
"The sluggish trend in manufacturing industry is now a reality despite our having some very favourable things like lower interest rates and political stability," said Mr Hossain Khaled, President of Dhaka Chamber of Commerce and Industry (DCCI).
"Currently most of the industries are running their production activities by replacing old machinery and they are not expanding to new units," he told the FE, explaining the factors for industrial slowdown.
"Although the authorities have assured the businesses that power and gas connection will be provided when required, in reality it becomes a lengthy and complex process."
The Dhaka Chamber chief also opined that without reforming the procedural complexity, situation would not be improved.
The Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), in its latest quarterly economic review also said performance of industrial activity was not at expected level due mainly to shortage of power and gas and also political uncertainty.
"The government had stopped giving gas connection to industries in July 2009," said MCCI.
Recently, the government decided to provide new gas connections and additional load to over 354 industrial units, which, the chamber noted, is a longstanding demand from businesspersons and investors, who had put their investment plans on hold for this.
"The suspension has not only caused the piling up of applications but also hurt banks and entrepreneurs, who invested their money in the setting up of factories and were forced to run the plants on costly diesel generators in the absence of gas connections."
The growth rate of manufacturing output was, however, higher in FY15 compared to the growth in FY14, as reflected in the index of manufacturing industry.
According to BBS index, manufacturing output registered 13.43 per cent growth in FY15 on average while the rate was 8.9 per cent in FY14.
The growth rate at the end of June 2015 also stood at 18.9 per cent while it was 8.75 per cent in the previous period.
Country's manufacturing and business activities suffered heavily during the third quarter (January-March 2015) of the last fiscal year due to political unrest. So, there was a widespread speculation that overall industrial output would face a severe setback.
But, BBS data indicate a good upturn from the downturn in the manufacturing activities in the third quarter.
On broader sector-base estimation, it shows that output of textile industry declined by around 12 per cent. Textile occupies 14 per cent of total weight used to calculate the manufacturing-output index.
At the same time, production of export-oriented wearing apparels increased by 3.8 per cent. But growth was higher, 8.2 per cent in FY14.
Production of food products and pharmaceuticals, however, jumped 41 per cent and 57 per cent respectively in the last fiscal year, as reflected in the sector-based indices.
In FY15, output of leather and chemical industries shrunk by 3.9 per cent and 3.7 per cent respectively.
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