Country largely bypasses industrialisation

Non-agricultural economic units like business establishments numbered 11.88 million in 2024 with a 51.91-percent growth in last 11 years from 7.82 million in 2013 as per official count, but economists see deviation from economic-expansion trajectory.
They point out growth path of developed economies -- a transition from agriculture to manufacturing to services sector.
However, less than 0.14 million, only 3.42 per cent of 4.06 million new units, have been established to operate business in the manufacturing sector, while the remaining 96.58 per cent in the services sector, reveals the preliminary report on the Economic Census done by Bangladesh Bureau of Statistics (BBS).
The census outcome is scheduled to be published today, with the presence of planning adviser Dr Wahiduddin Mahmud.
The findings of the economic census undermine the high and sustained boost in the gross domestic product (GDP) of Bangladesh preselected by the BBS over the last decade based on a high growth of manufacturing industries, says experts, economists, representatives of the private sector and officials of the BBS.
They say the economy has seen declining manufacturing and a growing services sector, deviating from the typical path of developed economies. This trend exposes structural weaknesses, policy inconsistencies, and inadequate investment in manufacturing, and growing dependence on imports.
The economists warn that the reduced emphasis on industrialisation could hamper the resilience of the economy, as manufacturing traditionally plays a vital role in creating jobs, boosting productivity, and fostering export growth.
The report has found the overall growth of economic units and generating employment reduced over the last 11 years. The pattern of the firms in terms of permanent establishment, economic units in the household degraded at the same time.
The number of economic units increased 54.91 per cent in the 2013-2024 period, which increased by 110.85 per cent in 10 years from 2003 to 2013, according to the report.
The number of units in the services sector has increased by 56.68 per cent in the last 11 years, growing by 112.29 per cent in the previous 10 years. However, the rate increased by 15.39 per cent according to the latest report, growing over 100 per cent during 2003-2013.
The share of manufacturing sector among economic units dropped to 8.77 per cent of the total, from 11.54 per cent in 2013 and 12.14 per cent in 2003. The share of services sector increased to 91.23 per cent last year from 87.89 per cent in 2003.
The report found a total of 30.76 million people engaged in manufacturing and agricultural sector--25.63 million males, 5.13 million females.
About 83.32 per cent of people engaged in these two sectors.
Employment in the last 11 years increased by 25.55 per cent, significantly lower than the growth in the previous census, 117.39 per cent.
The reports prepared earlier by the national accounting wing of the BBS revealed that the production value in the manufacturing sector rose significantly from Tk 1.97 trillion in 2012-13 to Tk 11.33 trillion in FY 2024, marking a 5.75fold increase over 11 years.
During this period, the sector's contribution to GDP grew from 17.27 per cent to 23.19 per cent. Additionally, the manufacturing sector achieved an impressive growth of over 14 per cent across the last 11 fiscal years, underscoring its expanding role in the country's economy.
The economists and experts question the authenticity of a huge manufacturing growth despite a lower growth in industrialisation.
Responding to a query, Economic Census Project Director SM Shakil Akhtar said, "No large industrial factories have been established in the last 10 years." However, the number of small industries increased with a lower growth, which reflects a lower overall economic progress in the last decade. Abul Kasem Khan, former president of Dhaka Chamber of Commerce and Industry (DCCI), stresses the importance of long-term investment in planning for the growth of the manufacturing sector.
"Frequent changes in tax and revenue policies create significant uncertainty for businesses. Policies are being shifted every year, making it challenging for investors to forecast future scenarios or evaluate the profitability of their investments," he says, adding that there are many options for the safer route of investing in trading and services rather than taking the risks associated with manufacturing.
Economist Dr Khondaker Golam Moazzem, Research Director of the Centre for Policy Dialogue (CPD), says typically sustainable development involves a shift from agriculture to industry and then to the services sector. "However, the economic structure is deviating from the ideal growth trajectory. Bangladesh is bypassing industrialisation and moving directly from agriculture to the services sector."
Golam Moazzem also explains that investors in the productive sector are primarily setting up small, informal household units rather than permanent, formal industrial entities. "These units are often low-earning and substandard compared to conventional industrialisation, failing to make a significant impact on the country's overall economic activities."
In Bangladesh, 52.94 per cent of economic units are permanent, while 4.86 per cent are temporary. , 42.2 per cent are identified as household units.
A significant 70.27 per cent of these units are operated in rural areas, with 29.73 per cent located in urban areas. Dhaka Division hosts the highest number of units, totaling 3.21 million, contributing 27.03 per cent of the total in 2024, up from 24.23 per cent in 2013.
The share of Chattogram, Barishal and Khulna along with Dhaka division observed uptrend, while the share of Mymensingh, Rajshahi, Rangpur and Sylhet divisions are on the decline.
Dhaka alone accounts for 11.83 million jobs, or 38.45 per cent of the total employment.
Additionally, the country has 116,978 e-commerce economic units, with Dhaka hosting the largest share of 47.42 per cent or 55,474 units.

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