Electricity, gas shortage and scarce land have slowed down development in the manufacturing sector despite a sign of regaining momentum in the first quarter (Q1) of the current fiscal year (FY), 2014-15.
The Metropolitan Chamber of Commerce and Industry (MCCI) made the observation in its first quarter review published on Wednesday.
According to the review, there are over 0.24 million small, medium and large-size manufacturing units in the country. But due to the gas and electricity shortage these units can utilize only 60 per cent of their overall capacity.
It said the manufacturing industries, which held 19.45 per cent share in the GDP in FY 14, have long been experiencing difficulties due to power-gas shortage and insufficiency of land for setting up industries at appropriate location.
"The manufacturing activities showed signs of regaining momentum, though not in full swing, thanks to the apparently calm political situation, which earlier had badly affected the production."
The MCCI Q1 review also said local manufacturers in the post-election period are making desperate efforts to increase output and cover up production loss as quickly as possible.
It found the manufacturing units, mostly bulk gas users, producing glass and glassware, carpet and rugs, petroleum refinery, industrial chemicals, leather products, transport equipment, tobacco items, pharmaceuticals, wood products, ceramic, cement and electronic goods, perhaps recorded a slow growth due to the energy shortage during the July-September period.
The MCCI review referred to a recent study of the Bangladesh Bureau of Statistics (BBS) that the manufacturing industry's inability to fully utilize capacity is preventing it from contributing to the economy at the desired level.
The review mentioned about one-third of the manufacturing units can utilize 25-50 per cent of their total capacity, while 59 per cent can use 75 per cent of their potential.
The chamber recommended addressing the issue of the manufacturing sector's underutilized capacity in an earnest manner for ensuring its highest contribution to the GDP after the service sector.
MCCI found that political violence and labour unrest eased in the quarter under review. But private investment did not increase sufficiently due to the infrastructure deficit and insufficient availability of serviced land.
The review identified political violence, labour unrest in the garment sector, insufficient private investment and shortage of industrial lands in the export processing zones (EPZs) with required facilities for low growth of the industrial sector in Q1.
It said though the broad industrial sector managed a growth of 8.39 per cent in FY 14, it is however, 1.25 percentage point below the previous year's growth. The growth of Industrial sector in Q1 in FY 13 was 9.64 per cent.
The broad industrial sector managed to grow by 8.39 per cent in FY 14, which was 1.25 percentage points below the previous year's growth of 9.64 per cent.
smunima@yahoo.com