As listed companies, especially those in the manufacturing sector, have reported falling profits in recent quarters, business leaders are now turning their attention to how best to navigate 2025 amid global uncertainty, domestic inflation and rising borrowing costs.
Despite the storm clouds, many industry leaders remain cautiously optimistic as they say signs of recovery are beginning to emerge.
For all latest news, follow The Daily Star’s Google News channel. “We believe the worst may be over,” said Rupali Chowdhury, president of the Bangladesh Association of Publicly Listed Companies (BAPLC).
In a recent interview with The Daily Star, she said that the freefall of local currency taka against the US dollar has stabilised, the foreign exchange reserve is recovering, and businesses are gradually adjusting to a new economic reality.
“Hope in future this trend will be continued,” said Chowdhury, also the managing director of Berger Paints Bangladesh. “If law and order remain stable and consumer confidence improves, economic recovery is possible.”
Reflecting on the broader macroeconomic pressure, she acknowledged the slowdown. “Not all companies are facing a downturn, but overall, growth has slowed down,” she said.
“Some companies have seen revenue increases, yet their profits remain stagnant or have declined due to rising costs.”
Inflation, according to Chowdhury, has been a major factor. The price pressures started to tick up after the pandemic and have persisted due to lingering global and local economic uncertainties. The steep depreciation of the taka in recent years has only added to the pressure.
“The taka lost value almost overnight, leading to higher costs of goods sold. Many companies could not pass this inflation onto the consumers, which reduced profit margins,” she said.
The manufacturing sector has felt this impact most acutely. In 2023 and early 2024, expansion plans were stalled, and investments were delayed due to letter of credit (LC) restrictions.
Another blow to profitability has come from the increased cost of financing. Many manufacturing firms rely on imported raw materials, and the volatility in foreign exchange rates has sent costs soaring.
“In 2023 and 2024, companies were forced to open letters of credit under ‘usance payable at sight’ terms, leading to exchange rate risks. The difference in rates at the time of LC opening and retirement adds financial burden,” said Chowdhury, who is also a former president of the Foreign Investors’ Chamber of Commerce and Industry (FICCI).
In contrast, she said the banking sector has gained from this economic environment.
“While manufacturing and service industries are struggling, banks have managed to improve their profitability. The rising interest rates have helped banks generate better returns on lending, although it has made borrowing more expensive for businesses.”
One of the key hurdles for businesses now is low consumer confidence. “When uncertainty looms, consumers tend to cut back on spending, which affects demand across industries,” she said.
Sectors such as steel and cement have been hit hard due to a slowdown in construction, while the fast-moving consumer goods (FMCG) segment has delivered mixed results. “Even FMCG companies, which usually perform well, are experiencing slower growth,” she commented.
Still, there are glimmers of hope. “In January and February 2025, we observed signs of recovery. If this trend continues, we could see further economic stabilisation in 2025.”
The business leader said that remittance inflows have picked up and exports have posted double-digit growth, even as several garment factories remain shut leading to job losses.
However, there are concerns over the capital market, which continue to remain sluggish. “There seems to be a lack of investor confidence. Even well-performing companies are experiencing stock price declines. The reasons behind this trend need to be analysed further.”
To encourage investment, she said the government must ensure stability and implement policies that support businesses.
“Capital market dynamics are influenced by multiple factors, including foreign investment. Over the years, many foreign investors have exited, impacting the market. They have experienced capital erosion due to devaluation of currency. Encouraging foreign and local investors to reinvest will be crucial.”
To draw investors back, returns from the stock market must at least match bank interest rates, she said.
Another issue is the limited number of quality companies seeking listing. “The critical question is why would good companies be interested in an IPO if compliance costs outweigh the benefits? Bank loans are often easier to secure.”
Still, some companies are staying the course.
“We are not scaling back our investments. In fact, we are expanding by setting up a third factory in Mirsharai, investing more than Tk 800 crore, and bringing in new businesses and technology. Bangladesh has a strong history of economic resilience, and we believe in its potential.”
She also underscored foreign direct investment (FDI) in long-term growth. “The government is working on attracting FDI, which will bring advanced technology and create employment opportunities. The establishment of economic zones is a positive step in this direction.”
Chowdhury welcomed the resolution of the long-standing issue surrounding the Korean EPZ, calling it a positive signal for foreign investors.
On government support for listed companies, Chowdhury offered several suggestions.
She said simplifying compliance requirements could encourage more firms to go public. The taskforce set up by the government to revive the stock market has received proposals from BAPLC.
While the corporate tax gap between listed and unlisted firms has narrowed, she believes more incentives are needed to encourage listings through initial public offerings (IPOs).
She also called for streamlining the appointment process for independent directors. “Their responsibilities are significant, and attractive remuneration packages should be introduced to bring in qualified professionals.”
Chowdhury urged the government to pursue predictable fiscal policies. “Sudden changes in tax and duty structures create instability,” she said, citing the supplementary duties imposed in January 2025 as an example. “Businesses need predictable policies to plan effectively.”
An automated tax system, she argued, would reduce corruption and improve transparency, ultimately benefiting the wider economy.
She also pointed to discrepancies in import duty calculations, urging the National Board of Revenue (NBR) to align the harmonised system (HS) code classifications more accurately with international standards.
“Currently, some duties are calculated under a different code instead of the specific one, leading to higher import duties for businesses,” she said.
Rectifying this issue would not only reduce costs but also help avoid unnecessary demurrage charges.
Looking ahead, Chowdhury believes 2025 holds promise but not without challenges.
Interest rates remain high, causing cash flow problems for many firms. “To sustain economic growth, consumer spending must rise. Economic stability and employment opportunities will play a crucial role in restoring consumer confidence.”
She also highlighted the continued importance of the banking sector in economic recovery.
“Non-performing loans (NPLs) are still a concern. Many businesses depend on banks for financing. The government is making necessary changes to mitigate the risks related to the banking sector.”
“We must bring back the confidence of the depositors. With stability in forex rate and reserves, both local and foreign investors will gradually gain confidence,” she added.