DHAKA, Bangladesh — Bangladesh’s export-driven economy is facing mounting pressure as garment and textile factories across the country’s industrial belt suspend production, reduce operations or shut down altogether, raising fresh concerns about employment, investment and the future of the nation’s largest export industry.
The wave of closures has been most visible in Gazipur, one of Bangladesh’s leading industrial hubs, but similar warning signs are emerging in Chattogram, Narayanganj, Savar, Ashulia and other manufacturing centers.
Industry leaders say the closures are no longer isolated business failures but symptoms of broader structural problems that include weakening export demand, rising production costs, energy shortages, high borrowing costs and shrinking profit margins. They also argue that the crisis has been compounded by the political targeting of business leaders, fears of arrest, mob violence, extortion and a deteriorating security environment following the fall of the Awami League government.
For more than three decades, the ready-made garment (RMG) industry has powered Bangladesh’s economic transformation. The sector generates more than 80 percent of the country’s merchandise export earnings and directly employs around four million workers while supporting millions more through transportation, logistics, packaging, banking and countless small businesses.
Today, that growth model is under increasing strain.
Gazipur Offers a Warning for the Entire Country
The recent shutdowns in Gazipur illustrate the scale of the challenge.
The district is home to hundreds of factories producing apparel for global fashion brands. Normally, its roads fill before dawn with hundreds of thousands of workers heading to industrial zones. In recent weeks, however, many factory gates have displayed closure notices instead.
According to officials and industry sources, at least 13 garment factories in Gazipur suspended operations or closed within a single week, leaving thousands of workers uncertain about their future.
While each company has cited different immediate reasons, the underlying causes are strikingly similar: higher raw material costs, persistent gas and electricity shortages, rising bank interest rates, declining international orders, weak product prices and growing financial losses.
Labor disputes have added further pressure on companies already operating with extremely thin margins.
Since the fall of the Awami League government, many factories have come under multiple forms of pressure. Several factories have been set on fire, while others, along with business establishments, have been attacked and looted. Numerous business owners have been arrested and detained. Although some have been released on bail, many remain behind bars. A number of industrialists have been imprisoned for nearly two years without their cases being resolved through trial. In addition, thousands of entrepreneurs—both large and small—have fled the country.
Islam Garments Among Latest Casualties
One of the latest closures involved Islam Garments Limited (Unit-2) in Gazipur’s Jarun area.
The factory suspended operations indefinitely from July 1 after unrest followed the death of worker Rubina Begum, who reportedly became ill before being taken to a hospital, where she later died. Management said concerns over possible vandalism prompted the company to invoke Section 13(1) of the Bangladesh Labour Act, 2006, allowing the factory to suspend operations indefinitely.
The decision immediately affected approximately 2,500 workers.
Although the incident centered on labor unrest, officials familiar with the situation say the factory had already been operating under significant financial pressure.
Multiple Closures Reflect Deeper Financial Stress
Only days earlier, five factories belonging to Lithi Group halted operations simultaneously in Gazipur’s Bagher Bazar industrial area.
Company notices attributed the decision to prolonged gas shortages, declining export orders, uncertainty surrounding future contracts, years of labor unrest, falling product prices and difficulties obtaining banking support.
The affected factories included Apparel-21 Limited, Fomcom Fashion Limited, Fomcom Dyeing Limited, Fomcom Printing Limited and Fomcom Knitting Limited.
Another major setback came with the permanent closure of Unique Designers Limited and Unique Washing Limited, which left nearly 1,800 workers unemployed.
Although government officials, industrial police, factory owners and labor representatives later reached agreements covering unpaid wages, service benefits and other financial obligations, those settlements could not restore the jobs that had already disappeared.
Gazipur Industrial Police Superintendent Mohammad Amzad Hossain said financial difficulties ultimately forced management to close the factories permanently.
“Because of financial constraints and other operational challenges, the authorities were compelled to declare the factory permanently closed. Both parties have agreed on 11 decisions regarding workers’ service benefits, unpaid wages and other dues,” he said after a tripartite meeting involving factory management, labor representatives and government agencies.
The pressure extends beyond one industrial district.
In Kaliakair’s Chandra industrial zone, four Apex Group factories suspended operations indefinitely following disputes over employee service benefits. Management cited production disruptions and invoked the same provision of the Bangladesh Labour Act to justify the closures.
Authorities also reported additional closures involving Fashion Linkers Limited and Cortex Apparels Limited, further expanding the list of affected manufacturers.
Officials from the Department of Inspection for Factories and Establishments have expressed hope that some factories may eventually reopen, but there is no clear timeline for resuming production.
The Human Cost
The economic consequences extend well beyond factory owners.
For many workers, garment employment provides the primary source of household income. When factories close, families immediately face uncertainty over rent, food, education and healthcare.
The impact also spreads through surrounding communities. Small restaurants, grocery stores, transport operators, landlords and local suppliers all depend on the spending power generated by nearby factories. Every closure therefore weakens not only industrial production but also the broader local economy.
Economists say that when multiple factories close within the same industrial region, declining household spending can trigger a wider slowdown affecting businesses far removed from the garment sector itself.
A National Problem, Not Isolated Incidents
Although Gazipur has become the most visible example of Bangladesh’s industrial difficulties, manufacturers say similar pressures are emerging across the country’s export-oriented economy.
Following the Eid holidays, factory closures, workforce reductions and production cutbacks have also been reported in Savar and Ashulia. Industry associations warn that unless underlying structural problems are addressed, additional manufacturers could be forced to reduce operations in the coming months.
The developments raise an increasingly urgent question for policymakers: Are the recent factory closures temporary setbacks caused by difficult market conditions, or do they signal a deeper challenge confronting Bangladesh’s export-led growth model?
Exports Slow Despite a June Rebound
The factory closures are unfolding as Bangladesh’s export sector experiences one of its weakest performances in recent years, reinforcing industry concerns that the difficulties are structural rather than temporary.
According to provisional figures from the Export Promotion Bureau (EPB), Bangladesh’s merchandise exports totaled about US$48 billion in fiscal year 2025-26, down 0.58 percent from the previous fiscal year. More significantly, the ready-made garment (RMG) sector—which contributes more than 80 percent of the country’s export earnings—recorded a 1.64 percent annual decline, placing additional pressure on foreign exchange earnings, employment and industrial production.
Although exports rebounded sharply in June, industry leaders caution that the monthly figures do not necessarily indicate a lasting recovery.
EPB data showed garment exports rising 21.52 percent in June to approximately US$3.39 billion, with knitwear exports increasing 19.49 percent and woven garments 24.2 percent. Exporters, however, argue that much of the increase reflected a favorable production calendar rather than stronger international demand. June 2025 production had been unusually low because of the extended Eid-ul-Adha holidays, while June 2026 contained significantly more working days, naturally resulting in higher production and shipments.
Fazlee Shamim Ehsan, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and President of the Bangladesh Employers’ Federation, has urged policymakers not to become complacent.
“There is no room for complacency based on one month’s export growth. The industry’s structural challenges remain, and sustainable recovery depends on improving competitiveness and productivity,” Ehsan said while commenting on the sector’s recent export performance.
Why Are Factories Closing?
Manufacturers say the crisis is being driven by a combination of domestic and international pressures rather than any single factor. Following the fall of the Awami League government, the political targeting of business leaders, fears of arrest, mob attacks, terrorism, and extortion have added multiple dimensions to the crisis. Many investors have fled the country while many others have been arrested or attacked by mob.
Moreover, production costs have increased sharply over the past year. Wages have risen, yarn prices have climbed by about 10 percent, and the cost of dyes and chemicals has increased by between 15 and 50 percent. Electricity, gas, transportation and financing costs have also moved higher, while exchange-rate pressures have made imported raw materials more expensive.
At the same time, many international buyers have resisted paying higher prices for garments.
The result is a severe squeeze on profit margins.
Industry leaders say some manufacturers continue accepting export orders simply to retain skilled workers and maintain long-term relationships with international buyers, even when production generates little or no profit. Others have postponed expansion plans, reduced production or suspended operations altogether.
Energy shortages have compounded those difficulties. Manufacturers continue to report inadequate gas supplies and unstable electricity, forcing factories to operate below capacity and making it harder to meet delivery deadlines demanded by global retailers.
Higher bank lending rates have further weakened the sector by increasing the cost of working capital, particularly for small and medium-sized manufacturers that lack substantial financial reserves.
Bangladesh Faces Stronger Regional Competition
Bangladesh is also confronting a rapidly changing global apparel market.
Competing manufacturing countries—including Vietnam, India, Indonesia and Cambodia—have expanded production of higher-value garments while investing heavily in automation, synthetic fibers, technical textiles and more efficient logistics.
Bangladesh, by comparison, remains heavily dependent on cotton-based apparel.
Industry analysts say that while Bangladesh remains one of the world’s leading garment exporters, it has diversified into higher-value products more slowly than many of its regional competitors. That leaves manufacturers increasingly vulnerable to price competition in traditional apparel markets.
Global uncertainty has added further pressure. Changing trade policies, intense price competition in Europe and shifting sourcing strategies among international retailers have made export markets more competitive than at any time in recent years.
Restoring Confidence
Economists increasingly argue that Bangladesh’s biggest challenge extends beyond export figures.
It is a crisis of confidence.
Factory owners remain uncertain about future orders and profitability. Investors have delayed expansion plans. Banks have become more cautious in lending. Workers worry about job security.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has acknowledged these pressures. During discussions on the national budget earlier this year, BGMEA President Mahmud Hasan Khan said the industry was under significant strain because of weakening global demand, rising production costs and growing financial stress on manufacturers.
Those concerns closely mirror the experience of factories across Gazipur and other industrial districts.
The Road to Recovery
Industry leaders believe Bangladesh can regain momentum, but only through structural reforms rather than short-term improvements in export statistics.
They argue that priority should be given to ensuring uninterrupted gas and electricity supplies, expanding access to affordable financing, improving logistics and port efficiency, and encouraging investment in synthetic fibers, sportswear, technical textiles and other higher-value products. Diversifying export markets beyond Europe and North America is also considered increasingly important.
Former BGMEA director Mohiuddin Rubel told The Voice that Bangladesh possesses significant long-term potential but requires sustained investment in research, innovation, skilled human resources and supportive industrial policies.
He said achieving the government’s ambitious goal of US$150 billion in exports would require not only clear targets but also a realistic, time-bound national export strategy.
Bangladesh retains major strengths: an experienced workforce, decades of manufacturing expertise and long-established relationships with global buyers. Yet the recent closures in Gazipur demonstrate that those advantages cannot be taken for granted.
The factory gates that have fallen silent in Bangladesh’s largest industrial district serve as a warning for the nation as a whole. Unless policymakers, financial institutions, industry leaders and international buyers work together to address the structural challenges confronting manufacturers, the current slowdown risks becoming a broader industrial crisis with lasting consequences for employment, exports and economic growth.
