The number of the country’s large and medium manufacturing industrial establishments declined significantly in 2019 despite the fact that the curve of their contribution to the gross domestic product (GDP) headed upwards.
The contribution of the manufacturing sector to the GDP is estimated at nearly 20 per cent in the fiscal year 2018-19, up from nearly 15.5 per cent in the fiscal year 2012, according to the Bangladesh Bureau of Statistics (BBS).
Economists think the decline in number of large and medium manufacturing units indicates that the industrial sector is in a difficult situation and it will have negative consequences on employment generation and the economy of the country.
The number of large industries employing 250 or more people fell by 608 units to 3,031 in 2019 from 3,639 in 2012, the latest Survey on Manufacturing Industries (SMI), 2019 revealed.
On the other hand, the number of medium-size plants fell drastically by 51 per cent to 3,014 units in 2019 from 6,103 in 2012, the survey released on May 23 showed.
These were preliminary findings of the survey conducted between April and May 22, 2019 under a project funded by the government of Bangladesh.
However, the number of small industries employing less than 100 people each increased sharply to 23,577 in 2019 from 15,666 in 2012.
‘The medium industries’ are believed to be the backbone of Bangladesh’s industrial strength. But both the number of people employed and the number of such industrial units fell significantly.
Such industries usually employ between 100 and 250 people.
The latest survey said the number of jobs fell to 0.461 million in 2019, less than a half of 1.04 million in 2012.
But the employment in large industries increased to 4.02 million in 2019 from 2.96 million in 2012.
Dr Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh (PRI), told the FE that such a trend of the manufacturing sector has a negative relationship with the country’s economy.
“Every year youths are coming into the labour market and if there is a fall in the number of industrial units and job growth, this is very disturbing for the economy.”
He said there may be a reason for the fall in the number of garment industrial units and that is the outcome of the activities of the Accord and the Alliance.
He argued that jobs are usually created in the medium and small units. “Large units are more or less automated and jobs are scarce there.”
Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank, told the FE that one reason for the fall is that local industries lack governmental nursing.
“Many wanted to grab the local market, but those who managed the policy in their favour sustained and others were victimised.”
The state-run BBS carried out the survey from April to May this year.
The last survey was conducted by the statistical agency seven years ago, which found the gross output of 42,792 manufacturing units worth at Tk 5.39 trillion.
Project officials said the key objective of the study was to deliver a more accurate estimate of the manufacturing industry while measuring the country’s gross domestic product (GDP).
“We’ve a sample of 8,000 industries in 64 districts of the country,” said deputy director of the statistical agency and focal point of the study Lizen Shah Nayeem.
It costs Tk 17.4 million to carry out the survey which is expected to be finalized by September next.