Bangladesh Exporters Lose Market Share Amid Energy Crisis

The Government of Bangladesh has implemented fuel price increases of up to 17.4%, exacerbating a severe gas and power crisis that is disrupting the nation's ready-made garment sector. Production costs have surged by 30-40 percent due to rising energy prices, increased wages, higher interest rates, and exchange-rate depreciation. These pressures, combined with a 10 percent tariff from the United States administration and Middle East conflicts, contributed to a nearly 5 percent drop in merchandise exports to $47.74 billion in 2025.

Energy shortages have forced 78% of surveyed knitwear factories to partially halt production, while 55% have seen orders canceled or reduced since late August. Logistics costs have also spiked, with Chattogram Port implementing an average service charge hike of 41 percent in 2025. While most factories struggle with outages, 4A Yarn Dyeing Limited has maintained production through solar panels and independent generation, though it still reports monthly fuel bills reaching 5 million taka.

Industry leaders warn that the inability to pass these costs to overseas buyers is eroding profit margins and reducing buyer confidence. This instability is causing Bangladesh to lose its competitive edge to regional rivals, specifically India, Vietnam, and China, who have seen growth while Bangladeshi exports decline.