Mass Business Shutdowns Spark Nationwide Alarm

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17 Oct 2024, 17:19

Photo: Collected

The news is alarming. Over the past two months (August and September), around 150 companies from both domestic and international groups, including City Group, BSRM, and US-Bangla, have decided to shut down their operations. This will put the jobs of hundreds of thousands of people at risk, while also damaging the national economy.

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According to information from the companies, they are closing permanently based on decisions by their boards of directors. Around 160 companies are already in the process of shutting down. The list of closures includes both small enterprises and large corporations. These companies, registered with the Registrar of Joint Stock Companies and Firms (RJSC), come from both product and service sectors. Additionally, some companies that registered with plans for new investments are now on the closure list.

Data from the RJSC shows that 128 companies closed down in the last five months (May to September). Of these, a record 46 companies shut their doors in August alone, followed by 26 in September. Between July and September, a total of 83 companies ceased operations.

It has been reported that the number of closures began to rise in July, the first month of the current fiscal year. Government data indicates that 16 private companies closed in June, followed by 21 in July.

Recently, political instability and the impact of floods have caused severe damage across various sectors, particularly in industry, tourism, agriculture, and services. In addition, labor unrest in the ready-made garment (RMG) sector—one of the country's top exports—is causing further instability. If the situation does not improve, business owners may face even more difficulties.

Companies Closing Permanently
According to the information provided by the companies, based on board decisions, many businesses are shutting down permanently. Around 160 companies are already in the process of closure. These include both small businesses and large corporate entities, spanning both product and service sectors. Some companies that had recently registered for new investments are also shutting down.

The Registrar of Joint Stock Companies and Firms (RJSC) reports that 128 companies closed in the last five months (May to September), with August alone witnessing a record 46 closures, followed by 26 in September. During July-September, 83 companies ceased operations.

The trend began in July when 21 companies closed, compared to 16 in June.

Causes of Business Shutdowns
Political instability and floods have severely affected various sectors, particularly industry, tourism, agriculture, and services. Additionally, labor unrest in the ready-made garment (RMG) sector—one of the country’s top exports—has created further uncertainty. If the situation does not improve, businesses will face even greater challenges.

Domestic Companies Shutting Down
City Group: Shutting down 30 companies, including City Hair Oil, City Seed Crushing Industries, City Condensed Milk, Shampa Sugar Industries, City Biscuit, and several oil mills. The group has appointed a liquidator, G.K. Rajbongshi, who called for an Extraordinary General Meeting (EGM) in September for closure proceedings.

US-Bangla Group: Closing five companies, including US-BD Security Services, US-Bangla Furniture, and US-Bangla Pharmaceuticals. Liquidators have been appointed following their EGM in September.

BSRM Group: Appointed a liquidator for its Recycling Industries division.

Other Companies: Hospitals like Asmat Ali Khan Central Hospital, healthcare companies such as Lab Quest, and paper manufacturers like Hosendi Paper Mills are also shutting down. Additionally, firms from diverse sectors—including Esquire Holdings, Intek Greenpack, and Urban Fit Properties—are winding up operations.

Foreign Companies Closing Operations
Taiwan-based Maryland Engineering and Singapore-based Weeding Private Company are among those shutting down operations.
South Korea’s Bride Medical & Education Services and India’s Shipcard Marine Bangladesh Ltd. have decided to close voluntarily.
Kite Tech International has also approved its closure during a recent EGM.

Economic and Business Outlook
Mir Nasir Hossain, former FBCCI president, noted that many companies are struggling to recover from pre-existing economic crises. While some businesses have managed to survive, others couldn’t overcome the current challenges. He expressed hope that the business environment will improve soon.

Abul Kasem Khan, vice-chairman of A.K. Khan Group, explained that registering new companies or closing existing ones is a regular part of business. Some companies are shut down to avoid taxes or losses, while others close to reinvest elsewhere. He emphasized that the current economic challenges began three years ago but expressed optimism about future domestic and foreign investments.

Analysts' Perspective
Analysts attribute the closures to inflation, rising production costs, reduced sales, high-interest rates, labor unrest, technical and logistical issues, raw material shortages due to dollar crises, and global conflicts. Political shifts have also limited business opportunities for some companies. However, they believe that the situation will not persist for long and expect improvements in the near future.

This report reflects the growing trend of business closures, driven by both internal and external challenges. October is expected to continue this pattern, with more companies planning EGMs to formalize their shutdowns.

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