Middle East crisis hits businesses hard

Middle East crisis hits businesses hard; small entrepreneurs deeply worried

At Zihan Plastic Industries in Keraniganj, a factory producing plastic toys and employing around 800 workers, the impact of the Middle East crisis is already being felt.

Prices of raw materials used in plastic toy manufacturing have surged in the global market amid ongoing turmoil, forcing the company to scale back imports. At the same time, worsening power shortages have led to increased load-shedding in recent months. As a result, the factory’s output has dropped by half, while sales have declined by 40 to 50 per cent compared with normal levels.

Managing Director Mohammad Sumun told Prothom Alo that soaring raw material prices in the Middle East had compelled the company to cancel several import orders. He also alleged that local market syndicates were contributing to price hikes.

“We are facing six to seven hours of load-shedding both day and night. Diesel is also scarce,” he said. “Wholesale sales have fallen as shops are required to close in the evening. If the war continues, shutting down the factory may become the only option.”

Across the country, small entrepreneurs like Sumun are grappling with mounting challenges triggered by the Middle East war, which began after attacks by the United States and Israel on Iran.

With the crisis now stretching close to two months and no clear resolution in sight, business owners say they are increasingly anxious about the future.

Shafat Kadir, chief executive officer of Hat Bakso, said rising raw material costs have significantly increased production expenses.

“Corporate orders account for 65 to 70 per cent of our business, and we cannot raise prices on orders already confirmed. As a result, we are incurring losses,” he said. “Online sales have also dropped by 20 to 30 per cent since Pahela Baishakh.”

In Gopalpur of Faridpur, RK Metal, a manufacturer of agricultural machinery—including onion storage equipment, grass cutters, rice threshers and maize threshers—has also been hit hard. The company has been struggling for the past two years, and the Middle East crisis has further worsened conditions. Sales have now fallen by half.

Managing Director Paritosh Kumar Malo said the company had been forced to cut its workforce. “Two years ago, we employed 25 to 30 workers. Now only eight to ten remain,” he said.

He added that rising raw material prices and increased costs of electric motors have compounded the crisis. Many government projects are currently on hold, and farmers—deprived of subsidies—are reluctant to invest in new machinery.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said that even if the Iran war were to end immediately, it could take more than a year for global fuel supplies to stabilise.

“Fuel infrastructure in Middle Eastern countries has been damaged by the war,” he said. “The government cannot rely solely on short-term measures. To ensure affordable energy in the future, dependence on fossil fuels must be reduced, and solar power generation expanded.”

Discussions with small entrepreneurs across the country point to four major challenges: rising raw material prices and supply shortages; production disruptions caused by electricity load-shedding; increased production costs driven by fuel shortages and higher prices; and declining sales due to mandatory evening shop closures.

Many business owners say the situation has become so severe that meeting wages and covering operating costs is increasingly difficult.

Following the outbreak of war between Iran and Israel–United States forces on 28 February, the Strait of Hormuz—a key global fuel transport route—was effectively shut down, pushing international crude oil prices above $100 per barrel.

In response to supply shortages and rising prices, the government introduced fuel rationing last month. Motorists have since faced long queues at filling stations, with many returning without fuel.

Further adding to the strain, fuel prices were increased by Tk15 to Tk20 per litre last Saturday night.

Small entrepreneurs under pressure

Handicrafts firm Hat Bakso produces a wide range of items, including miniature replicas, fridge magnets, frames, paperweights, card holders, desk calendars, lapel pins, coat pins, tie pins, cufflinks, key rings and luggage tags. While corporate clients form the bulk of its customer base, the company also sells products online.

The war has pushed up the price of resin—the main raw material used in its products—by around 20 per cent. Transport costs have also risen due to higher fuel prices, further squeezing margins.