Bangladesh’s Business Relations with Neighbors: Opportunities, Challenges, and the Path Forward

In recent years, Bangladesh has emerged as a rising economic power in South Asia, capturing global attention for its steady growth and strategic geographic position. But how well are we capitalizing on our relationships with neighboring countries—India, Myanmar, Bhutan, and Nepal?

This article takes a deep dive into the state of Bangladesh’s business ties with its neighbors, highlighting key trade trends, infrastructural milestones, and the pressing challenges that need to be addressed.

The State of Trade

Bangladesh’s trade dynamics with its neighbors paint a mixed picture.

• India: As Bangladesh’s largest trading partner in South Asia, bilateral trade reached $11 billion in 2023, with Bangladesh exporting $2.5 billion worth of goods, primarily RMG, jute, and fish. However, a significant trade deficit persists due to $8.5 billion in imports, including machinery, automobiles, and food grains.
• Myanmar: Border trade with Myanmar has been affected by political instability, with volumes dropping to $75 million in 2023. Potential collaboration in energy and transport remains largely untapped.
• Bhutan and Nepal: Trade with these countries remains minimal at $50 million combined. Yet, opportunities in hydropower and agriculture could redefine these relationships.

Key Opportunities

1?? Infrastructure as a Game Changer The Padma Bridge has reduced transport times by 40%, making trade routes to India’s northeastern states more efficient. Enhanced use of Chattogram Port and Mongla Port could position Bangladesh as a logistics hub for South Asia.

2?? Renewable Energy Partnerships Imports of hydropower from Bhutan and Nepal could meet up to 20% of Bangladesh’s energy needs, helping to diversify the energy mix while strengthening diplomatic ties.

3?? Sectoral Diversification While RMG dominates exports, there is room to expand into high-growth sectors like ICT, pharmaceuticals, and digital trade infrastructure to attract investment and reduce over-reliance on traditional markets.

Challenges to Address

?? Trade Imbalances and Barriers: High tariffs and non-tariff barriers, such as cumbersome customs procedures, make cross-border trade challenging. For instance, tariffs on some Bangladeshi goods entering India can go as high as 25%.

?? Geopolitical Tensions: Issues like the Rohingya crisis with Myanmar and unresolved disputes like the Teesta water-sharing agreement with India have strained diplomatic and trade relations.

?? Weak Regional Agreements: Frameworks like SAFTA and BBIN hold promise but suffer from weak enforcement and lack of political will.

Policy Recommendations for Progress

?? Streamline Cross-Border Trade: Simplify customs processes and invest in integrated logistics systems to make trade faster and more efficient.

?? Leverage Regional Cooperation: Strengthen Bangladesh’s participation in SAFTA, BBIN, and BIMSTEC to ensure better trade access and regional integration.

?? Invest in High-Potential Sectors: Focus on renewable energy, digital technology, and pharmaceuticals to diversify the trade portfolio and attract foreign investment.

?? Enhance Infrastructure: Accelerate projects like the BBIN Motor Vehicle Agreement to improve connectivity across South Asia.

Conclusion

Bangladesh is uniquely positioned to act as a bridge between South Asia and Southeast Asia, but this potential remains underutilized. By addressing trade barriers, strengthening regional ties, and investing in infrastructure and new industries, Bangladesh can transform itself into a regional trade powerhouse.

This transformation will require bold reforms and sustained collaboration with neighbors, but the rewards—a stronger economy, greater regional influence, and sustainable growth—are well worth the effort.

#Bangladesh #TradeRelations #SouthAsia #Infrastructure #RegionalDevelopment #BangladeshEconomy #LinkedInArticles