Flourishing BD-Japan Bilateral Relationship and Untapped Potential

Bangladesh's position in international trade is concerning, ranking fourth according to a new World Bank report, with a score of 53.86 out of 100. The country's scores include 51.56 in legal framework, 29.52 in government services, and 80.50 in operational efficiency, indicating significant challenges in laws, government services, and management that deter foreign investment and slow export growth.

Bangladesh and Malaysia have agreed to resume discussions on a Free Trade Agreement (FTA) following Malaysian Prime Minister Anwar Ibrahim's recent visit to Dhaka, which has strengthened bilateral ties. This visit marks the first official engagement by a head of government since the formation of Bangladesh's interim government and symbolizes Malaysia's solidarity with Bangladesh during challenging times.

Following the change in government after the July anti-discrimination movement, Bangladesh’s progress in signing preferential trade agreements has slowed. The country aims to sign FTAs, CEPAs, and EPAs with China, Indonesia, ASEAN, India, and Japan to secure zero-duty benefits after its graduation from LDC status in 2026.

Bangladesh has significantly reduced its foreign trade deficit through various measures, as reported by the central bank. In July, the trade deficit was $1.458 billion, down from $1.604 billion the previous year, marking a reduction of $146 million. The country imported goods worth $4.94 billion while earning $3.48 billion from exports.

Mutual trade among South Asian Association for Regional Cooperation (SAARC) countries accounts for a mere 5% of their total trade, according to a special report by the Bangladesh Bank. The report suggests that trading in local currencies could enhance intra-regional trade, but significant reforms are necessary to achieve this. Following the Russia-Ukraine conflict, the rising exchange rates of the US dollar have created challenges for import-dependent countries, including Bangladesh, which has had to limit imports due to declining foreign currency reserves.

Bangladeshi products will now enjoy full duty-free access to Chinese markets, following an announcement made after a meeting between the newly appointed Foreign Secretary of Bangladesh and the Chinese Ambassador. The Ambassador noted that in early September, during the Sino-Africa summit, China committed to providing 100% duty-free access to least developed countries, including Bangladesh.