Bangladesh Trade and Foreign Investment

By | July 23, 2022


  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The EU has long been the largest export market for Bangladeshi goods. Bangladesh benefits from preferential treatment in favor of least developed countries, also known as “Everything but Arms” (EBA). The EBA guarantees the Generalized Preferential System (Generalized Preferential System) for an indefinite period and is not subject to regular review. Thanks to this system, Bangladesh has a unilaterally positive trade balance with the EU. In early 2021, the European Commission warned Bangladesh that it was ready to begin steps to withdraw the GSP if it did not make sufficient progress on basic human rights and labor standards. In a recent report on EBA preferential countries, the EC said that Bangladesh has made progress in certain areas, but this is not enough and more efforts are needed to fully align Bangladeshi labor laws and practices with ILO standards. The balance of the trade balance is in surplus and for 2021 it was EUR 12.93 billion. The main import items to the EU include clothing, textiles, footwear and frozen fish.

  • Allcountrylist: Overview of major industries in Bangladesh, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 2,913.70 3,214.10 2,952.00 2,232.60 2,803.80
Imports into the EU (million EUR) 14,251.40 15,201.60 16,291.60 13,532.90 15,736.90
Balance with the EU (million EUR) 11,337.7 11,987.6 13,339.7 11,300.2 12,933.1

Source: European Commission

Trade relations with the Czech Republic

The mutual trade balance has been significantly negative for a long time and is increasing year by year. There are no known dates for 2021. Among the main export items of the Czech Republic to Bangladesh are dairy products, electronics and machinery. The main import items of the Czech Republic from Bangladesh are clothing products.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 11.3 1.2 1.1 0.9 ON
Imports to the Czech Republic (billion CZK) 0.8 12.3 13.7 13.7 ON
Balance with the Czech Republic (billion CZK) -11 11.2 12.6 12.8 ON

Source: CZSO

Trade relations with countries outside the EU

The trade balance with non-EU countries is negative for Bangladesh. In 2021, the balance was €7.13 billion, of which exports accounted for €31.60 billion and imports for €38.73 billion. Top exporting countries include China ($10.34 billion), India ($5.82 billion) and Singapore ($4.41 billion).

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 23,766.5 26,022.3 23,765.3 23,931.4 31,601.7
Imports to countries outside the EU (million EUR) 26 183.7 31 195.7 25 106.3 25,375.9 38,735.4
Balance with non-EU countries (million EUR) -2,417.2 -5 173.4 -1,341.0 -1,444.5 -7 133.7

Source: EIU, Eurostat

Foreign direct investment

The government of Bangladesh is actively seeking foreign investment, particularly in the garment industry, light manufacturing, power, energy, agriculture and infrastructure sectors. The government offers a number of investment incentives as part of its industrial policy and export-oriented growth strategy. According to the United Nations Conference on Trade and Development (UNCTAD), Bangladesh received a net foreign direct investment (FDI) inflow of US$billion in 2020. The Central Bank of Bangladesh estimates that foreign exchange reserves increased from USD 36.0 billion in June 2020 to USD 4billion in June 2021.

FTAs and treaties

The government has taken an initiative to create new general principles for preferential and free trade agreements. The Ministry of Commerce has already asked the Bangladesh Trade and Tariff Commission to prepare updated draft policy guidelines on Preferential Trade Agreements (PTAs) and Free Trade Agreements (FTAs). The country has signed a PTA with Bhutan. The government is planning to sign a preferential trade agreement (PTA) with Nepal in the near future. Bangladesh is negotiating PTAs with 11 other countries and trading blocs such as Australia, Indonesia, Japan and Canada. Bangladesh and Nepal have agreed to sign a free trade agreement

Treaties with the EU

The EU works closely with Bangladesh under the EU-Bangladesh Cooperation Agreement concluded in 2001. This agreement provides a broad scope for cooperation that extends to trade and economic development, human rights, good governance and the environment. As a Least Developed Country (LDC), Bangladesh benefits from the most favorable treatment available under the EU’s Generalized System of Preferences (GSP), namely the Everything But Arms Arrangement (EBA). The EBA grants 46 least developed countries – including Bangladesh – duty-free and quota-free access to the EU for the export of all products except arms and ammunition.

Contracts with the Czech Republic

  • Agreement between the Government of the Czech Republic and the Government of the People’s Republic of Bangladesh on the prevention of double taxation in the field of income tax and on the prevention of tax evasion and avoidance (Prague 12 November 2019, entered into force 15 January 2021)
  • Agreement on trade promotion and economic cooperation between the government of the Czech Republic and the government of the People’s Republic of Bangladesh (Prague 21/05/2019)
  • Cultural Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the People’s Republic of Bangladesh (Dhaka 13.5.1981)

Developmental cooperation

Bangladesh is a net recipient of foreign development aid. The EU is one of the three largest foreign donors. The main areas where the EU helps Bangladesh are economic development, human rights, good governance and the environment. Under its Multiannual Indicative Program for Bangladesh 2014-2020, the EU has committed up to €690 million in aid (excluding thematic and regional funds). For the EU, the priorities are healthcare, education, human rights and strong institutions, trade and economic development, food security and crisis management.

In the past, the Czech Republic has long supported Bangladesh through so-called small local projects aimed mainly at strengthening the economic activities of the most vulnerable population. There is currently no project being implemented in Bangladesh.

Prospective fields of study (MOP)

Civil aviation industry

The demand for air transport is determined by the size of Bangladesh and the limited scope of the railway and road network, and creates the need for the construction of new airports, or the need for the expansion or modernization of existing airports. The Ministry of Aviation and Tourism expects the aviation industry to triple in 15 years. Czech companies can apply especially in the segments of aviation infrastructure and increasing air traffic safety (radar). The same applies to the need for aircraft, including smaller aircraft, which are also produced in the Czech Republic. Deliveries of so-called mobile airports could further contribute to the success of the aviation industry in the region.

Energy industry

Interest in the restructuring and modernization of the energy sector is related to the needs of increasing industrial production and at the same time to the pressure to reduce the devastation of one’s own environment. The Department of Energy has announced that $8billion will be needed to invest in the energy sector by 2041. Primary energy consumption is dominated by natural gas, followed by heating oil, oil, coal, hydropower and solar energy. The government plans to build more nuclear power plants and especially to install solar photovoltaic systems. Prospective fields are also the supply of energy equipment (spare parts) and involvement in activities connected with preparatory work and subsequent natural gas extraction.

Water management and waste industry

Bangladesh suffers from large-scale flooding every year, polluting drinking water sources. The government has therefore prepared the ambitious Delta 2100 Plan, which is primarily intended to secure sources of drinking water and increase the landscape’s resistance to climate change. For the entire project, the government has allocated 1.13% of GDP ($404 million) for the current fiscal year. Total investments will amount to USD 43 billion. The first phase of the plan includes 80 projects to be implemented by 2031, of which 65 will be physical projects and 15 projects to strengthen the capacities of institutions. Companies focusing on the construction of hydromelioration facilities, anti-flood works, water management integration systems, design and simulation modeling will find application.

Defense industry

The budget of the Bangladesh Army is increased every year and therefore provides room for supplies of equipment especially for the security forces of the state. The Bangladesh government has prepared a ten-year plan, Forces Goal 2030, to modernize its military forces. It can be an advantage for Czech companies that the Bangladeshi authorities strive to diversify their partners for military cooperation and at the same time expand the portfolio of suppliers in the area of ​​the defense industry. Czech companies can be successful not only in classic weapons products, but especially in the field of electronic protection, anti-mine jammers, personal protective equipment, radar simulators, and chemical defense. There are also possibilities within the “Safe City” project involving monitoring and control of street crime.

Agricultural and food industry

Agriculture accounts for about 15% of the GDP and Bangladesh has ideal conditions for increasing agricultural production. In the case of Bangladesh, there is a demand for technology in the food industry, especially in the processing of fruits, vegetables, in the dairy (milk and whey products) and canning industries, or beverage processing technology. Solid perspectives also exist in the import of poultry meat. Bangladesh also faces a lack of technology for quality and fast processing of agricultural production. According to the Bangladesh Investment Development Authority, the freezer industry in particular represents a high potential for investors in the future.

Rail and rail transport

Bangladesh is struggling with a continuous increase in its own population, which contrasts with the low development of the country’s transport infrastructure: facilities for the construction of bridges, roads, railways and the supply of railway transport equipment and railway components are in demand. Congested and chaotic traffic is a big problem, especially in the capital city of Dhaka. From this point of view, the smart city concept is promising.

Bangladesh Trade