Bonikbarta Exclusive

In monetary value, Bangladesh has the highest bilateral trade with China, the United States, and India. Among these, exports are highest in the United States, while imports are more significant from China and India. Although there have been fluctuations in import and export volumes in some years, overall trade with these countries has increased for Bangladesh over the past two decades. An analysis by the Asian Development Bank (ADB) indicates that during this period, Bangladesh's trade growth with the United States and China surpassed that of neighboring India.

Trade experts say that only Western countries played a significant role in Bangladesh's export market two decades ago. The United States has had a significant role in bilateral trade with Bangladesh as an individual country. Over the past decade, there has been some diversification in the export market, leading to increased trade with China and India. Although exports to China have increased slightly, imports from that country have risen significantly. Trade with India has also grown in imports and exports, but a significant portion occurs informally, which is not reflected in official trade statistics. For these reasons, in terms of growth, Bangladesh's trade with the United States and China has surpassed that with India.

Recently, the Asian Development Bank (ADB) published an evaluation report titled "Evaluation of ADB Support for the South Asia Subregional Economic Cooperation Program, 2011-23." The report indicates that from 2001 to 2012, Bangladesh's trade growth with the United States was 137 percent, while with China, 667 percent, and with India, 373 percent. This means that although trade growth with the United States was higher during this period, it was lower than in China and higher than in India. Meanwhile, Bangladesh's trade growth with the United Kingdom during this time was 228 percent. Although there was trade growth with Bhutan, Nepal, and Sri Lanka, the volume was minimal.

The ADB report also provides an analysis of trade from 2012 to 2022. According to this analysis, Bangladesh's trade growth with the United States over the past decade was 198 percent, while trade growth with China was 230 percent and with India was 184 percent. This means that Bangladesh experienced higher trade growth with the United States and China during this period than India. However, trade growth with Bhutan over the last decade was negative. While there was some trade growth with Nepal and Sri Lanka, the volume of imports and exports with these countries was very low.

Mohammad Selim Uddin, Secretary of the Ministry of Commerce, told Bonik Barta when asked for comments, "I have asked our Export Promotion Bureau (EPB) to conduct an analysis. We must understand the nature, markets, and products involved in trade with various countries over the past few years. It will be appropriate to provide detailed comments once we have the analyses."

According to statistics from the Bangladesh Bank, in the fiscal year 2022-23, trade between Bangladesh and the United States amounted to 10.6 billion dollars. During the same period, trade with China was nearly 18 billion dollars, while trade with India was 11.2 billion dollars.

Trade analysts say that Bangladesh's export trade is primarily centered around ready-made garments. In contrast to this export, many raw materials must be imported. Bangladesh imports raw materials from China and India while exporting goods mainly to Western markets, particularly the United States. Although a large quantity of raw materials is imported from China, the export of goods to China is minimal. Additionally, while Bangladesh imports goods from India, the volume is less than that from China. A significant portion of trade with India occurs through informal channels. Due to a lack of product diversification, the growth of exports to China is also negligible, which has not significantly impacted overall trade growth.

Professor Mustafizur Rahman, a distinguished Center for Policy Dialogue fellow, told Bonik Barta, "Trade between Bangladesh and the United States has increased. However, the US is primarily a destination for Bangladeshi ready-made garment exports, and we do not import much from there. We used to import from the European Union, which could have increased, but India and China have taken that space. They have already advanced their technology, and the quality of their products has improved. Trade has become dynamic, allowing for quicker delivery of goods. These factors have contributed to trade growth with both countries. China imports goods worth 2.8 trillion dollars annually, while India imports 700 billion dollars, but we have not been able to increase our exports to these two destinations. This reflects our structural weaknesses."

Regarding trade with India, Mustafizur Rahman said, "In 2011, India granted duty-free access for Bangladeshi products, which led to an increase in our exports. While it took 48 years for our exports to surpass one billion dollars, it only took four years to exceed 2 billion dollars. This indicates that the duty-free and quota-free benefits have been effective. India's capacity has also increased, with improvements in technological capability and competitive quality. As a result, we are now importing items that we previously sourced from Europe from India. Therefore, India has become an import alternative or a trade diversion. Over the last decade, our imports from India have also increased. Considering both sides, there has been growth in trade between Bangladesh and India."

Trade experts say that exports and imports are taking place between Bangladesh and the United States, although imports and exports are lower. Bangladesh has a significant demand for production-oriented industrial goods from China, especially machinery and raw materials for the textiles and garments sector. As a result, imports from China are increasing. In the case of India, the reality is that there are many exportable products available in Bangladesh, while the number of exportable products in India is limited.

Syed Ershad Ahmed, President of the American Chamber of Commerce in Bangladesh (AmCham), told Bonik Barta, "Trade with the United States includes exports and imports, and we benefit from a balanced trade. However, recently both our imports and exports have decreased. Our imports from China are quite high, which is why we are seeing more growth there. Exports to China are very minimal. In India, there has been more informal trade than formal trade, known as cross-border informal trade. It may seem that a lot of business is happening, but when we gather data from various sources, we find that much of it is not recorded. The reflection of trade through informal channels is not being accurately captured. Therefore, it is essential to formalize such informal business transactions with any country."

According to official Chinese data, trade between China and Bangladesh has increased from 2 billion dollars to 28 billion dollars from 2003 to 2023, representing a growth of nearly 1,400 percent over these two decades. Highlighting this information, Al Mamun Mirdha, Secretary General of the Bangladesh-China Chamber of Commerce and Industry (BCCCI), told Bonik Barta, "If we look back to before 2003, we can see that trade and growth were much lower at that time. Since then, we have rapidly moved towards growth driven by industrialization, and China’s market has started to open up to the global market. Over the past two decades, there has been a surge in industrialization, particularly in Southeast Asia. In this context, trade with Bangladesh has increased, especially in the textiles and garments sector, especially in importing machinery and raw materials. Overall, the global context and Bangladesh's demand have significantly contributed to the increase in trade with China over the past two decades."

Dewan Sultan Ahmed, Treasurer of the India-Bangladesh Chamber of Commerce and Industry (IBCCI), claims that trade growth between Bangladesh and India has increased compared to before. He told Bonik Barta, "Our trade growth with India is greater than before. The problem is that our export basket is small, reflected in trade growth. The reality is that India can supply us with goods in a way that we cannot reciprocate. Our exports to India are mainly ready-made garments. The growth situation is better now compared to two years ago. If we can improve our service sector, India's trade picture could improve. If we cannot achieve this, we will always lag in trade growth with that country. Another reason is the informal trade between Bangladesh and India. This type of trade is causing a loss of about 20-25 percent in potential growth."