A recent seminar jointly hosted by the Foreign Investors’ Chamber of Commerce and Industry (FICCI) and the South Korean Embassy in Dhaka convened policymakers, economists, and prominent business leaders from Bangladesh and South Korea to discuss opportunities for expanding bilateral trade and strengthening investment cooperation.The deal will underscore Bangladesh’s economic potential while also identifying major bottlenecks that foreign investors continue to face.
Bangladesh’s demographic composition and expanding domestic market were highlighted as key strategic advantages. With a predominantly young population and increasing urbanization, the country is poised to become an attractive destination for both regional and global investors. Its geographic location, bridging South Asia and Southeast Asia, adds to its strategic appeal, making it a potential hub for cross-border trade and regional value chains.
Despite its strengths, Bangladesh’s trade policy has remained relatively conservative. Experts noted that the country’s tariff structure has not been significantly reformed in over two decades. As a result, it continues to operate under a highly protectionist regime, which hampers competitiveness, discourages innovation, and increases the cost of doing business. With the national budget scheduled to be announced soon, there is anticipation that the government may consider rationalizing tariffs to support trade facilitation and industrial diversification.
Vietnam’s rapid economic growth was referenced as a comparative model for Bangladesh. Through its extensive network of free trade agreements (FTAs), Vietnam has integrated itself into global supply chains and achieved a remarkable export-to-GDP ratio. The country’s annual export value has reached nearly $400 billion, nearly matching its GDP of $470 billion. This demonstrates the advantages of proactive trade liberalization and the establishment of strategic partnerships. Bangladesh, on the other hand, still lacks FTAs with major economies, limiting its access to global markets and competitiveness in sectors like electronics, garments, and processed goods.
South Korean businesses functioning in Bangladesh exchanged their views during the seminar. They acknowledged Bangladesh’s lower cost of production compared to Vietnam, particularly in the garment sector. One major Korean investor announced plans to significantly expand operations at the Adamjee Export Processing Zone in Narayanganj, with workforce numbers expected to increase from 4,200 to 10,000. This decision reflects confidence in Bangladesh’s manufacturing potential, especially in the context of a growing export-oriented economy.
However, Korean businesses also expressed frustration with several operational challenges. Among the major concerns were political and economic instability, frequent road blockades, and persistent delays in customs clearance. These issues disrupt supply chains, increase business costs, and undermine investor confidence. The lack of predictability in logistics and policy enforcement remains a major barrier for companies seeking long-term engagement in Bangladesh.
The dominance of the grey market in the electronics sector, particularly smartphones, was identified as a critical issue. Grey market imports, which enter the country unofficially and without paying appropriate taxes, allow such products to be sold at lower prices than legal imports. This not only distorts competition but also causes significant tax revenue losses for the government and discourages formal sector investments.
Trade data shared by the South Korean Embassy in Dhaka showed that in 2023, Bangladesh imported $1.62 billion worth of goods from South Korea, while exporting goods valued at $649 million to the country. This reflects a substantial trade imbalance and highlights the need for strategies to boost Bangladeshi exports to the South Korean market.
The seminar concluded with calls for stronger bilateral cooperation, improved business climate reforms, and enhanced infrastructure to support trade and investment. Stakeholders emphasized the need for Bangladesh to move beyond a protective trade model and adopt a forward-looking economic policy that fosters competitiveness, attracts quality investments, and creates employment opportunities.
The event reaffirmed the growing interest of South Korean companies in Bangladesh’s economy but also pointed to the urgent reforms needed to unlock the country’s full potential as a regional manufacturing and export hub. As Bangladesh approaches its transition from least developed country (LDC) status, aligning its trade, tariff, and investment policies with global standards will be critical to sustaining growth and integration into global value chains.
