Bangladesh is looking to Pakistan as a potential sourcing destination to enhance its trading landscape. Local traders anticipate competitive pricing and a diversification of raw material options. Despite historical trade challenges and a significant imbalance favoring Pakistan, recent initiatives may pave the way for more robust economic ties between the two countries, particularly in the textile sector.

Bangladesh is increasingly considering Pakistan as an emerging sourcing destination, particularly with the anticipation of improved trade relations. Local traders express optimism about the potential for more competitive prices and diversifying raw material sources from Pakistan. Presently, Bangladesh primarily imports significant quantities of cotton, yarn, and essential commodities from Pakistan, though these figures remain lower than imports from its two main partners, China and India.

Historically, the trade dynamics between Bangladesh and Pakistan have been relatively weak. In the first half of the current fiscal year, Bangladesh exported goods worth only $39.77 million to Pakistan, marking a notable decline from $83.59 million in the previous fiscal year. Conversely, imports from Pakistan totaled $372.1 million, illustrating a substantial trade imbalance, as imports constituted a mere one percent of Bangladesh’s total import figures.

Despite the absence of formal trade restrictions, Pakistan’s role as a sourcing hub has been limited. In FY24, Bangladesh imported goods worth $16.63 billion from China and $9 billion from India, in stark contrast to the $627.8 million from Pakistan. Major investments in cotton imports have driven much of this figure, confirming Pakistan’s current position as Bangladesh’s 20th largest import source.

As articulated by Mohammad Abdur Razzaque, a leading economist, Bangladesh requires a reliable supply of essential commodities to stimulate economic growth, and Pakistan presents an opportunity to enhance competition among suppliers. To address this, he advocates for rationalizing tariff and non-tariff barriers through dialogue between the two nations.

Though Bangladesh enjoys certain trade benefits under the South Asian Free Trade Agreement as a least developed country, actual benefits are limited due to low export volumes. Razzaque opines that while a Free Trade Agreement (FTA) is not immediately necessary, bolstering trade relations could significantly enhance regional commerce.

Abul Kasem Khan, former president of the Dhaka Chamber of Commerce and Industry, supports the exploration of trade with Pakistan after years of stagnation, emphasizing the importance of competitive pricing for business interests. Furthermore, Mir Nasir Hossain notes that expanded trade would allow Bangladesh access to more diverse sourcing options and potential to increase its exports of jute and tea.

Initiatives for an FTA between the two countries have been discussed since 2002 but have not been reached due to past negotiations stalling over market access conditions. Recent studies, including a report by the Pakistan Business Council, underscore the persistent trade imbalance and suggest that Pakistan possesses substantial unrealized export potential in textiles and other sectors.

To facilitate trade growth, new agreements such as the Pakistan-Bangladesh Joint Business Council have been formed, and recent changes in visa processing and shipping logistics signal a positive shift. The Bangladeshi textile sector is also diversifying its sourcing, with increasing imports from Pakistan due to competitive pricing driven by currency devaluation, illustrating a promising path for future trade relations between the two countries.

In summary, Bangladesh’s interest in strengthening trade ties with Pakistan reflects a strategic move towards enhancing sourcing options and competitiveness. Despite historical challenges and current trade imbalances, experts like Mohammad Abdur Razzaque and Abul Kasem Khan advocate for increased cooperation. The adoption of new trade facilitation measures and the establishment of joint business councils may enhance bilateral relations, contributing to the regional economic landscape’s growth. The potential for utilizing Pakistani raw materials could significantly benefit Bangladesh’s textile industry, signaling a transformative period for trade between the two nations.

Original Source: www.thedailystar.net

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