Negotiations are underway on a Preferential Trade Agreement (PTA) between Nepal and Bangladesh to further strengthen trade relations between the two countries.
This is to address an increasingly large trade deficit in import-export trends between Bangladesh and Nepal.
Nepal's Ambassador to Dhaka Ghanshyam Bhandari said that said that there was immense underutilized potential for economic cooperation between the two countries. He was speaking at a roundtable discussion on “Bangladesh-Nepal Relations: A Renewed Outlook" organized by the Centre for Policy Dialogue (CPD) on Monday.
Referring to the ongoing negotiations on preferential trade agreement, he expressed hope that they would advance positively.
He also said that discussions on issues such as product lists, tariffs, and non-tariff barriers would be held in next commerce secretary level meeting.
“There is a huge potential for increasing trade between the two countries. Pran, Akij, and some Bangladeshi pharmaceutical and IT companies are already doing business in Nepal."
Import of 40 megawatts of electricity from Nepal to Bangladesh has already started, with the potential to scale it up in the future, he added.
According to the presentation, there were limited exports to Nepal during the 1980s and early 2000s.
Export volumes rose sharply, surpassing $20 million and exceeding $100 million by 2021, signalling strong trade ties. Yet, exports to Nepal drastically fell to $40 million in 2024.
Bangladesh’s imports from Nepal were modest during the 1980s and early 2000s. Imports from Nepal peaked in 2008, accounting for $66.5 million. However, in recent years, imports have declined significantly, accounting for only about $6 million in 2024.
Both countries are facing difficult times since they are both set to graduate from the Least Developed Country (LDC) status by 2026.
Fahmida Khatun, CPD executive director, in her concluding remarks, said: “Both countries are going to graduate from LDC status next year. Therefore, there are many challenges ahead for both countries.”
The benefits of the quota-free market will decrease. Therefore, regional and bilateral trade must be increased, she further explained.
Earlier, the presentation also stated that, as per the energy pact signed in 2018, Bangladesh will import 9,000 MW of electricity by 2040 from Nepal, and among that, the 40 MW export will begin in June 2025.
CPD honorary fellow Prof Mustafizur Rahman said: “If we want to increase electricity imports from Nepal, we will have to use the Indian grid. For that, India's help will be needed. India's transit is needed to increase trade with Nepal.”
"There is a rise in tariffs globally. Therefore, we must diversify exports by increasing exports to neighboring countries,” he added.
