Bangladesh's significant trade deficit with its South Asian Association for Regional Cooperation (SAARC) neighbours, as highlighted by a recent Bangladesh Bank report covering fiscal year (FY) 2023-24, demands urgent attention and a comprehensive policy overhaul.
Indeed, it is worrying to learn that Bangladesh's imports from SAARC countries are over five times its exports - for a nation that has long spoken of the need to become self-reliant, instead it is our over-reliance on imports that must be addressed immediately.
What is arguably more concerning is that a whopping 92% of Bangladesh's imports come from India while 90% of Bangladesh's exports within the region are also destined for India.
These numbers expose a gross lack of diversification for us; India’s importance to Bangladesh can simply not be questioned despite the less-than-ideal relationship shared by the two nations since August of last year. Nevertheless, there is an immediate and crucial need to explore trade options with other nations in the region as the over-dependence on India has the potential to create vulnerabilities.
In particular, if we are to bring some balance, there is a need to bolster domestic production and export diversification; it is our overreliance on RMG products that we are unable to offer any export products to our regional neighbours. As such, Bangladesh must pro-actively identify and address the obstacles hindering trade with other SAARC nations.
We must therefore prioritize strengthening regional cooperation and addressing these trade imbalances. The central bank's call for appropriate policy measures to help increase domestic production must be taken seriously, along with investing in key sectors and incentivizing local industries.
Furthermore, active engagement in regional trade negotiations and the pursuit of mutually beneficial trade agreements can help level the playing field and foster a more balanced trade relationship.
As things currently stand, Bangladesh is in a precarious position, and it must transform its present trade dynamics within SAARC to achieve sustainable and inclusive economic growth.
