Driven by the prospect of competitive pricing and diversified raw material sources, Bangladesh is exploring enhanced trade ties with Pakistan. While current trade favors Pakistan, with Bangladesh importing cotton, yarn, and fabrics, these volumes remain significantly lower than imports from China and India. Historically, strained relations have hindered Pakistan's emergence as a major sourcing hub.
Trade data reveals a substantial imbalance. In H1, FY25, Bangladesh's exports to Pakistan were $39.77 million, while imports reached $372.1 million. For FY24, exports totaled $61.98 million, and imports $627.8 million. Compared to China and India, Pakistan's contribution is minimal, accounting for only 1 per cent of Bangladesh's total imports.
Economists like Mohammad Abdur Razzaque emphasize on the need for diversified and competitive supply chains for Bangladesh's economic growth. He suggests, the country should focus on addressing tariff and non-tariff barriers, though he doesn't see an immediate need for a Free Trade Agreement (FTA). Business leaders such as Abul Kasem Khan and Mir Nasir Hossain highlight the potential for competitive pricing and diversified sourcing, particularly for cotton and denim fabrics.
A 2022 study by the Pakistan Business Council highlighted the trade imbalance and potential for increased Pakistani exports. To strengthen bilateral trade, the Pakistan-Bangladesh Joint Business Council was recently formed.
Md Hafizur Rahman, Administrator, FBCCI acknowledges the potential for increased trade, citing improvements in visa processes and the establishment of a direct shipping line. Bangladeshi textile manufacturers are diversifying their sourcing strategies, with Pakistan becoming a key cotton supplier. Showkat Aziz Russell, President, Bangladesh Textile Mills Association (BTMA), notes, the devaluation of Pakistan's currency has made its cotton more competitively priced, leading to increased imports. Despite past challenges, strengthened trade ties are expected to boost trade volumes between the two nations.
