The Bangladesh government has taken the initiative to export 21 products to Sri Lanka with duty-free facilities. At the same time, the two countries have started expanding bilateral trade, increasing investment, and developing their shipping and tourism industries. Readymade garments, medicine, jute and jute products, ceramics, juices, food products, vegetables, peppers, construction materials, melamine, paper and paper boards, flowers, plastic products, leather and leather products, shoes, soybean oil, potatoes, fertilizers and cosmetics from Bangladesh have a huge demand in the Sri Lankan market.
The Bangladesh government’s efforts to get a duty-free market facility for the export of these products show Sri Lanka is becoming increasingly important in increasing regional trade. As a result of various initiatives, Bangladesh’s trade relations with Sri Lanka will further strengthen. The friendly relations between the two nations is also playing an important role in increasing trade and investment.
Extending port facilities
Sri Lanka has already allowed Bangladesh to use the seaport of Hambantota in its Southern Province. This opens up a huge opportunity for Bangladesh. The Bangladesh-Sri Lanka trade volume in monetary terms is US $61 million. The government is thinking of increasing it further.
Apart from this, Dhaka is also thinking of providing various facilities to take investments to Sri Lanka. The Chittagong port has historic connectivity with the Colombo port. By using the Hambantota port, Bangladesh can reach Central Asia, West Asia, Eurasia, Russia and China through the utilization of Pakistan’s Gwadar port and Iran’s Chabahar port.
The Sri Lankan Prime Minister Mahinda Rajapaksa visited Bangladesh to mark the birth centenary of Prime Minister Sheikh Hasina’s father, Sheikh Mujibur Rahman and also the golden jubilee of Bangladesh’s independence. On these occasions, he had detailed talks with Sheikh Hasina. The meeting led to expectations of taking trade relations between the two countries to new heights. The two leaders also signed six memoranda of understanding on bilateral cooperation.
Various regional and international issues were discussed during the one-hour summit. During the meeting, Sheikh Hasina stressed the need for a free trade agreement between the two countries, saying the amount of trade is less than expected. For this, both sides should quickly go for a free trade agreement.
According to Bangladesh Bank, the country’s trade volume with Sri Lanka is very low.
Bangladesh signed its maiden preferential trade agreement with Bhutan in December 2020, with the people of the two nations reaping the dividends. If a free trade agreement is signed, then only the sky would be the limit for Bangladesh-Sri Lanka business relations.
Trade potential in multiple sectors
Many Bangladeshi products have exceptional potential in the Sri Lankan market. Similarly, there are huge possibilities for Lankan products in Bangladesh. Now it is high time to address the need to increase the participation of the private sector in the two countries. Sri Lankan entrepreneurs should invest in Bangladesh to serve their own business interests.
Sri Lanka has invested in Bangladesh’s power sector. Some more opportunities are there for Sri Lankan investors in Bangladesh’s special economic zones, industrial parks and high-tech parks.
The two countries can exchange their experiences in agriculture, including paddy cultivation and freshwater fish farming. There are also the sectors of tourism, cricket diplomacy and Covid-19 vaccine diplomacy. Bangladesh has an interest in acquiring technical knowledge from Sri Lanka on coastal, aquaculture, marine culture and deep-sea fishing. More institutional cooperation in the field of education for technical training and skill development can strengthen the ties.
Bangladeshi nurses and other health workers can be trained in Sri Lanka, which can benefit from importing world-class medicines from Bangladesh.
Bangladesh has been doing well in the electronics field and its products are available in Nepal now. Sri Lanka can also import electronics products from Bangladesh to fulfill the demands of its people.
Even Rajapaksa has praised the digital transformation of Bangladesh under the leadership of Sheikh Hasina and emphasized increasing trade and expanding the scope of business between the two countries. He lauded Hasina’s leadership in tackling the pandemic. He evinced interest in exchanging experiences on blue economy and disaster management.
Maritime security
The Colombo Security Conclave held earlier this month has ushered in opportunities for both Bangladesh and Sri Lanka concerning maritime security.
Sri Lanka has recently been suffering from a foreign exchange reserve crisis. As per the latest reports, it has only US $500 million in foreign exchange reserves. With this reserve, Colombo can’t meet its import expenses for even three months. To keep the reserves risk-free, at least three months of import expenditure has to be kept aside.
Bangladesh has decided to lend US $250 million to the Central Bank of Sri Lanka from its foreign exchange reserves. To this end, Bangladesh Bank is going to sign a memorandum of understanding with the Central Bank of Sri Lanka. According to Sri Lankan media outlets, Bangladesh has already disbursed US $50 million to Sri Lankan authorities. This will pave the way for new multi-dimensional economic relations.
Sheikh Hasina is very keen to strengthen ties with all South Asian countries. She has been stressing on economic diplomacy and ordered all government officials to ensure maritime trade, which along with the blue economy, are given precedence in the government’s agenda. There is huge potential in tapping marine resources in the Bay of Bengal region and Sri Lanka can assist Bangladesh in this area.
Bangladesh’s initiative has a huge significance, not just for the two countries, but for South Asia in general. Both states should now build upon their growing business relations for mutual benefit.
*The writer is Bangladesh-based NGO activist, researcher and writer on international relations.
August 27, 2021
The viewpoints expressed by the authors do not necessarily reflect the opinions, viewpoints and editorial policies of Aequitas Review.