Bangladesh-UK Economic Cooperation: Idea Of Separate Economic Zone For British Investors – OpEd
Bangladesh and the United Kingdom are about to embark on a new chapter of economic engagement, bolstered by strong historical links and shared ideals. The concept of creating a distinct economic zone for British investors develops as a strategic effort, in line with the changing dynamics of both countries’ economic landscapes. As Bangladesh develops as a vibrant and rapidly rising market with a swelling middle class, digital innovation, and a powerful startup environment, the UK sees opportunities for mutually beneficial collaboration.
The historical resonance of British backing for Bangladesh’s Liberation War in 1971 establishes the groundwork for a long-term alliance. Bangladesh’s remarkable economic development, which outperforms regional peers and the world average, makes it an appealing investment location. With an average annual GDP growth rate of 6.4% between 2016 and 2021 and a projected path to upper-middle-income status by 2031, Bangladesh makes a strong argument for strategic economic cooperation.
UK-Bangladesh Economic Relations Flourish with Focus on Gender Equality and Inclusive Development: ODA and Investment Highlights
For Bangladesh, the vision goes beyond just financial assistance. This proposal for a distinct economic zone reflects the desire to strengthen the economic, migration, and security alliance with the UK. The shift from relying on large-scale Overseas Development Assistance (ODA) to a more refined strategy, emphasizing expertise and knowledge exchange, highlights Bangladesh’s increasing self-reliance in development financing.
The DFQF (Duty-Free Quota-Free) market access until 2029 and the request for its extension until 2032 highlight the significance of the economic partnership. There is a mutual benefit for Bangladesh and Britain to explore investment opportunities in startups, services, and IT sectors, as it aligns with the changing economic landscape and allows both countries to capitalize on their respective strengths.
An enhanced economic partnership, supported by a specialized economic zone, becomes a crucial tool for bringing about significant transformation. In addition to economic benefits, the partnership seeks to enhance trade and investment, promote political stability, and advocate for important social issues like gender equality. This potential collaboration not only helps Bangladesh in obtaining affordable financing for sustainable development, but also strengthens its ability to withstand the effects of climate change.
With both nations grappling with the complexities of the ever-changing global economic landscape, the suggested economic zone and partnership demonstrate a progressive mindset. Through the collaboration of technical and diplomatic expertise, Bangladesh and the UK aim to drive economic reforms, stimulate investments, and embark on a joint path towards prosperity and resilience in the future.
The UK’s Official Development Assistance (ODA) to Bangladesh in the fiscal year 2022-2023 showcased a firm dedication to advancing gender equality and disability inclusion.
It is worth mentioning that a significant portion of the ODA expenditure, 88%, was allocated towards promoting gender equality, with 69% specifically targeting disability inclusion. The Bilateral ODA Budget Sector Share for 2022-2023 by the British High Commission Dhaka highlights important allocations: Humanitarian (46%), Climate Change, Nature, and Global Health (21%), Women and Girls (20%), British Investment Partnerships (5%), and Other Themes (8%). When considering the projected budget for 2023-2024, there is a strong emphasis on gender equality at 22%. Additionally, significant allocations are made for Humanitarian efforts at 45%, as well as Climate Change, Nature, and Global Health at 16%. British Investment Partnerships receive 9% of the budget, while Other Themes account for 8%.
Furthermore, the investment data between the UK and Bangladesh highlights a consistent increase in Inward FDI stock, amounting to £21.6 million. Outward FDI stock stands at £0.4 million, indicating a favorable trend in economic collaboration. The ODA budget for the financial year 2023-2024 is set at £45.3 million, with an indicative budget of £49 million for 2024-2025. This demonstrates the ongoing dedication to promoting inclusive development and economic partnerships between the UK and Bangladesh.
UK-Bangladesh Trade Relations: Bilateral Trade Dynamics and Economic Significance
During the four quarters leading up to the conclusion of Q3 2023, Bangladesh became the United Kingdom’s 52nd largest trading partner, accounting for 0.2% of the overall UK trade landscape. The total trade in goods and services, including both exports and imports, amounted to £3.9 billion during this period. Exploring the details of the UK’s exports to Bangladesh, a significant amount of £610 million was recorded during the same period, highlighting the strong economic relationship between the two countries.
Examining the trade data from recent years offers further insight. In 2020, the trade volume reached £3,307 million, with exports totaling £3,005 million and imports amounting to £302 million. This was followed by an increase in 2021, with the trade volume rising to £3,860 million. The exports in 2021 reached £3,300 million, while imports stood at £560 million. In 2022, there was a significant increase in total trade, amounting to £5,481 million (exports: £4,800 million, imports: £681 million). However, in 2023, the figure slightly decreased to £3,900 million (exports: £610 million). This academic analysis highlights the ever-changing nature of trade relations between the UK and Bangladesh, offering valuable insights into the evolving economic exchanges between the two countries.
Bangladesh – UK Economic relations 2020-2023 (in million $)
Year — Export — Import
2020 — 3,005 — 302
2021 — 3,300 — 560
2022 — 4,800 — 681
2023 — 3,900 — 610
Toward Shared Prosperity: The Importance of Economic Collaboration between Bangladesh and the UK
Creating an economic zone in Bangladesh for British investors offers a chance for both countries to experience economic growth together. With its large and skilled labor force and strategic location, Bangladesh complements the UK’s advanced technology, capital, and expertise. This partnership not only promotes economic growth but also helps to diversify Bangladesh’s economy, reducing reliance on a single sector.
Technology Transfer and Innovation: Driving Forces for Modernization
British companies entering a special economic zone contribute to the transfer of technology, best practices, and innovative approaches. This collaboration benefits multiple sectors in Bangladesh, fostering technological progress and modernization, which are vital for the country’s long-term economic stability.
Strengthened Bilateral Relations: Building the Groundwork for a Comprehensive Partnership
Collaboration on economic development projects, such as the proposed economic zone, enhances the bilateral relations between Bangladesh and the UK. Similar economic interests lay the groundwork for a stronger partnership, promoting diplomatic collaboration, cultural interchange, and general goodwill between the two countries.
Exploring the UK’s Strategic Move in South Asia: Post-COVID Recovery and Beyond
Amidst the aftermath of the COVID-19 pandemic and the UK’s departure from the European Union, the United Kingdom is actively exploring fresh avenues for growth and expansion. The creation of a new economic body in South Asia, involving Bangladesh’s population of 166 million, represents a significant opportunity for the UK to revitalize its economic journey after Brexit. This decision reflects the growing focus on the Indo-Pacific region, highlighting Bangladesh’s role as a vital link between the Western world and the Indo-Pacific. It presents the UK with a valuable opportunity for economic stability and collaboration.
Emphasizing the Importance of Regional Stability
With the West shifting its focus to the Indo-Pacific region, Bangladesh has become a crucial player in bridging the gap between the Western world and this vibrant area. Ensuring the stability and economic growth of Bangladesh is crucial for the UK, as it aligns with the global trend of economic engagement in the region and strengthens its position in South Asia for a prosperous future.
Prime Minister Sheikh Hasina’s positive decision to set up a dedicated economic zone for British investors highlights Bangladesh’s dedication to nurturing economic collaborations. Highlighting the government’s commitment to fostering foreign investments and enhancing relations with the UK, the establishment of a dedicated zone demonstrates a proactive approach.
Utilizing the potential of the Bangladeshi diaspora in the UK, primarily from the Sylhet Division, offers a distinct opportunity. Establishing an economic zone in the Sylhet region would enable Bangladesh to forge a direct and valuable link with the Sylheti diaspora, thereby promoting investments from the diaspora. An ideal setting for new investments and collaborations is created by the historical ties between the UK and Bangladesh, along with the familiar environment of the Sylhet region.
Bangladesh’s diplomatic efforts are gaining traction as it adapts to the changing economic landscape. This proposal showcases the country’s willingness to welcome foreign investments and demonstrates a strategic vision to foster connections with key actors, particularly with the UK. This development positions Bangladesh as a desirable location for global investments, utilizing diplomatic efforts to connect economic prospects.
With its tax incentives and streamlined regulations, the SEZ framework is set to attract substantial FDI from the UK, fostering greater economic collaboration.
With the establishment of the SEZ, there is great potential for job creation and skill development, which will have a positive impact on the local workforce through the infusion of British investments.
