Future Prospects Of Saudi–Bangladeshi Economic Partnership: Spillovers Of Saudi Modernization Drive – OpEd
Saudi Arabia has been an important political and economic partner for Bangladesh since the late 1970s. Through the migration of millions of Bangladeshi workers to Saudi Arabia over the previous decades, Dhaka and Riyadh have developed a mutually beneficial economic partnership.
Recently, however, the massive Saudi modernization program has presented Bangladesh with the opportunity to further expand this partnership. Taking into account the close political, economic, military, cultural and humanitarian ties between Bangladesh and Saudi Arabia, the former is well-placed to utilize this opportunity.
Since the establishment of diplomatic relations between Bangladesh and Saudi Arabia in 1976, the two countries have developed strong political ties, which have been demonstrated repeatedly over the previous decades. During the Gulf War (1990–1991), in spite of its close relations with Iraq, Bangladesh sided with Saudi Arabia and Kuwait, and sent some 2,300 troops to participate in the United States-led and Saudi-backed Operation Desert Storm against Iraq. In the recent years, Bangladesh has condemned the attacks on Saudi territory by the Ansar Allah (Houthi insurgents), joined the Saudi-led Islamic Military Counter Terrorism Coalition (IMCTC), and sent some 1,800 troops to Saudi Arabia for performing various tasks, including border defense and demining. In addition to these, Bangladeshi and Saudi troops have jointly participated in military exercises, such as the Gulf Shield-1.
Apart from the military-political sphere, Dhaka and Riyadh are closely connected on cultural and humanitarian grounds. Bangladesh is the 3rd largest Muslim-majority state in the world in terms of population, while Saudi Arabia, by virtue of its guardianship of Mecca and Medina, is considered the center of gravity of the Muslim World. Moreover, the territories of Bangladesh and Saudi Arabia have been connected to each other for hundreds of years via maritime trade and the settlement of Arab traders along Bangladesh’s coastal territories. The influence of Arab culture can be witnessed in the Bengali language, culture, architecture and demography. Furthermore, ranging from the provision of relief to the victims of flood to the donation of COVID-19 vaccines, Saudi Arabia has been an important source of humanitarian assistance for Bangladesh.
These close political, military and cultural ties have paved the way for expansive economic cooperation between the two states. Nearly 2.8 million Bangladeshi citizens, or 1.65% of the Bangladeshi population, are currently employed in Saudi Arabia. This presents Dhaka and Riyadh with a win-win situation. The sparsely-populated Saudi Arabia requires a lot of manpower to run its economy, and so the presence of hundreds of thousands of Bangladeshi migrant workers is beneficial for Riyadh. On the other hand, Saudi Arabia has been the largest source of remittances for Bangladesh for decades, and at present it is the 2nd largest source of remittances for the latter. It should be noted that remittances constituted 6.03% of Bangladesh’s gross domestic product (GDP) during Fiscal Year 2020–202, and this source of income is crucial to managing the deficit in its balance of payments.
The Saudi–Bangladeshi economic partnership is already extensive and expanding, and it can be expanded further. So far, Bangladesh has primarily sent unskilled and semi-skilled workers to Saudi Arabia, where they were employed in various blue-collar jobs. However, recently Saudi Arabia has expressed interest in recruiting high-skilled workers from Bangladesh and integrating Bangladeshi businesses into the Saudi investment ecosystem. The proposition, elaborately expressed by the Saudi Ambassador to Bangladesh Essa Al-Duhailan in July 2023, is a reflection of the ongoing transformation of the Saudi economy, and presents Bangladesh with a lucrative socio-economic opportunity.
At present, the Saudi economy is undergoing a significant transformation, which was kick-started in January 2016 with the formal adoption of the Saudi Vision 2030 by the Saudi government. The initiative aims at, among other things, transforming Saudi Arabia’s oil-centric economy through diversification. At present, more than 40% of Saudi GDP is reliant on the export of oil, and it is the 3rd most-oil-dependent state in the world. The current Saudi government is determined to change this situation, and accordingly they have undertaken a number of massive infrastructure programs. These megaprojects include the construction of the futuristic NEOM city along the Red Sea, the inception of a massive renewable energy project across the country, the building of the largest Saudi cultural, sports and entertainment city in Al-Qidiya, the realization of the New Taif project, the creation of a 400-meter tall skyscraper called Mukaab in Riyadh, the renovation of the downtown Jeddah and the accomplishment of the highly ambitious Red Sea tourism project. The Saudi government has invested billions in these projects, hoping to fully diversify their economy by 2030.
However, the lack of manpower has presented Riyadh with a complex problem. The Saudi population base is limited, and the country is facing shortages of both high-skilled and low-skilled manpower. The fulfilment of the aforementioned projects would require a large number of high-skilled personnel, such as engineers, architects, technicians and IT personnel, and a very large number of low-skilled and semi-skilled personnel, including construction workers, security guards and janitors. In spite of the Saudization policy of the current Saudi government, the demand for foreign workers has not decreased in the country. On the other hand, in addition to low-skilled and semi-skilled workers, the country now requires substantially more high-skilled workers.
Meanwhile, Bangladesh, with its burgeoning population, has more than enough manpower. In addition to unskilled workers, Bangladesh can also become an important source of skilled workers for Saudi Arabia. In recent years, unemployment among the educated youth in Bangladesh has risen substantially. According to the Bangladesh Bureau of Statistics, around 46% of the unemployed youth are university graduates. Consequently, Bangladesh currently has an excess of skilled manpower. Accordingly, Saudi Arabia can deal with their shortage of skilled personnel by employing Bangladeshis in the concerned sectors. This would create a win-win-win situation for the three actors involved: the skilled workers would have the opportunity to earn more in Saudi Arabia than in Bangladesh; Dhaka would be partially relieved of its unemployment problem and earn more in remittances; and Riyadh would get the necessary manpower to fulfil their ambitious modernization program.
In February 2023, a Saudi–Bangladeshi agreement initiated under the Saudi Workers’ Recruitment and Skill Verification Program came into effect, and Saudi Arabia agreed to recruit 1,000 Bangladeshi skilled workers. Dhaka must undertake all necessary measures, including the training of workers and the pursuit of economic diplomacy with regard to Saudi Arabia, to sustain and intensify this process in order to utilize the opportunities provided by the massive Saudi modernization drive.
