Neighbours by geography, the foundations of their friendship were laid down by visionary leaders of both Bangladesh and Bhutan, based on their common aspirations for peace, mutual respect, collective prosperity and deeper integration, writes Mohammad Tarikul Islam (Jahangirnagar University).

Bangladesh and Bhutan are currently leveraging their opportunities and elaborating methods to handle their competitive advantages. These are primarily factor-advantages, among which raw material sources and production potential appear as interchangeable priorities for both countries with transitional economies. Over the years, both countries have sought to develop a strategic development partnership encompassing hydropower, free trade and transport. Interestingly, Bangladesh and India are the only countries to have resident embassies in Bhutan.

MoU on the use of Inland Waterways for Transportation of Bilateral Trade and Transit Cargoes

Bangladesh, in negotiations with Bhutan, has offered to export more products, such as ready-made garments, ceramics, pharmaceuticals, jute and allied products, leather goods, toiletries and agricultural produce, while Bhutan has agreed to facilitate entry for these products to promote trade and investments between the two countries. The signing of an MoU on the use of Inland Waterways for Transportation of Bilateral Trade and Transit Cargoes between Bhutan and Bangladesh will pave the way for opening up the concept of connectivity with Chittagong and Mongla ports.

The proposed trilateral MoU between Bangladesh, Bhutan and India for cooperation in the field of hydroelectric power on the principles of an agreed regional framework would influence the collective efforts of Bangladesh in resolving its power deficit. Cooperation in tourism to maximise its potential is another win-win area. Cooperation in other sectors, including ICT, connectivity, health, agriculture, education, culture, water resources, hydro-power projects and trade and commerce has also been discussed.

Bhutan and Bangladesh entered into a trade agreement in 1980 under which Bangladesh granted duty-free access to 18 products from Bhutan. The total bilateral trade volume has been on the rise over the past decade and, at more than US$50 million, Bhutan’s exports to Bangladesh recorded their highest value in 2017 – making Bangladesh the only country with which Bhutan enjoys a trade surplus.

Bilateral trade liberalisation has presented as a win-win even from the vantage point of Bangladesh, with exports to Bhutan rising each year.  As per the country-wise import ranking of 2017, Bangladesh’s positioning has massively improved, relative to a year earlier.

Bangladesh’s economic offers

With a demographic base of 160 million, coupled with an average GDP growth rate of over 6 percent in the past decade, the opportunity Bangladesh offers on the economic front is widespread and more palpable, with it being foreseen as an upcoming Asian Tiger. Such rapid growth is, in part, attributed to the trickle-down effect generated by a burgeoning group of domestic companies such as SQUARE, PRAN-RFL Group and ACI Group. There is also immense potential to import ready-made garments and pharmaceuticals from Bangladesh down the line.

Human resource development is another facet which shapes the two countries’ bilateral partnership and the level of impact it has had on the socio-economic development of the country cannot be understated. Bangladesh has emerged as a favoured destinations for higher studies for Bhutanese students, especially for courses in health and medical sciences. Today there are 133 Bhutanese students in various universities across Bangladesh.

People-to-people contacts have also strengthened between the two countries, with the number of visitors in different capacities to both destinations rising each year. Bhutan’s tourism and hospitality sector has particularly benefited from the exponential rise in tourists from Bangladesh. As per visitor arrival statistics, 10,536 tourists from Bangladesh visited Bhutan in 2017 – a 30.89 percent increase from 2016, making it the second most visited country after India.

Regionally, Bangladesh engages and cooperates through various forums – such as BIMSTEC, Colombo Plan, SAARC and UNESCAP – where significant progress has been achieved and several initiatives and projects in key areas are in the pipeline. Neighbours by geography, the foundations of their friendship were  laid down by visionary leaders of both countries on their common aspirations for peace, mutual respect, collective prosperity and deeper integration.

Similar paths of socio-economic progress

The two countries have walked a similar path of socio-economic progress and are on track to graduate from LDC status within the next decade. As much as the two countries take pride in their collective history of partnership and headway on multi-faceted fronts, the strong political leadership they inherit and the complementarities, opportunities and untapped potential the two countries offer make the future equally appealing and their bilateral ties all the more promising.

A crucial pre-condition for the successful conduct of economic diplomacy is the existence of a critical pool of skilled personnel in the government, private sector and civil society. This pre-condition is to understand and negotiate trade, investment and other economic issues from the national development perspective after taking into account a country’s strengths, limitations, opportunities and threats.

Bangladesh seeks to grow with Bhutan. The relationship is deepening as high-level economic exchanges through visits and meetings take place regularly alongside the wide ranging people-to-people interaction. We need to have a forward approach based on past heritage, based on the spirit of track-II diplomacy.  Bangladesh and Bhutan will carry the momentum forward to “consolidate the already excellent” relations for the benefit of their people.

This piece was first published on South Asia Monitor.

This article gives the views of the author, and not the position of South Asia @ LSE blog, nor of the London School of Economics. Please read our comments policy before posting.

Mohammad Tarikul Islam is an Assistant Professor of Government and Politics at Jahangirnagar University, and Visiting Research Fellow at University of Oxford. He previously worked for UNDP for seven years. 

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