In the context of the global economic recession caused by the post-Covid-19 Russia-Ukraine war, the recent visit of UK International Trade Affairs Minister Nigel Huddleston to Dhaka is important for several reasons. At this time, he held a meeting with the Minister of Commerce, Prime Minister’s Adviser on Private Industry and Investment, and several high-ranking officials. In those discussions, issues such as Rohingya refugee problem, politics and neutral elections etc. came up, but mutual business-trade-investment between the two countries was the most prominent. Along with trade, cooperation in education, defense, aviation sector etc. has gained importance.
It should be noted that Bangladesh’s relationship with UK is warm and fri The UK and Bangladesh have deep political and economic ties and trade has increased significantly over the last two decades. Bangladesh’s economy has gone through major structural shifts with exports, including to the UK, playing a catalytic role in developing the manufacturing base.endly. The country is also an endless export market for Bangladesh.
In the financial year 2022-23, Bangladesh exported goods worth 5.31 billion dollars to the UK. But there is huge potential to increase it further. On the other hand, Bangladesh imported goods worth 450 million dollars from the UK. The commerce minister requested the Commerce Minister of Bangladesh for more investment in the Economic Zone of Bangladesh. In response, the UK Commerce Minister said that the businessmen of that country have to face various problems and challenges. Bangladesh has assured a quick solution to the existing problem. The meeting of the Joint Working Group for the expansion of economic and trade relations between the two countries was also discussed. So that bilateral trade, economic development and investment can be strengthened and strengthened in the future.
Recently, Prime Minister Sheikh Hasina went to participate in the formal inauguration of the new King Charles III of the United Kingdom. Apart from this, Prime Minister Sheikh Hasina’s meeting with UK Prime Minister Rishi Sunak was, in a word, warm, sincere, cordial and above all fruitful. At one point, the Prime Minister of the United Kingdom said, ‘You are the inspiration of our family. I have been following you for years. You are a successful economic leader. Appreciating the extensive economic development and prosperity of Bangladesh, he said, “You are a role model of development”. In this context, the British Prime Minister appreciated Bangladesh’s glorious role in various international forums including sheltering Rohingyas, climate change.
The trade balance heavily favoured Bangladesh, largely attributed to its thriving readymade garments (RMG) sector, which accounted for the lion’s share of the trade. The UK’s total imports from Bangladesh surged by 54.0% to £3.8 billion in 2022. At the same time, UK exports to Bangladesh increased by 36.7% to reach £897 million during the same period.
UK is the second largest foreign investor in Bangladesh. As of March 2020, UK-based companies have invested around US $2.45 billion and there are more than 200 British companies in Bangladesh. In addition, UK is the third single largest market destination for Bangladesh after the United States and Germany. In 2021, Bangladesh exported goods worth £2.4 billion to the country and at the same time, it imported goods worth £585 million.
Bangladesh is also the second largest recipient of UK’s development assistance after India. Since independence, total UK assistance to Bangladesh has crossed £3 billion. The UK has been providing duty-free export facilities to the country as it is a UN Least Developed Country (LDC). However, the graduation of Bangladesh from the LDC status by 2026 poses a number of challenges to the steadily growing economy. For instance, Bangladesh will no longer be eligible for the Official Development Assistance (ODA) from developed countries including UK. So, it is time to rethink their future economic partnership.
Due to the former colonial ties and cheap foreign labour sources, the United Kingdom is the largest Bangladeshi population hub in the Western World. The diaspora, which is now around 0.6 million, remains a key link in the growing political, economic and cultural relations. Currently, there are around 100 British-Bangladeshi councillors and 4 Members of Parliament (MPs) in the UK. The community operates over 10,000 Bangladeshi restaurants, worth a yearly turnover of £4.5 billion.
For Bangladesh, UK has been one of the top sources of remittance. In the last fiscal year 2020–21, UK was the 4th largest source of remittance amounting to US $2023.62 million
Clothing emerged as the driving force behind this growth, representing a staggering £3.3 billion or 91.9% of all UK goods imported from Bangladesh. Among other top goods imported from Bangladesh were textile fabrics (£74.7 million or 2.1%), fish & shellfish (£45.7 million or 1.3%), mechanical power generators (£38.7 million or 1.1%), and road vehicles other than cars (£33.9 million or 1.0%).
On the flip side, the UK’s top exports to Bangladesh featured metal ores & scrap, amounting to £317.2 million or 57.0% of all UK goods Bangladesh imported. Mechanical power generators (intermediate) followed closely behind, with exports valued at £32.5 million or 5.8%. Aircraft (£29.1 million or 5.2%), General industrial machinery (capital) (£23.3 million or 4.2%), and Electric motors (capital) (£22.4 million or 4.0%) completed the list of top exported goods.
Bangladesh’s growing prominence in the UK’s trade landscape is evident, with the nation becoming the UK’s 50th largest trading partner in 2022. Accounting for 0.3% of total UK trade, which signifies the mutual benefits derived from their robust economic ties.
In addition to trade, foreign direct investment (FDI) between the two nations has also been noteworthy. In 2021, the UK’s outward stock of FDI in Bangladesh reached a substantial £816 million, reflecting the confidence of British investors in the country’s potential. However, due to data disclosure limitations, information regarding the inward stock of FDI from Bangladesh to the UK in 2021 remains unavailable, according to the UK’s Department for Business and Trade.
In 2021, the total UK FDI abroad was £1.8 trillion. In 2021, the top destination for UK FDI was the United States, accounting for 26.1% of the total UK outward FDI stock, followed by Netherlands (8.8%) and Luxembourg (7.2%).
The total UK market share in Bangladesh was 1.1% in 2021 for goods and services. This is a decrease of 0.2% from 2020. The UK market share in Bangladesh was 0.8% in 2021 for goods only. This is an increase of 0.2% from 2020. The UK market share in Bangladesh was 2.6% in 2021 for services only. This is a decrease of 2.5% from 2020. In 2021, around 1,000 UK VAT-registered businesses exported goods to Bangladesh and around 1,100 UK VAT-registered businesses imported goods from Bangladesh.
According to the UK’s Department for Business and Trade report, Bangladesh and UK’s trade balance in 2013 was £2.4 billion. In 2014 it dropped to £2.2 billion and then increased again in the following two years to £2.6 billion and £2.9 billion respectively. In 2017, the trade value crossed the £3 mark to £3.6 billion. From 2018- 2021 the figures consistently stayed above £3 and were respectively £3.5 billion, £4.0 billion, £3.1 billion and £3.1 billion. In 2022 the trade volume saw a jump to hit a record of £4.7 billion.
A recent study by Research and Policy Integration for Development (RAPID) says that by 2030 UK apparel exports will be worth $4.5 billion. Meanwhile, exports of other products outside the apparel sector will increase from 0.7 billion to 1.3 billion dollars.
It is to be noted that the United Kingdom has previously agreed to provide duty and quota free market facilities to Bangladesh until 2027, as it has been promoted from LDC to middle income country by the United Nations. At the same time, the country is particularly interested in increasing cooperation in the private education sector with more investments in various sectors in Bangladesh. Bangladeshis especially Sylhet people are contributing a lot in the economic development and progress of the country. Furthermore, with Brexit taking effect, the UK has naturally become more interested in trading and investing with other countries around the world. The UK is the third largest destination for Bangladesh’s exports. The UK is also the second largest investor in Bangladesh. In that case, the country’s GSP benefits till 2027 will inevitably have an impact on the European Union, the United States and elsewhere. This is definitely a great achievement for Bangladesh.