Restoring Bangladesh’s export edge

Bangladesh’s export competitiveness has long been one of the country’s greatest economic strengths. Since 2000, merchandise exports have grown from about $6.4 billion to around $47.2 billion in 2024, peaking at nearly $59.3 billion in 2022. However, official Export Promotion Bureau data show exports fell nearly 5 percent in calendar year 2025 to $47.74 billion, highlighting the growing challenges facing the country’s export-led growth model.

The RMG industry remains the backbone of Bangladesh exports, accounting for around 84-85 percent of export earnings and employing more than four million people, most of them women. It has transformed Bangladesh into the world’s second largest apparel exporter after China, helping reduce poverty, generate foreign exchange and drive industrialisation. Yet this reliance on a single sector has created a structural weakness. As global competition intensifies and consumer demand shifts, Bangladesh has become increasingly exposed to external shocks.

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The recent export slowdown reflects both global and domestic pressures. Weak consumer demand in the United States and Europe, driven by high inflation, rising interest rates and slower economic growth, has reduced orders for clothing. At home, power and gas shortages, rising production and transport costs, port congestion and customs delays have eroded competitiveness. Bangladesh has also made limited progress in diversifying exports. Pharmaceuticals, leather goods, agro-processing, information technology and light engineering have shown promise but still account for only a small share of exports. At the same time, buyers are demanding higher environmental, social and governance standards, while the country’s graduation from LDC status will gradually reduce preferential market access.

The contrast with regional competitors is striking. Vietnam has expanded exports from about $14.5 billion in 2000 to more than $429 billion in 2024 by building strengths in electronics, machinery and agricultural products alongside garments. India has diversified into engineering goods, pharmaceuticals, chemicals, automobiles, electronics and digital services. Indonesia has built competitive value-added industries around minerals and manufacturing, while Cambodia has steadily expanded exports of garments, footwear and travel goods.

These countries have also attracted far more foreign investment. Vietnam receives around $38 billion in annual registered foreign direct investment, supported by efficient infrastructure and strong global supply chains. Bangladesh, by comparison, has attracted relatively little export-oriented investment beyond garments. Trade policy has widened the gap further. Vietnam has concluded more than 15 major free trade agreements, while Bangladesh still depends largely on trade preferences linked to LDC status. Weak logistics, high transport costs and unreliable energy supplies also continue to undermine competitiveness.

Reviving export growth requires a comprehensive strategy. Diversification must become a national priority, with greater support for pharmaceuticals, electronics, medical devices, agro-processing, shipbuilding and light engineering through better access to finance, research and innovation.

Modernising Chattogram and Mongla ports, improving transport networks, ensuring reliable electricity and gas supplies, and digitising customs would lower costs and improve efficiency. Greater investment in technical education, automation and advanced manufacturing would help Bangladesh compete through productivity and innovation rather than low labour costs alone.

Economic diplomacy must also become more proactive. Bangladesh should pursue comprehensive trade agreements with the European Union, the United Kingdom, China, Japan, ASEAN and the Gulf Cooperation Council while expanding exports to Africa, Latin America and the Middle East. A more predictable business environment and policies that attract export-oriented foreign investment will also be essential.

Bangladesh has reached a pivotal stage in its economic development. Diversification, better infrastructure, investment in skills and innovation, and stronger trade diplomacy are now essential. With its young workforce, manufacturing experience and strategic location, Bangladesh has the potential to regain momentum and build a more resilient, competitive and diversified export economy.

The writer is vice chairman of Newage Group of Industries