Bangladesh views Thailand is a reliable and credible partner and friend, based on strong bilateral relations ever since independence a half-century ago. The two countries also share a common regional platform in Bimstec (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation).
Trade relations between Bangladesh and Thailand have grown stronger in recent years, especially in commodities. And as Thailand has become more developed, many Bangladeshi students have gone there to study science. About 150,000 Bangladeshis also visit Thailand each year for medical and trade purposes.
Thailand can contribute more to the economy of Bangladesh, the Ministry of Finance in Dhaka believes, and a free trade agreement (FTA) between the two countries would be a major step forward. The two countries agreed in principle in January 2020 to embark on FTA talks but progress has been limited, partly because of the pandemic. Both sides are optimistic that momentum will pick up his year.
In 2019, before the pandemic, bilateral trade between Thailand and Bangladesh was valued at US$1.05 billion, with Thailand enjoying a huge surplus. Its exports were worth $973 million, compared with just $74.8 million from Bangladesh.
Bilateral trade dipped to $910.05 million in 2020, but in the first eight months of 2021, the figure was $785 million, an increase of 30.4% from the same period the year before, according to the Thai Ministry of Commerce. Thai exports were worth $747 million, versus $37.2 million from Bangladesh.
The two countries have a Joint Trade Committee (JTC) that meets regularly to discuss prospects for improving the trade relationship. At a meeting in Bangkok in January 2020, participants agreed to emphasise agriculture, fisheries, livestock, health services and transport. They also set a goal of doubling the value of bilateral trade to $2 billion.
Exports from Bangladesh to Thailand include leather and leather products, medicines, fish and other animal products, paper and pulp, soap, apparel, plastic and rubber products, electrical and electronic equipment, textiles and vegetable textile fibres.
Exports from Thailand to Bangladesh include electrical and electronic equipment, iron and steel, organic chemical products, cement, cereals, plastics and related products, man-made staple fibres, sugar and confectionery, machinery and mechanical equipment, cotton fabrics and synthetic fibres.
Bangladesh has also signed a memorandum of understanding to import rice from Thailand.
In the near term, Bangladesh hopes to increase exports to Thailand of jute and jute products, for which there is good demand, as well as other agricultural products as a way to narrow the trade deficit.
Thailand offers a duty-free, quota-free (DFQF) facility for selected Bangladeshi products based on the latter's least developed country status. Bangkok renewed the preferences in 2020 and they will remain in effect until 2026. However, Bangladeshi businesses utilised DFQF benefits on shipments worth just $541,000 in 2019, government data showed.
Duty-free facilities are being sought for products including medicines, leather goods, jute and jute textile fabrics, textiles made of jute yarn, knitted and woven shirts, T-shirts, knitted garments and cotton shirts. Leather bags are also a significant export product.
Bangladesh, the world's third-largest exporter of textiles and garments, ships only about $60 million worth of ready-made apparel to Thailand every year. However, the country has annual clothing demand of about $40-42 billion. China, India, Vietnam and Indonesia export huge quantities of garments to Thailand, helped by free trade agreements.
Proposals to increase connectivity with Bangladesh, especially by linking the port of Ranong in southern Thailand with the port of Chittagong, are also being considered. Both countries have also agreed that the simplifying visa procedures should be addressed.
More Thai investment in Bangladesh is said to be one way to reduce trade inequality. According to the Bangladesh Economic Zones Authority (Beza), the country is building 100 free economic zones for foreign investors and one zone would be allocated for Thai investors.
Thailand's direct investment in Bangladesh totalled $1.5 billion from 2006 to 2019, mainly in agriculture and processed farm products, construction, and hotels and related services.
One proposal has been floated for Thailand to invest in an automotive assembly plant in Bangladesh so that the latter could re-export auto parts and components to Thailand, thus helping to narrow the trade deficit.
Other high-potential areas for Thai investment include tourism, Buddhist Circuit tourism, technical education, health, hospitality, food processing, and businesses that can take advantage of special economic zones and IT parks.
Some commentators believe that Bangladesh is poised to start rising rapidly and could become the next South Asian economic miracle. The potential is certainly there in many economic sectors, and the population of 165 million makes the country an attractive market for many investors. Thai businesses can also use Bangladesh to gain access to other South Asian markets.
Cox's Bazar airport and the Matarbari deep seaport also hold potential for Thailand to expand maritime trade with South Asia.
Thailand is an economic superstar in Southeast Asia and the country's government has made great strides in creating a higher standard of living for Thai people. Together, Bangladesh and Thailand could pool their strengths to create a new hub of prosperity between South and Southeast Asia.
Pathik Hasan is a Dhaka-based researcher and columnist.