As the possibility of a free-trade agreement (FTA) between Bangladesh and Australia is unlikely soon, trade officials suggest signing a bilateral investment treaty to bolster investment.
Last September, the two friendly countries signed a trade and investment framework agreement (TIFA) under which a joint working group (JWG) is expected to meet next month.
They group aims to discuss how to harness the potential of bilateral trade and investment.
Last week, Bangladesh High Commission in Canberra told trade officials in Dhaka that Bangladesh's inclusion in the ASEAN bloc and RCEP (Regional Comprehensive Economic Partnership) might take time.
If Australia shows interest, it suggests, Bangladesh may submit a proposal in the upcoming JWG meet to enter into an investment treaty.
A senior commerce ministry official acknowledged receipt of a letter from the high commission and said they would discuss the issue with high-ups to take a decision on it before the JWG meet.
The high commission also forwarded a report on the Bangladesh-Australia trade and investment scenario.
Investment protection treaties are widely used in bilateral agreements between two states to make foreign investment more attractive, it cited.
Bilateral investment treaties usually provide legal security to foreign investors so they exercise their desired economic freedom in host countries.
The investors also find it as a legal safeguard.
Since 1980, Bangladesh has signed 31 bilateral investment treaties with countries like Cambodia, Turkey, the UAE, Denmark, India, Vietnam, Singapore, Thailand, Iran, Austria, Switzerland, Japan, South Korea, Indonesia and USA.
Despite having no FTA, the commission says, Bangladesh's trade with Australia has increased nearly fivefold in the past 10 years, availing the duty-free and quota-free (DFQF) facility accorded by Australia.
Bangladesh's export to Australia in fiscal year 2019-20 was US$762.9 million while import of goods from there was US$695.7 million.
In 2020, Australian investment in Bangladesh stood at AU$435 million of which 87 per cent or AU$380 million was portfolio investment.
"Bangladesh is yet to attract significant Australian investment, especially foreign direct investment (FDL)," reads the letter signed by commercial councillor Md Saifullah.
He points out that Australia's foreign investment opportunities and interests are not currently aligned with Bangladesh's thrust sector which may be one of the reasons for a lower FDI flow from there.
Another reason, he assumes, is that Australian investors feel comfortable in a predictable business environment. They prefer the countries Canberra has such bilateral investment deals with.