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Bangladesh's next phase of development will depend on how quickly the country can navigate the evolving global trade landscape. Failure to diversify and technology-enable its export sector could push the country into the middle-income trap.
Dr Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, made the remark in his keynote presentation on 'Leveraging the Power of Global Markets: Why Export Competitiveness and Diversification Matter for Bangladesh' at the second session of the Economic Reform Summit 2025 held at a city hotel on Monday.
The conference was jointly organised by Voice for Reform, BRAIN, Innovision Consulting, Fintech Society, and Nagorik Coalition.
Dr Reaz noted that although Bangladesh's exports have grown nearly tenfold over the past four decades, they have become excessively dependent on the ready-made garment (RMG) sector. The sector now accounts for more than 81 per cent of total exports, while other sectors such as leather goods and home textiles together contribute only around 5 per cent.
"Such a narrow export structure exposes our economy to serious risks -- especially when preferential market facilities will diminish after our graduation from LDC status," he warned.
In his presentation, Dr Reaz highlighted that after LDC graduation, Bangladesh's apparel exports could face tariffs of around 11.6 per cent in the European Union, 16.2 per cent in Canada, and over 22 per cent in India. As a result, overall exports could decline by as much as 14 per cent.
According to Policy Exchange data, Bangladesh's participation in global manufacturing value chains is only 22-26 per cent, whereas Vietnam's participation exceeds 60 per cent. The country lags significantly in technology adoption and automation, leading to higher production costs and limited value addition.
He added, "Globally, new rules are being implemented on environmental protection, human rights, and sustainable production. If we fail to align with these standards, our export markets may shrink."
Dr Reaz identified six promising sectors for the future economy -- agriculture, information technology, pharmaceuticals, leather goods, light engineering, and plastics-semiconductors -- as potential new engines of export diversification. With the right policies, infrastructure, and skilled workforce, these sectors could generate an additional USD 35 billion in export earnings by 2030, he noted.
Calling reform the need of the hour, Dr Reaz said, "Reducing logistics costs by 25 per cent could increase exports by up to 20 per cent."
He urged immediate prioritisation of infrastructure development, formation of regional economic corridors, FTA negotiations, skills development, and automation in trade processes.
Addressing the session as a discussant, Syed Nasim Manzur, Managing Director of Apex Footwear Limited, said the government should set clear targets focusing on two to three priority sectors instead of spreading attention across too many.
He also raised concerns about unnecessary business costs, noting that taxes should be imposed on profits rather than turnover, as turnover tax adds an additional burden on businesses.
Mr Manzur further emphasised the need to improve the country's logistics facilities to facilitate business operations and reduce overall costs.
Shams Mahmud, Managing Director of Shasha Denims, said the government should formulate policies proactively, considering the changing global economy and the challenges of LDC graduation.
The textile sector has significant untapped potential, he said, adding that government policies should encourage enterprises to adopt new technologies for man-made fibres (MMF), supported by long-term financing and energy security.
He also emphasised that the textile education curriculum should be designed to meet future industry demands.
He further said that taxation should be based on actual income rather than turnover.
Rasha Khan, Founder of Escape Bags and Managing Partner at RMS, said that as a startup company, they are facing numerous challenges, including high duties on imported raw materials, the high cost of maintaining compliance, and the expense of obtaining various certifications.
She further explained that they have to import nearly 80 per cent of their raw materials without a bond licence. "If the government provides policy support for start-ups, it would help us grow and diversify exports," she added.
Among others, Sadaf Saaz, CEO of EskeGen Ltd, and Mir Shahrukh Islam, CEO of Bondstein, also spoke at the event.
BD's cashless economy faces key hurdles
At the opening session of the summit, experts highlighted key barriers to achieving a fully cashless economy.
Despite rapid progress in digital financial service, Bangladesh's transition to a fully cashless economy faces significant challenges, including low financial literacy, and limited interoperability between providers, and high transaction costs, said Md. Arfan Ali, Chairman of Zaytoon Business Solutions, and ex-Managing Director of Bank Asia, in his keynote presentation.
These barriers, combined with weak digital infrastructure and public mistrust in online financial systems, are slowing the country's progress toward widespread financial inclusion, he said.
The session, titled 'Cashless Economy & Financial Inclusion', was held on Monday.
In his keynote paper, Mr. Arfan Ali highlighted the significant gap between Bangladesh's financial inclusion efforts and global standards, calling the country's progress 'alarmingly behind'.
"The widespread adoption of bank accounts is the critical first step we must address to begin closing this gap," he said.
He noted that limited digital and financial skills cause distrust in digital payments.
"Low digital and financial skills among large population segments reduce trust and correct use of digital payments, causing errors, fraud susceptibility, and preference for cash," he said.
Uneven internet and smartphone coverage in rural areas creates unreliable access and poor user experience for payments, raising failure rates and abandoned transactions, he pointed out.
Arfan Ali noted that fragmented platforms and the lack of seamless interoperability between digital platforms forces users to switch between services, incurring additional costs and efforts in the process.
Underscoring the need for a cashless economy, he said a cashless economy isn't just a modern convenience; it's now a fiscal imperative.
"We have to spend an enormous cost of Tk 200 billion for printing, minting, and handling physical cash every year," he said.
Shahadat Khan, Founder and CEO of TallyPay, discussed the goal of cashless transactions and the Bangladesh Bank's initiatives like QR code payments for in-store transactions and P2P (Person-to-Person) transfers.
Mohammad Rashed, Additional Director of Bangladesh Bank's Payment Systems Department, provided insights into the central bank's role in driving the transformation.
He said that the year 2026 is anticipated to be a period of robust transformation for the digital payment sector.
"This progress is expected as several key innovations are currently in the pipeline, and the effects of which will become visible in the coming year," he said.
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