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A European business leader has called for urgent action to secure a free trade agreement (FTA) with the European Union, warning that delays could undermine Bangladesh’s investment outlook and export competitiveness ahead of its LDC graduation.
The concern was voiced at a policy dialogue jointly organised by the Metropolitan Chamber of Commerce and Industry, Dhaka and Policy Exchange Bangladesh in Gulshan, where speakers highlighted market access as a critical gap in the country’s economic strategy.
The event was attended by special guest Md Mahmud Hasan Khan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Policy Exchange Bangladesh Chairman and CEO Dr M Masrur Reaz presented the keynote on Improving the Investment Climate: Why It's Critical for the New Government Priorities and the Upcoming National Budget.'
The programme began with a welcome address by MCCI Secretary General Farooq Ahmed. Panel speakers included EuroCham Chairperson Nuria López, corporate lawyer Barrister Margub Kabir, Head of Chambers at Margub Kabir & Associates, and Zinnia Huq, Chief Financial Officer (CFO) of Unilever Bangladesh.
Nuria Lopez, Chairperson of the European Union Chamber of Commerce in Bangladesh (EuroCham), stressed that the absence of an FTA with Bangladesh’s largest export destination is already weighing on investor confidence.
“Do we have a free trade agreement with our major customer at this moment — the European Union? No,” she said. “And we are in a region where Vietnam and India have already secured such agreements.”
She warned that without preferential access to the EU market, Bangladesh risks falling behind regional competitors that offer greater certainty to investors.
“We need to have, we must have, we must start right now an FTA,” Lopez said. “Because if we don’t have free trade access to our largest market, we don’t have a horizon to invest.”
Drawing on her own experience, Lopez said uncertainty over future market access is already affecting business decisions.
“I have recently started a new business in the agro-processing sector, but I am uncertain about the future. I do not know whether I will be able to export to Europe on equal terms with competitors from countries that already enjoy free market access,” she said.
She emphasised that predictability is key to attracting long-term investment, which Bangladesh currently lacks.
“We don’t have predictability. We don’t know what’s going to happen in the future,” she said, questioning whether the government has a clear and investor-friendly vision.
Lopez linked the urgency of an EU FTA directly to Bangladesh’s broader struggle to attract foreign direct investment (FDI).
“The root of the problem is Bangladesh does not attract foreign direct investment… We do not have the trust of the investor,” she said, adding that policy uncertainty and weak business conditions continue to erode confidence.
She argued that securing an FTA with the EU would send a strong signal to global investors about Bangladesh’s commitment to open markets and stable trade policy.
Without such a move, she cautioned, investors may continue to favour competing destinations in the region that already offer assured market access and clearer policy frameworks.
BGMEA President Mahmud Hasan Khan advised expanding export markets by pursuing bilateral agreements with countries such as South Africa, Brazil, and Turkey.
He noted that around 8 billion US dollars in new market opportunities have emerged in the ready-made garment sector, with further expansion possible in the future. However, he stressed that bilateral agreements with these countries are necessary, as export tariffs there remain high. “We are discussing this matter with the government,” he added.
Mahmud Hasan Khan also identified energy shortages as the biggest challenge facing businesses.
“For entrepreneurs, energy is a greater concern than financial constraints,” he said.
He added that interest rates of 13–14 per cent in Bangladesh are not conducive to starting or sustaining businesses and called for support from the central bank. He noted that the new governor has introduced initiatives—such as a new fund or GTF—to provide lower-cost financing and enable refinancing from the central bank.
However, he warned that without resolving energy and broader infrastructure issues, such financial support would have a limited impact.
In his keynote paper, Masrur Reaz stated that the new government has committed to creating 10 million new jobs within less than two years.
He said this would only be possible through increased investment, which in turn requires addressing existing challenges in the business environment. Beyond improving the business climate, he emphasised the need to resolve issues in the financial sector, infrastructure, energy, and policy continuity.
“Progress will not come from addressing one issue while leaving others unresolved,” he said.
In his welcome remarks, Farooq Ahmed noted that over the past 20 years, foreign direct investment (FDI) in Bangladesh has fluctuated between around 1 billion and 1.8 billion US dollars. Meanwhile, neighbouring countries have seen their FDI increase many times over.
He attributed this gap to significant structural weaknesses and limitations.
“Until we address these challenges and remove these barriers, no amount of discussion will lead to increased domestic or foreign investment,” he said.
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