Economist and Chairman of Policy Exchange Bangladesh Masrur Riaz speaking at an event organized by BBF at a hotel in the capital - Jago News Photo

Bangladesh stands at a pivotal moment to capitalise on shifting global trade dynamics as US imports pivot away from China, economist and Policy Exchange Bangladesh Chairman Dr Masrur Riaz said on Monday.

Speaking at a forum titled "What Bangladesh Can Do in the Context of the Trade War and the Role of FBCCI", organised by the Bangladesh Business Forum (BBF) at a city hotel, Dr Riaz highlighted a significant window of opportunity for the country amid the ongoing US-China trade tensions.

“Global supply chains are being restructured, and American companies are actively seeking alternative manufacturing and sourcing destinations,” he said. “As a politically neutral and non-aligned country, Bangladesh is well-positioned to emerge as a preferred alternative.”

The remarks come as multinational firms increasingly adopt a ‘China Plus One’ strategy — diversifying production beyond China to mitigate geopolitical and supply chain risks. According to a global survey cited by Dr. Riaz, 32% of firms are already implementing this strategy, while 72% believe neutral, stable countries will be ideal for relocating trade and production.

“This is where Bangladesh comes in,” he said. “But having an opportunity doesn’t mean we can automatically benefit from it. We must address five critical weaknesses to be competitive.”

Five key challenges to overcome

Dr Riaz outlined five key structural challenges that Bangladesh must address to capitalise on the shifting global trade landscape.

First, the country needs to boost its competitiveness, as it currently ranks 105th on the Global Competitiveness Index significantly behind regional counterparts like India (62nd) and Vietnam (60th). He stressed the urgent need to improve productivity, innovation, and institutional efficiency to meet international standards.

Second, trade facilitation must be enhanced, as lengthy customs procedures, port congestion, and bureaucratic red tape continue to slow down export operations. Streamlining import and export processes, he said, is non-negotiable for improving supply chain efficiency.

Third, governance must be strengthened through greater transparency, adherence to the rule of law, and consistent policy implementation, all of which are critical for building investor confidence and attracting long-term foreign investment.

Fourth, Bangladesh must diversify its economy beyond the ready-made garment sector, which still dominates exports. Dr Riaz urged the development of alternative industries such as pharmaceuticals, electronics, agro-processing, and IT services to create a more resilient and balanced export portfolio.

Finally, he emphasized the need to strengthen public-private dialogue, advocating for a shift from ad hoc decision-making to collaborative, data-driven policymaking. Only through evidence-based planning and sustained engagement between the government and the private sector, he noted, can Bangladesh fully seize the opportunities presented by the global trade realignment.

Economic outlook amid global uncertainty

Dr. Riaz cautioned, however, that global headwinds remain. Due to the impact of the Trump administration’s aggressive tariff policies, global GDP growth is projected to slow by 0.6 percentage points in 2025, affecting developing economies across Asia.

As a result, Bangladesh’s expected export growth has been revised downward — from 3% to 2% in 2025, with a modest recovery to 2.5% in 2026.

Business leaders voice concerns

In his keynote address, Abdul Haque, President of the Bangladesh Reconditioned Vehicles Importers and Dealers Association (BARVIDA), warned of over-reliance on traditional markets. “Nearly 65% of our exports go to the EU and the US,” he said. “This over-dependence makes us vulnerable.”

He cited tariff and quota barriers, stringent quality checks, and lack of bilateral trade agreements as major hurdles to entering new markets. Additionally, domestic challenges — including infrastructure deficits, energy shortages, foreign exchange instability, and policy unpredictability — are discouraging investors.

“Businesses must proactively seek alternative markets, diversify exports, modernise ports, and expand e-commerce,” Haque urged. He also called for revitalising the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), calling its current state “ineffective.”

Echoing the sentiment, former FBCCI President Shafiullah Chowdhury described the current state of the business community as “like orphans — directionless and unsupported.” He criticised the appointment of a former bureaucrat with no private sector experience to lead FBCCI after the recent political transition.

“We don’t know who to turn to,” he said. “Traders face sudden port fee hikes and arbitrary harassment. There’s no strong voice representing us.”

Call for institutional reform

Former caretaker government advisor Hossain Zillur Rahman, BKMEA President Mohammad Hatem, and other industry leaders also attended the event, underscoring the urgency of institutional reform and strategic planning.

As global trade realigns, the consensus was clear: Bangladesh has a historic opportunity — but only if it acts swiftly, decisively, and collectively.