Tap Bangladeshi Investment

Nepal and Bangladeshi are separated by just about 35-km Indian territory. Both the nations are members of two regional forums– SAARC and BIMSTEC. Bangladesh has graduated to the developing status some years ago while Nepal is set to upgrade in 2022.

Despite being smaller in size than Nepal, Bangladesh has progressed a lot in the last decade with the revival of its industrial sector and national economy and infrastructure development. The country has done well in social and economic development after reducing poverty. Until 1972, the national poverty rate of the coastal nation stood at 82 per cent. However, the nation was able to bring down poverty to 18.5 per cent and 9 per cent in 2010 and 2018, respectively. Bangladesh’s per capita income (nominal) was US$1,906 in 2019 while Nepal had just $1034.

Due to various reasons, there has been very less cooperation between the two countries in terms of trade, investment, tourism and other areas. Nepal is witnessing continuous trade deficit with Bangladesh for the last many years. Nepal had almost Rs. 3 billion trade deficit with Bangladesh as it imported goods worth Rs. 4.24 billion from the latter and exported goods or Rs. 1.29 billion in 2018/19. In 2017/18, such deficit was Rs. 3.7 billion.

Nepal needs to revive its export trade with Bangladesh and attract more investments and tourists. Foreign Minister Pradeep Kumar Gyawali’s recent visit to Bangladesh has tried to strike the chords for the same. During his visit, Nepal and Bangladesh signed a memorandum of understanding to develop waterways in the river that connect Nepal and Bangladesh and enhance road, rail and air connectivity networks. 

Minister Gyawali also said that the visit was successful in creating understanding in the areas of trade, investment and connectivity. The two neighbours have agreed to find additional potential in promoting the bilateral trade, removing the trade barriers, lowering the tariff and increasing the production of exportable goods. Bangladesh also pledged simple and easy transit facility for Nepal to utilise the facility provided by the former.

Nepal has much to learn from Bangladesh such as focusing on a few exportable goods. Bangladesh has given major attention to the development of the garment industry. With cheap labour and technological expertise in this sector, the country has created a formidable garment business which has not only employed the largest number of people but also supported in its economic development and improved the living standard of people. Likewise, development of manufacturing industry is another lesson that needs to be learnt from it.

Bangladesh has shown interest in investing in hydropower project in Nepal. It has pledged Rs. 100 billion investment in any project in Nepal and recently agreed to import electricity from the Upper Karnali Hydel Project. But Nepal has so far failed to tap that investment potential. Bangladesh will require 34,000 MW of power by 2030 to sustain its current 7.8 per cent growth. Nepal could reduce its trade deficit with Bangladesh if the former focuses on hydropower development.  

Published in The Rising Nepal daily on 21 February 2020.