Since their first diplomatic interaction in February 1974, Bangladesh and Iran have maintained an open and trusting relationship over the years. Following the very recognition of Pakistan to Bangladesh during the second session of the Islamic Summit Conference in Lahore, Iran formally recognized Bangladesh in the same month. By that time, both nations decided to swap ambassadors to strengthen diplomatic and other ties. The relationship between the two Asian nations took on a more official form when Bangladesh opened an embassy in Iran in June 1974 and Iran opened one in Bangladesh in January 1975. However, Iran’s then deputy minister of commerce led an economic team to Bangladesh after the Islamic Revolution to expand trade and economic ties between the two nations. As a result, in January 1983, the two parties signed a memorandum of understanding. Thereafter, the government of the Islamic Republic of Iran agreed to favourably review the request of the Bangladeshi government to deliver 100,000 barrels of oil in accordance with the MOU. Iran also agreed to help Bangladesh with its request for assistance with technology in the field of gas and oil exploration.
Since then, the economic rapport between the two Muslim countries has undergone diverse ebbs and flows. In this regard, one of the core developments that happened between the two countries is the constant discussion through ‘the Joint Economic Commission Meetings between Iran and Bangladesh’ which helped them formulate further economic gamut over the years. Iran’s exports to Bangladesh were $86.3 million in 2018. Iran’s exports to Bangladesh have climbed from $5.01M in 1995 to $86.3M in 2018, an increase of 13.2 per cent. On the other hand, Bangladesh exported $29.8 million worth of goods to Iran in 2018. Bangladesh’s exports to Iran have grown from $29.8 million in 1995 to $29.8 million in 2018, an increase of 0.012 per cent each year. Although the economic relations between the two countries have been in a steady approach for the last few years due to Covid-19 and other milieus, it is nowadays discerned that the countries are thinking of rejuvenating the surge. During a phone call, Iranian President Ebrahim Raisi recently reiterated his government’s commitment to building linkages with Bangladesh and other Muslim countries and has exhibited an overwhelming willingness to expand the economic and trade ties with the South Asian country.
Bangladesh As a Massive Destination: The Potential for Iran in Expanding Market
With nearly 172 million populations, Bangladesh ranks high on the list of most populated countries. The country’s middle class is expanding fast, driving up demand for a wide range of consumer products and services. This means access to a potentially massive new market for Iranian exporters and firms. However, Iran and Bangladesh have economies that complement one another, since they each excel in distinct areas. Among the many fields in which Iran excels is the production of oil and gas as well as petrochemicals, equipment, and vehicles. Conversely, Bangladesh is a major manufacturer in the global textile and garment sector, as well as the pharmaceutical business, agriculture, and fisheries industry. This synergy creates opportunities for business relationships that will benefit all parties involved. In addition, Iran is a major producer of oil and gas, while Bangladesh heavily relies on energy imports to meet its domestic needs. Through mutually beneficial commerce, Iran and Bangladesh may be able to cooperate on energy production and delivery to Bangladesh. This would improve Bangladesh’s energy security by allowing the country to become less reliant on any one energy provider.
Regarding the multilateral organizations, Iran and Bangladesh are both members of the D-8, whereas, Bangladesh is also a member of the South Asian Association for Regional Cooperation (SAARC) and the World Trade Organization (WTO). In this regard, to lower trade obstacles in order to increase market access, Iran may use these regional and international frameworks to negotiate trade agreements with Bangladesh. Moreover, Bangladesh offers attractive investment opportunities in sectors such as infrastructure development, power generation, textiles, pharmaceuticals, and information technology. In this respect, joint ventures and direct investments from Iran into Bangladesh may take advantage of these opportunities that would generate profits, as well as help propel Iran and Bangladesh’s economy forward.
The Significance of Bangladesh’s Locus in the Indo-Pacific Region
Bangladesh’s strategic location provides Iran with access to the broader Indo-Pacific region, where the littorals and all the stakeholders are experiencing rapid economic growth. Iran may benefit from its geographic location in the area by expanding its commercial relations with Bangladesh. This will allow Iran to gain access to markets in South Asia, Southeast Asia, and beyond. Furthermore, Bangladesh is actively participating in regional connectivity initiatives including the Bangladesh-China-India-Myanmar Economic Corridor (BCIM-EC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). However, many nations have made it a goal to diversify their supply chain sources because of the Indo-Pacific region’s significant role in the world’s supply chains.
In this respect, Tehran has the chance to establish itself as a viable provider of products and services by expanding its economic rapport with Bangladesh, especially in areas where it has a comparative advantage. In addition, Bangladesh has been taking steps to enhance its business and investment environment, such as enacting laws to ease trade, attracting foreign direct investment (FDI), and creating especial economic zones for foreign investors. In contemporary times, energy, infrastructure, textiles, pharmaceuticals, and ICT (Information and Communication Technology) are Bangladesh’s target sectors for growth. Therefore, improved Iranian trade and investment in the area are possible because of Bangladesh’s business-friendly climate. Both nations stand to gain from increased collaboration, as it may pave the way for the creation of joint enterprises, the transfer of technology, and the exchange of information.
Recent Impetus and The Vitality of Continuing the Joint Economic Commission (JEC) Meetings
In the late 1970s, Iran and Bangladesh had their first Joint Commission Meeting. After two days of talks, the then-presidents of both nations signed a memorandum of understanding (MOU). This MOU calls for the establishment of a permanent committee to discuss issues related to commerce, transportation, communications, banking, agriculture, manufacturing, and the arts and human resources. Since the very commencement, over the years, the Joint Commission meetings have played a vital role in boosting the economic rapport. However, the last time both countries relished the Joint Commission Meeting was in 2013. The 5th Joint Economic Commission Meeting was organized by The Iranian Ministry of Mines, Industries, and Commerce and the Bangladeshi Ministry of Finance in Dhaka, which was expected to bring about robust impetus in this relationship. However, The Bangladeshi minister of industry travelled to Iran in 2014 which was highly focused on discussing the prospect of the ‘Peace Pipeline’s extension beyond its current route through Iran, Pakistan, and India.
Nonetheless, the tightening of international sanctions against Iran and Bangladesh’s heavy reliance on the economies of the West and the Persian Gulf states has negatively impacted the long-term initiatives between the two nations. Apart from that, the Iranian Foreign Ministry responded quickly in 2017 to the influx of Rohingya Muslim immigrants into Bangladesh by sending 40 tons of relief consisting of medicine, nutrition, and food. While in Dhaka for the IORA Conference in 2019, the Iranian foreign minister also met with Bangladesh’s prime minister, parliament speaker, and foreign minister to discuss strengthening economic, political, and cultural connections between the two countries. In this respect, one significant thing has always been missing in the last decade which is the continuity of the Joint Economic Commission (JEC) Meetings.
Although diverse meetings between the high officials of the two countries have been held in different forums and sidelines of the IORA conferences, substantial progress was not palpable at all. In this respect, the recent development of Iranian President Ebrahim Raisi’s willingness to expand trade with Bangladesh, a country with more than $420.52 billion US economy, is very noteworthy. He urged ‘his administration to enhance the growth of commercial and trade relations with Bangladesh.’ However, during a phone call between the countries’ heads of state, Bangladeshi Prime Minister Sheikh Hasina said, “Bangladesh and Iran should bolster their economic and commercial ties by increasing the number of initiatives they undertake together.” In this regard, the Premier emphasized the importance of establishing a Joint Business Commission (JBC) and more importantly, underlined the extreme significance of continuing the regular Joint Economic Commission (JEC) meetings. In a nutshell, while Iran has many rooms that led the country to be more interested in expanding trade with Bangladesh in recent days, Bangladesh has also some complementary necessities that Iran can easily meet. In such a milieu, the rejuvenation of the economic rapport through such joint meetings would be very advantageous for both nations, and thus, not only Iran but Dhaka also can secure its energy and other interests through collaboration with Tehran.
– Kawsar Uddin Mahmud is a Research Intern at the KRF Center for Bangladesh and Global Affairs (CBGA).
Read Full Briefs as a Pdf [Link]