Bangladesh-Spain Bilateral Cooperation: Prospects and Way Forward

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‘It is a graduation day of our bilateral relations (with Bangladesh), in 50 years, we have gone from LDC-Long Distance Contracts – and are ready to go into MIC -More In-Depth Cooperation.’   

Spanish Ambassador Francisco de Asis Benitez Salas

The bilateral ties between Bangladesh and Spain have experienced a notable evolution, transitioning from a remote connection to a deeper and cooperative alliance.  The establishment of diplomatic relations between Spain and Bangladesh occurred on May 12, 1972, when Spain formally acknowledged the independence and sovereignty of Bangladesh. This significant event marked the official recognition of Bangladesh as a distinct nation by the Spanish government. The acknowledgment of this achievement served as a catalyst for the formation of the Spanish Embassy in Dhaka in 2008, symbolizing a dedication to enhancing the mutual ties between the two nations.

Bangladesh and Spain possess significant potential for enhancing their diplomatic relations in multiple sectors, encompassing economics, education, climate change, security, and culture. Through the strategic utilization of their unique strengths and shared interests, both nations have the potential to foster increased collaboration, facilitate the cultivation of mutual comprehension, and actively contribute to the advancement of global peace and development. As the examination of these potential opportunities unfolds, the establishment of a robust framework of diplomacy will assume paramount importance in shaping the trajectory of Bangladesh-Spain bilateral relations.

Trade Relations

Spain ranks as Bangladesh’s fourth-largest trading partner, with imports from Bangladesh amounting to nearly three billion euros annually. Simultaneously, Spain hosts a significant Bangladeshi expatriate community, fostering cultural and economic connections. In 2022, bilateral trade figures reflected imports worth US$4.43 billion from Bangladesh to Spain and exports of US$214.02 million from Spain to Bangladesh, highlighting the expanding trade relationship.

Figure: Spain Exports to Bangladesh

Figure: Spain Import from Bangladesh

Recent developments in trade relations have been particularly encouraging. Bangladesh’s government actively courted Spanish investors, offering them a Special Economic Zone (SEZ) during the TICFA meeting in Washington in 2015. The objective was to enhance bilateral trade and investment. This initiative seems to have borne fruit, as export data from the Export Promotion Bureau (EPB) demonstrates a significant profit of $2.37 billion through bilateral trade.

One notable sector in this trade relationship is the garment industry. Spain is increasingly drawn to Bangladesh’s products, largely due to their quality and cost-effectiveness when compared to alternatives. Despite this, Bangladesh’s profitability in the Spanish market may not have reached its full potential. Challenges related to product diversification, branding, and promotion have hampered the realization of higher profits, but these issues also present opportunities for growth and improvement.

FDI Inflow from Spain

Several factors influence FDI, including the business environment, political stability, infrastructure development, and government policies. Recent years have seen renewed interest, with FDI reaching 1.65 million USD in 2022, possibly driven by economic reforms or emerging opportunities, highlighting confidence in Bangladesh as an investment destination.

Year Spain FDI inflow  to  Bangladesh (in million USD)
2000-2008 0.41
2009 1.36
2010 0
2011 0
2012 3.69
2013 1.96
2014 1.20
2015 1.15
2016 1.57
2017 2.65
2018 1.61
2019 1.99
2020 0.14
2021 0.66
2022 1.65

The chart illustrates the Foreign Direct Investment (FDI) inflow from Spain to Bangladesh spanning 23 years from 2000 to 2022, a crucial economic indicator showcasing Spanish investments in various sectors of the Bangladeshi economy. The FDI inflow displays yearly variations, influenced by economic conditions, government policies, and global trends.

In the initial years (2000-2008), Spain’s FDI into Bangladesh remained low, averaging around 0.41 million USD, possibly due to limited business ties and investment awareness. In 2009, there was moderate growth, reaching 1.36 million USD, likely driven by improving economic conditions or specific investment opportunities. A significant resurgence occurred in 2012, with FDI reaching 3.69 million USD, indicating favorable conditions or opportunities in Bangladesh. From 2013 to 2018, FDI showed fluctuations, ranging from 0.14 million USD to 2.65 million USD, influenced by market conditions, investor sentiments, and specific projects. Despite these fluctuations, there is a long-term growth trend, signaling Bangladesh’s increasing attractiveness as an investment destination for Spanish investors.

Expanding Economic Frontiers

One of the most prominent aspects of the evolving Bangladesh-Spain relationship is the expanding economic frontiers. Spain stands as Bangladesh’s fourth-largest customer, and this economic interaction has resulted in imports from Bangladesh worth nearly three billion euros annually. The significance of this trade relationship cannot be overstated, as it underscores the mutual benefits derived from their bilateral trade activities. The economic symbiosis is evident in Spain’s status as a prominent market for Bangladeshi exports, emphasizing its role as a significant destination for trade between the two nations.

Economic Opportunities

As the relationship deepens, economic opportunities abound for both countries. Spain’s capacity to produce electronic products aligns with Bangladesh’s growing demand for items such as vehicles and machinery. Exporting surplus goods in these categories could potentially yield substantial foreign currency, benefiting Bangladesh’s economic stability amid market uncertainties.

On the flip side, Bangladesh possesses a wealth of resources and products, including clothing, labor, leather, and more, that hold appeal for Spain. Engaging in international trade with Bangladesh presents Spain with economic advantages, helping alleviate economic challenges and contributing to its own financial well-being.

Energy Sector Cooperation

The energy sector represents yet another area of cooperation and potential growth in the Bangladesh-Spain relationship. Spanish companies, including Técnicas Reunidas (TR) and Técnica y Proyectos, SA (TYPSA), have actively participated in energy and infrastructure projects in Bangladesh. Projects such as power plants in Ashuganj and ongoing ventures in Chittagong exemplify the collaborative efforts in the energy sector.

People-to-People Connections

The strong presence of Bangladeshi nationals in Spain, with an estimated population of 25,000, has a profound impact on fostering cultural exchanges and strengthening bilateral relations. Their role in building interpersonal relationships and facilitating cultural ties is invaluable in building a foundation for a deeper partnership between Bangladesh and Spain. The collaborative efforts between Dhaka and Madrid to promote Bangladesh’s tourism sector underscore the significance of people-to-people connections in enhancing bilateral relations. Such initiatives not only bolster cultural understanding but also pave the way for increased economic and cultural exchange.

Cultural Influence: LaLiga

The influence of Spanish culture extends beyond economics, with sports playing a pivotal role in cultural cohesion. The presence of LaLiga in Bangladesh has significantly contributed to the popularity of Spanish football. Initiatives like the Spanish-Bangla football dictionary highlight the deep connection between language and sports in fostering cultural exchange.

Future Prospects in Bangladesh-Spain Relations

Enhanced Economic Cooperation

The existing robust economic ties between Bangladesh and Spain provide a strong foundation for further cooperation. As both countries continue to explore avenues for economic growth, there is significant potential for expanding trade and investment. Strengthening economic cooperation can involve diversifying trade products, reducing trade barriers, and exploring new sectors for collaboration, such as technology and renewable energy. Spain’s expertise in various industries, including technology and renewable energy, could complement Bangladesh’s development goals.

Bilateral Investment and Joint Ventures

Encouraging more Spanish investments in Bangladesh can create win-win opportunities. Bangladesh’s strategic location in South Asia and its expanding consumer market make it an attractive destination for foreign investments. To attract Spanish investors, Bangladesh can offer more incentives, such as streamlined investment processes, tax benefits, and access to special economic zones. Joint ventures between companies from both countries can also be promoted to leverage each other’s strengths and expertise.

Cultural Exchange and Education

Cultural exchange programs and educational collaborations can foster greater understanding and goodwill between the two nations. This can lead to a more profound people-to-people connection. Establishing more cultural centers, language courses, and scholarship programs can encourage Bangladeshi students to study in Spain and vice versa. This exchange of knowledge and culture can strengthen the bonds between the two nations and lead to a deeper appreciation of their respective histories and traditions.

Tourism Promotion

Bangladesh’s natural beauty, historical sites, and vibrant culture have the potential to attract more Spanish tourists. Increased tourism can boost economic ties and people-to-people connections. Collaborative efforts between Dhaka and Madrid to promote tourism should continue and expand. Marketing campaigns, travel incentives, and cultural exchange programs can help showcase Bangladesh as an appealing tourist destination for the Spanish population.

Sports Diplomacy

The success of LaLiga in Bangladesh highlights the role of sports diplomacy in strengthening cultural ties. Expanding such initiatives can deepen the connection between the two nations. Bangladesh and Spain can explore more avenues for sports collaborations, such as hosting joint sporting events, exchanging sports professionals, and promoting youth participation in sports. These activities can further solidify the cultural bond between the two nations.

Green Energy and Sustainable Development

The energy sector offers immense potential for collaboration, particularly in green energy and sustainable development. Both countries can benefit from sharing knowledge and resources in this critical area. Spain’s experience in renewable energy and sustainable practices can be invaluable to Bangladesh’s efforts to address environmental challenges and promote sustainable development. Joint projects in solar, wind, and hydroelectric power generation can be explored to reduce carbon footprints and ensure a greener future for both nations.

The evolving Bangladesh-Spain relationship presents opportunities for growth and improvement. As these two nations deepen their connections in trade, culture, energy, and people-to-people exchanges, they are laying the foundation for a stronger, more dynamic partnership. The prospects for Bangladesh-Spain relations are undeniably promising. By leveraging their existing economic ties, fostering cultural exchanges, boosting tourism, and exploring new avenues of cooperation like green energy, both countries can forge a more robust and mutually beneficial alliance. This evolving dynamic holds the key to enhanced collaboration and a deeper mutual understanding between Bangladesh and Spain, setting the stage for a brighter and more prosperous future of cooperation and partnership.

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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