Bangladesh-Indonesia Relations in 2023: Issues and Directions


In the tumultuous year of 2023, marked by global geopolitical uncertainties, economic instability, and the looming specter of war, the bilateral relations between Bangladesh and Indonesia have proven to be a shining example of resilience, collaboration, and forward-thinking diplomacy. Amidst the challenges that have gripped the world, these two nations have not only sustained their diplomatic ties but have also expanded their cooperation across various sectors. The year 2023 becomes a pivotal chapter in the Bangladesh-Indonesia relationship, reflecting the spirit of South-South cooperation and the transformative power of strategic economic collaborations. Also, the signing of the Preferential Trade Agreement (PTA), and the profound implications for their future directions amid a globally uncertain landscape.

Bangladesh-Indonesia Diplomatic Surge: 2023 Marks Unprecedented Collaboration and Economic Growth

Bangladesh-Indonesia Relations Soar to New Heights in 2023, Fostering Economic Collaboration and Global Sustainability, marked by resilience, determination, and a mutual commitment to progress and development. The 78th Independence Day celebration at the Embassy of the Republic of Indonesia in Dhaka served as a symbolic representation of the strengthened partnership.

The ASEAN Summit played a pivotal role in elevating the bilateral ties between the two nations. President Mohammed Shahabuddin’s participation emphasized the longstanding relations since 1972, acknowledging Indonesia’s stability and development under President Sukarno’s vision. The focus on maritime cooperation, particularly in harnessing untapped resources in Bangladesh, showcased a forward-looking approach, with both countries expressing dedication to the blue economy. This included collaboration in marine science, technology, deep-sea fishing, and seaweed culture.

President Shahabuddin utilized the ASEAN Summit as a platform to address crucial regional issues, urging international action on the Rohingya crisis. Bangladesh’s active role in the Indian Ocean Rim Association (IORA) was acknowledged, highlighting the importance of international agreements such as the MoU between ASEAN Secretariat and IORA Secretariat. The signing of three Memoranda of Understanding (MoUs) in health, energy, and agriculture underscored the comprehensive nature of collaboration. These agreements are strategic in fostering economic development, with Indonesia providing a significant market for Bangladeshi goods and services, while Bangladesh’s strategic location acts as a gateway for Indonesia to South Asian markets.

The economic collaboration facilitated by the MoUs not only promises economic gains but also reflects a shared commitment to addressing common challenges and global sustainability goals. Collaboration in agriculture, renewable energy, and disaster management showcases a broader commitment to combat climate change and ensure food security.

Beyond formal agreements, initiatives like the workshop on unemployment protection and South-South cooperation projects illustrate the modern and dynamic approach both nations are adopting in building a robust friendship. The emphasis on knowledge exchange and experiences in various sectors further solidifies the depth of collaboration.

The cultural exchange during the singing event and the Indonesian Products Showcase at the embassy highlighted the diplomatic celebration’s multifaceted nature. Ambassador Heru’s gesture of presenting a traditional Indonesian weapon symbolized the shared cultural interests and the deepening bonds between Bangladesh and Indonesia.

Sector Treaty/MoU
Health Cooperation in the Health Sector
Energy Cooperation in the Energy Sector
Agriculture Cooperation in the Agriculture Sector

Bangladesh-Indonesia Trade Relations Soar: A Decades-Long Economic Odyssey towards Integration and Resilience

Over the past three decades, Bangladesh and Indonesia have navigated a remarkable economic journey, witnessing a substantial growth in their trade relations. Beginning in the 1990s, the foundations of collaboration were laid, setting the stage for a robust relationship that transcended conventional sectors. The transformative 2010s marked a significant milestone, witnessing an unprecedented surge in trade volumes between the two nations. This period was characterized by the negotiation and execution of a Preferential Trade Agreement (PTA), indicating a shared vision for deeper integration and a more resilient trade partnership.

From 2010 to 2022, Bangladesh and Indonesia experienced extraordinary developments in their trade ties. The execution of the PTA in 2023 underscored their commitment to liberalizing trade and addressing imbalances. Both nations actively diversified their trade portfolios, recognizing the importance of a comprehensive and mutually beneficial collaboration. Bilateral collaborations in crucial sectors, notably health and energy, emerged as key pillars of their shared commitment to mutual development. Memorandums of Understanding (MoUs) paved the way for increased cooperation, showcasing a strategic alignment of economic goals. The joint approach to addressing the Rohingya crisis highlighted the depth of their regional collaboration and shared responsibility.

Bangladesh and Indonesia Trade Relations (In Million $)

Year Import Export
1989 61.54 0.65
1995 90.30 9.10
2000 241.95 84.77
2005 353.30 189.15
2010 1,018.61 360.79
2015 1,340.79 594.71
2020 1,684.52 766.35
2022 3,894.63 1,100.74

Despite global challenges such as the Ukraine war and the Covid-19 pandemic, the trade relationship displayed resilience, instilling optimism for the future. Discussions on direct air connectivity and shipping services revealed ambitious plans for enhanced infrastructure links, signaling the potential for even greater economic integration. The Preferential Trade Agreement positions Bangladesh as a potential regional trading hub, reshaping the dynamics of South and Southeast Asian commerce. The focus on economic integration and collaboration with other ASEAN nations underscores a shared commitment to shaping a prosperous future. Also, Bangladesh imported 0.43 million tons of Vegetable Oil from Indonesia in Jan – Aug 2023, further highlighting the dynamic nature and continued growth of their trade relations.

Empowering Futures: The 2023 Bangladesh-Indonesia PTA and its Pivotal Role in Shaping Bilateral Relations

Bangladesh and Indonesia as they embark on a transformative partnership. This collaboration, driven by the proposed Preferential Trade Agreement (PTA), not only unlocks vast economic potential but also addresses existing trade imbalances, creating opportunities for shared growth. Indonesia, serving as a crucial market for a spectrum of Bangladeshi goods such as medicines, agricultural products, poultry, jute, leather goods, and footwear, presents an extensive canvas for economic collaboration. However, the trade figures from 2021 revealed a substantial imbalance, with Indonesia enjoying a surplus of USD 2.8 billion. The proposed PTA is poised to be a game-changer. By offering tariff concessions, particularly in sectors like pharmaceuticals, agriculture, and textiles, the agreement empowers Bangladeshi businesses with a competitive edge in the Indonesian market. This move not only opens avenues for market expansion but also enhances the overall competitiveness of these sectors.

Beyond economic gains, the PTA signifies a strategic step towards a more balanced and equitable economic relationship. With shared cultural and social similarities and a combined market of over 400 million people, the majority being Muslim, this partnership goes beyond commerce, becoming a bridge for cultural exchange and social collaboration. The potential for synergy in addressing the needs and preferences of this vast population base sets the stage for diversified trade and enhanced collaboration. The PTA, signed in the backdrop of the developments in 2023, becomes a symbol of the shared commitment to mutual growth and development. As Bangladesh and Indonesia move forward on this collaborative journey, the PTA not only rectifies trade imbalances but also lays the groundwork for a robust and sustainable economic partnership. The importance of the agreement is not confined to the exchange of commodities; it extends to shared knowledge, cultural understanding, and the potential for joint initiatives that transcend mere economic considerations. The implications of the 2023 PTA are far-reaching, shaping the trajectory of future bilateral relations and fostering an environment of mutual prosperity

To conclude, Bangladesh and Indonesia have emerged as beacons of resilience and collaboration. Despite the challenges that have engulfed the world, these two nations have not only managed to sustain their bilateral ties but have successfully expanded their cooperation across various sectors. The strengthened bilateral relations between Bangladesh and Indonesia during this tumultuous period signify more than just economic collaboration. Against the backdrop of geopolitical uncertainties and global challenges, the spirit of South-South cooperation shines through. This collaboration among nations of the Global South showcases their ability to address shared challenges and create pathways to prosperity in an interconnected world. The commitment to exploring new avenues of collaboration and partnership reflects a dynamic and forward-thinking approach, offering a positive example for diplomatic engagement amid the uncertainties of the contemporary world. Their collaborative efforts extend beyond economic considerations, embodying shared values, aspirations, and responsibilities. In navigating the challenges posed by war and economic instability, these nations are not only contributing to South-South cooperation but also setting an inspiring example of resilience and proactive collaboration for a prosperous and interconnected future.

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

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