Bangladesh and Malaysia launch FTA talks, target agreement by 2027
Bangladesh and Malaysia have begun formal free trade negotiations, seeking to expand market access and investment as Bangladesh prepares for the potential loss of trade preferences following LDC graduation.
Reading
In a Nutshell
- The first round of negotiations began in Dhaka on October 27 and will continue until October 29. Both sides signed the Terms of Reference, establishing the framework and scope of the talks.
- The negotiations follow a commitment made during Prime Minister Tarique Rahman’s June visit to Malaysia to conclude a mutually beneficial agreement by 2027. That remains a target, not a confirmed signing date.
- Discussions cover trade in goods and services, rules of origin, which determine which products qualify for preferential treatment and customs procedures.
- Trade remains heavily tilted towards Malaysia. In FY2024–25, Bangladesh exported approximately $282.55 million in goods to Malaysia and imported $2.29 billion in goods, resulting in a deficit of around $2.01 billion.
Context
The negotiations build on decades of economic cooperation, including a bilateral trade agreement signed in December 1977. An FTA was proposed as early as 2005 but made little progress. The June 2026 commitment and October negotiations now give that longstanding ambition a formal timetable, with both sides seeking an agreement by 2027
Why It Matters
LDC graduation could reduce some of the special trade benefits Bangladesh receives under the status, making its exports less competitive. An FTA with Malaysia could provide Bangladesh with negotiated market access beyond LDC status. It would build on a longstanding trading relationship while creating opportunities for Bangladesh to reduce its trade deficit with Malaysia.
What We Think
Bangladesh’s position between South and Southeast Asia, along with opportunities in halal industries, logistics, and economic zones, provides a basis for negotiating a beneficial partnership. Cultural and religious ties increase demand for halal products. The focus needs to be on securing opportunities for local producers, skilled workers and consumers rather than simply increasing trade volumes.