The first formal round of negotiations on a free trade agreement (FTA) between Bangladesh and Malaysia, aimed at strengthening the two countries’ economic partnership, is starting in Dhaka. A 30-member high-level Malaysian delegation led by Dr Rashidi Said, a senior official of Malaysia’s Ministry of Investment, Trade and Industry (MITI), is due to arrive in Dhaka on Monday. The first round of talks begins on Tuesday and will run until Thursday. The meeting will discuss in detail the draft prepared by Bangladesh and the points proposed by Malaysia. The FTA wing of the commerce ministry has already prepared for the talks on Bangladesh’s side, according to commerce ministry sources.
Background and target
During Prime Minister Tareque Rahman’s visit to Malaysia in June, the two heads of government agreed to move the free trade talks forward quickly. The joint statement from that visit carried a firm commitment to complete a comprehensive, forward-looking and mutually beneficial FTA by 2027. This first round of talks is starting within four months of that pledge.
According to a recent meeting of the parliamentary standing committee on the commerce ministry, the two countries have already finalised the terms of reference (ToR). The commerce ministry is preparing a 20-chapter draft to finalise the agreement. Both countries hope to complete it within the next year.
Target 2027: a strategic trade agreement
During the Malaysian prime minister’s visit, Bangladesh’s High Commissioner Monjurul Karim Khan Chowdhury said December 2027 had been set as the target for signing a full FTA between Bangladesh and Malaysia. On the same day Dr Rashidi Said of MITI said the coming Dhaka talks would give priority to matters of mutual interest, including wider market access, more investment and new business opportunities.
Why the FTA is needed
Bangladesh and Malaysia trade substantially with each other, but there is no preferential or full trade agreement between them. As a result, businesses in both countries miss out on the institutional benefits of tariff cuts, special market access and trade facilitation.
According to MATRADE, Malaysia’s state trade development agency, a full FTA lets partner countries secure preferential access to each other’s markets. Alongside modernised tariff structures, it opens new doors for investment, services and economic cooperation.
The timing of the agreement is very sensitive for Bangladesh, particularly with its final graduation from the list of least developed countries (LDCs). After graduation, the duty-free and quota-free export access it now has in international markets will shrink. In that changed global trade setting, a bilateral FTA will play a big part in keeping Bangladeshi goods competitive.
In particular, the FTA will help raise exports of Bangladesh’s main products to Malaysia, such as ready-made garments (knit and woven), leather and footwear, processed food and agricultural goods. It will also put on a firmer footing the trade in essential raw materials imported from Malaysia, such as fuel, machinery, iron and steel, plastics and chemicals.
The challenge of a large trade deficit
Bangladesh currently runs a large trade deficit with Malaysia. Bangladesh Bank figures show the gap clearly: in the 2023-24 fiscal year Bangladesh exported goods worth only $293.51 million to Malaysia, against imports of more than $2.6 billion. The trade deficit in that one fiscal year came to about $2.31 billion.
The gap stayed about the same over the 18 months from January 2025 to July 2026. In that period Bangladesh exported goods worth $305.55 million to Malaysia, while imports came to about $2.26 billion.
Bangladesh’s top exports to Malaysia are ready-made garments, knitwear, woven garments, leather goods, footwear, food and drink, processed vegetables and spices. Bangladesh mainly imports mineral fuels, edible oil, iron and steel, plastic products, heavy machinery and industrial chemicals from Malaysia.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report