Bangladesh Must Diversify Exports Beyond RMG to Regain Competitive Edge

Dhaka, July 26, 2026 — Bangladesh's export competitiveness has long been one of the country's greatest economic strengths. 📊 Since 2000, merchandise exports have grown from about 💰 $6.4 billion to around $47.2 billion in 2024, peaking at nearly $59.3 billion in 2022. However, official Export Promotion Bureau data show exports fell nearly 5 percent in calendar year 2025 to $47.74 billion, highlighting the growing challenges facing the country's export-led growth model.

👕 RMG Dominance: Strength and Vulnerability

The RMG industry remains the backbone of Bangladesh exports, accounting for around 84-85 percent of export earnings and employing more than 4 million people, most of them women. 👩 It has transformed Bangladesh into the world's second largest apparel exporter after China, helping reduce poverty, generate foreign exchange and drive industrialisation.

⚠ Yet this reliance on a single sector has created a structural weakness. As global competition intensifies and consumer demand shifts, Bangladesh has become increasingly exposed to external shocks.

📈 Global and Domestic Pressures

The recent export slowdown reflects both global and domestic pressures: 🌏

• 📦 Weak consumer demand in the United States and Europe, driven by high inflation, rising interest rates and slower economic growth
• 🚢 Power and gas shortages at home disrupting industrial production
• 💰 Rising production and transport costs eroding competitiveness
• 🚢 Port congestion and customs delays slowing shipments
• 👥 Limited diversification — pharmaceuticals, leather, IT, and light engineering show promise but remain small share

🌏 Regional Competitors Pulling Ahead

📊 The contrast with regional competitors is striking:

• 🇻🇳 Vietnam: Expanded exports from $14.5B (2000) to $429B+ (2024) by building strengths in electronics, machinery, and agriculture alongside garments. Receives ~$38B annual FDI.
• 🇮🇳 India: Diversified into engineering goods, pharmaceuticals, chemicals, automobiles, electronics, and digital services
• 🇮🇩 Indonesia: Built competitive value-added industries around minerals and manufacturing
• 🇰🇭 Cambodia: Steadily expanded exports of garments, footwear, and travel goods

⚠ Bangladesh, by comparison, has attracted relatively little export-oriented investment beyond garments. Trade policy has widened the gap further — Vietnam has concluded 15+ FTAs, while Bangladesh still depends largely on trade preferences linked to LDC status.

🔧 Comprehensive Strategy Needed

🤝 Reviving export growth requires a comprehensive strategy:

• 💡 Diversification as national priority — greater support for pharmaceuticals, electronics, medical devices, agro-processing, shipbuilding, and light engineering
• 🚢 Modernize ports — Chattogram and Mongla need upgrading to lower costs and improve efficiency
• 🔌 Reliable energy — ensuring consistent electricity and gas supplies to factories
• 💻 Digital customs — streamline export procedures through digitization
• 🎓 Technical education — invest in skills, automation, and advanced manufacturing
• 🌏 Economic diplomacy — pursue FTAs with EU, UK, China, Japan, ASEAN, and GCC
• 📍 Market expansion — target Africa, Latin America, and the Middle East

📅 LDC Graduation and ESG Pressures

🏛 Buyers are demanding higher environmental, social, and governance (ESG) standards, while the country's graduation from LDC status will gradually reduce preferential market access. ⚠ Bangladesh must prepare for the post-LDC era by building competitive industries that can thrive without trade preferences.

📈 A more predictable business environment, supported by consistent policies and institutional reforms, would give exporters the confidence to invest in new sectors and markets. The time to act is now — before the LDC transition window closes and global competition intensifies further.