Singapore sees positive economic growth prospect in Bangladesh

After 26 years of operation, the Singapore Consulate in Dhaka was upgraded to a full-fledged High Commission in October 2023. What were the main considerations for the upgrade?

Answer: The upgrade of Singapore’s Mission in Dhaka was, in some ways, long overdue. Our relations are longstanding and date back to February 1972, when Singapore became the first Southeast Asian country to establish diplomatic relations with Bangladesh. When we set up the Consulate in December 1997, it was primarily to facilitate the flow of migrant workers and visitors from Bangladesh to Singapore. However, since then, bilateral cooperation has expanded into a wide range of sectors, including energy, transportation, logistics, and ICT. So, in a nutshell, the upgrade to a High Commission is really a reflection of our growing ties with Bangladesh. It also reflects our confidence in Bangladesh’s economic prospects as a whole.

With a new transitional government in charge, Bangladesh aspires to a 2.0 turnaround. How do you view Singapore’s investment prospects in the changed scenario?

Answer: While the events of July and early August 2024 have caused some disruption and uncertainty in the political landscape, Bangladesh’s economic growth trajectory remains positive. Although growth rates have adjusted slightly downwards for this year, they are still positive. I understand that Bangladesh’s RMG sector and remittances from abroad continue to grow. There are also positive fundamentals, such as Bangladesh’s population dividend. The interim government has expressed its desire to stay on track to graduate from the UN’s list of LDCs by the end of 2026, which is another good sign. The interim government’s intention to implement reforms, especially in the area of improving the ease of doing business, will help boost investment prospects. Investment prospects from Singapore and other international investors will improve if the interim government is able to introduce and implement reforms that enhance the ease of doing business in Bangladesh and protect foreign investments in the country.

Singapore is the third-largest investor in power, energy, transport, logistics, and ports in Bangladesh. Bangladesh received US$624 million in remittances in 2020 from its large diaspora in Singapore, which is three times higher than its export value. How can skilled manpower export growth be sustained?

Answer: Bangladeshi workers have made significant contributions to the development of Singapore. They are present in our construction and marine shipyard sectors. Singapore will continue to require a constant supply of workers to meet the demand in these sectors. In fact, Singapore’s construction sector experienced strong growth in 2024. In the shipyard sector, although growth is moderating, the focus is now on adaptation and resilience so that the sector can find new areas of growth, such as in adopting greener technologies and complex offshore projects. Regarding the recruitment of foreign professionals, managers, and executives (PMEs), Singapore’s approach is that we want them to complement Singapore’s local workforce. The bottom line is that Singapore is a major financial, tech, and services hub, and our local workforce is not enough to meet our growing economy. In this context, “skilled manpower export growth” will be sustainable as long as Singapore continues to prosper as a hub.

Bangladesh imports capital machinery and intermediate goods and exports mostly garment products to Singapore. Bangladesh imported more than US$1.4 billion worth of capital and intermediate goods from Singapore. How crucial would a free trade agreement (FTA) between Bangladesh and Singapore be to increase primary exports to each other?

Answer: During the visit of Singapore’s High Commissioner to Bangladesh, Mr. Derek Loh, in November 2024, both sides formally announced the start of negotiations on a bilateral FTA. The idea of an FTA between both sides was first proposed by Bangladesh when it anticipated that, in a post-LDC status environment, there was a need for several FTAs to gain entry to key markets. An MOU was then signed by both sides in November 2022 to set up a Joint Working Group to explore collaboration in areas of mutual interest in trade and investment, including an FTA. This proposed FTA, together with an updated Double Taxation Agreement (DTA), will, in my view, form a comprehensive framework of treaties to enable, protect, and assure investors and companies from both countries. This, in turn, will facilitate further trade and investment flows.

An FTA will also provide Bangladesh preferential access to the entire Southeast Asian and Asia Pacific regions. The impact of FTAs is key for Bangladesh, particularly after it graduates from the Least Developed Countries (LDC) category in 2026. How soon can we expect an FTA with Singapore?

Answer: We are hoping to conduct the next Joint Working Group meeting between both sides in January 2025, which will discuss the scoping of the FTA, among other economic areas of interest. Singapore has had an FTA with Sri Lanka since 2018. The FTA with Sri Lanka took around 18 months to conclude, the fastest FTA negotiations we have managed thus far. I believe that if both sides stay focused, we should be able to conclude the FTA in a time frame that will allow Bangladesh to have this FTA before it graduates from LDC status at the end of 2026.

Bangladesh has offered many different types of incentives to foreign investors in the Special Economic Zones (SEZ). Japanese, Korean, Indian, and Chinese SEZs have been established. The Chinese Economic and Industrial Zone, Indian Economic Zone (Mongla), and Japanese Economic Zone (Araihazar) are top investors in these SEZs. Is there a possibility of a Singapore Economic Zone soon?

Answer: We have a number of companies that are successful in the development of industrial parks in countries like China, India, and Vietnam. For example, Sembcorp, a Singapore company, has invested in 18 Vietnam-Singapore Industrial Parks (VSIPs). Major Singapore companies like Keppel and Surbana Jurong have invested in the Suzhou Industrial Park in China. Ascendas, a Singapore company, has developed an international tech park in Chennai, India. Thus far, we have not had interest among our companies that manage and operate industrial parks to create an SEZ in Bangladesh. However, as Bangladesh expands its manufacturing base beyond Ready Made Garments (RMG), I believe there will be more interest from Singapore players, such as the companies I’ve mentioned above.

The Bangladesh Investment Development Authority (BIDA) and Enterprise Singapore (ESG) signed an MOU in July 2023 to work jointly to expand trade and investment in Bangladesh. According to BIDA, there are 169 investment projects registered with BIDA from Singapore, with a total value of US$3,185 million. What sectors are Singapore investors eyeing to invest in Bangladesh?

Answer: Singapore is interested in sectors such as Fast-Moving Consumer Goods (FMCG), the digital economy (IT services and digital platforms or solutions that ease business and improve efficiencies), commodities, energy generation including renewables, logistics and transportation, and infrastructure and port management. Bangladesh can also try to interest Singapore companies in the food sector. Singapore imports all its food and tries to diversify its food supply to enhance its food security. However, improvements in logistics and cold chain management will be needed to make Bangladesh’s food exports more viable.

Singapore’s total garment product import is over US$3 billion. However, Bangladesh’s garment product exports to Singapore were less than US$200 million in 2020. There is a lot of scope for Singapore to increase sourcing garments from Bangladesh. Your thoughts on increasing sourcing garments from Bangladesh?

Answer: My suggestion to Bangladesh garment manufacturers is to look at Singapore fashion brands that could potentially manufacture their products in Bangladesh. There are several fashion brands from Singapore, like Charles and Keith, Beyond the Vines, Benjamin Barker, and others. Aupen even produces handbags for stars like Taylor Swift. There’s a lack of awareness on both sides about the opportunities to collaborate in the RMG sector. I have mentioned some of these opportunities to Bangladeshis involved in the RMG sector. Similarly, in the food sector, there are Singapore companies that could potentially be interested in buying tea from Bangladesh. TWG is a renowned tea company in Singapore, and they could potentially source some of their tea from Bangladesh. Another tea company, the 1872 Clipper Tea Co., is also a successful Singapore tea company. I don’t think we grow any tea in Singapore!