Bangladesh-German Relations: Current Trends and Prospects

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 By 2026, Bangladesh will be upgraded to a middle-income country and it has several challenges along with the positive aspects. On the other hand, amid and after the post-Covid new normal, Germany, likewise other European Union (EU) members, needs to harness new avenues for economic and infrastructural development along with facing the challenges of economic reconstruction. Bangladesh has gradually turned to a geostrategic and economic hub of South Asia and Southeast Asia. At least ten developmental mega projects and speedy economic acceleration creates a new avenue for the Bangladesh-EU relations and especially for the Bangladesh-German relations.

Historical relations

Bangladesh has long-standing and reliable traditional and historical relations with Germany since the independence of Bangladesh in 1971. Germany (former East Germany) was the first country in Europe to officially recognize Bangladesh. After establishing the diplomatic relations on February 4, 1972, the bilateral relations between the two countries began to grow increasingly both in “depth and dimension”. Both countries have a long and successful bilateral relationship on most international issues and platforms. Between 1972 and 2020, Bangladesh received approximately € 3.03 billion in commitments from Germany as part of bilateral financial and technical cooperation. Besides, when Bangabandhu Sheikh Mujibur Rahman and his family was assassinated on August 15, 1975, his daughter and the current Prime Minister Sheikh Hasina was in Germany.

Economic ties

The bilateral economic ties between Bangladesh and Germany have been steadily increasing over the past ten years. Europe, especially Germany is now one of the enthralling and lucrative export destinations for Bangladesh. According to the Foreign Ministry of Germany, Germany is currently the second largest export market for Bangladesh. The volume of bilateral trade with Germany has increasingly enlarged in recent years. In 2018, Bangladesh exported goods worth about 5.8 billion Euros to Germany and imported worth 800 million Euros with a gross 6.6 billion bilateral trade. 90% of the exporting products Bangladesh to Germany are textile material along with frozen foods and leather products.

In a recent meeting with the railway minister of Bangladesh on May 20, German Ambassador to Bangladesh Mr. Peter Fahrenholtz has expressed his desire to be a part of the development partner of Bangladesh especially through investing in the Railway sector. The government of Bangladesh has given more importance to the railway sector. Many projects are currently underway in the railways including Dhaka to Jessore through the Padma Bridge Rail Link Project, Bangabandhu Railway Bridge, Dhaka-Cox’s Bazar rail link and Jessore-Satkhira rail line. Germany with its high technological advantage can play an important role in investing as well as digitalizing the railway sector of Bangladesh. Along with the railway, German investment in Bangladesh is also increasing in other sectors since 2016. Germany got approximately 4 billion dollars for several projects in Bangladesh in various sectors including electricity and textiles. The notable works of German-based companies received, included e-passports, 3,600 megawatt LNG-based power plants and the supply of 15 oil and gas-fired engines to generate 260 megawatts of electricity.

In the investment sector, the involvement of developed countries like Germany in the development and progress of Bangladesh is certainly very encouraging. Amid the hard time of Covid-19, Germany has agreed to provide 339.54 million euros for various development projects in the country which is signed by the Secretary of the Economic Relations Division (ERD) of Bangladesh and the Ambassador of Germany on behalf of their countries respectively. It is to be noted that technical and financial agreements are executed between the governments of Bangladesh and Germany every two years. Of the 339.54 million euros, 48.4 million euros are being given as grants and 292.5 million euros as loans, which are repayable at nominal interest for 25 years. These grants and loans will be used in various development projects in the country. The news of increased foreign investment and foreign reserves of Bangladesh is undoubtedly reassuring even in the face of Covid-19 epidemic.

According to Bangladesh Investment Development Authority (BIDA), from the 2016-17 fiscal year to March 2020, about US $11 billion foreign exchange investments have been implemented. In the 2019-20 fiscal year, gross foreign direct investment (FDI) inflows to Bangladesh was approximately US $3.23 billion. Besides, the foreign reserve of Bangladesh has exceeded 45 billion dollars. It is a pride for the country that born from poverty, famine and war, the country is now lending foreign reserves to Sri Lanka and Sudan through currency swap. Bangladesh’s position in the World Bank’s Ease of Doing Business Index 2021 has been upgraded to 168th from 176th with 8 steps forward than previous year. All these will help in improving the investment environment in the country, setting up new industries and creating new avenues for expanding bilateral economic relations between the two countries. Speaking at a seminar organized by the German-Bangladesh Chamber of Commerce during a visit to Germany in October 2018, the Prime Minister of Bangladesh called on German entrepreneurs to invest in the pharmaceutical, tourism, manufacturing, ICT, ceramics and renewable energy sectors for joint ventures.

In order to expand German-Bangladesh bilateral trade in the future, new export sectors need to be harnessed keeping in mind the need for environment and labor-friendly production. To diversify the exporting areas, shipping industry, vaccine production and technological cooperation could be the potential areas of bilateral trade in the upcoming days. Although Bangladesh has given priority to the textile sector, the sectors of leather goods, frozen fish, engineering products and medicines need to be developed to diversify the exporting products. The technological sector and agricultural and industrial equipment of Germany is far better than Bangladesh. Bangladesh has been developing 100 economic zones where German industries can work through investment and technology sharing. In a word, there is huge potential to accelerate the bilateral relations to a new height.

Bangladesh has been able to retain its GDP growth rate at around 7 per cent in the last decade before the Covid-19 attacked. Even during the pandemic, Bangladesh is among the fewer countries that become able to maintain a positive growth rate at 5.24 per cent in the 2019-20 fiscal year. To make its economic development more dynamic, the Bangladesh government is focusing on the mega infrastructure projects i.e., Padma Multipurpose Bridge, Metro rail project or Matarbari deep seaport. Bangladesh will soon become a middle-income country where there are enormous opportunities for Germany for trade and investment. Bangladesh’s economic development has been praised by various German economic organizations, the International Monetary Fund, the World Bank and the Asian Development Bank as well. Among the 27 countries of the European Union, Germany is the largest consumer market that leads to competition between exporting countries to capture the German market. In 2019, Germany imported 1,104.1 billion euros worth of goods from abroad, however, Bangladesh only captured 5.64 billion euros where Bangladesh and Germany have huge room for development.

Human Security Aspects

‘Environmentalism’ has been gaining momentum in Europe especially in Germany that tends to lean them towards eco-friendly products which paves the way for Bangladesh to export tea and jute-oriented products. Besides, Germany is one of the leading countries in the world in terms of producing alternative environment friendly fuels. In the field of alternative energy, Bangladesh can utilize the experiences and technological support of Germany. Climate change and global warming are common threats for the world. Bangladesh as the worst sufferer and Germany as an active proponent of climate diplomacy, should work together to make the world sustainable, livable and eco-friendly. Germany can contribute to the Delta plan 2100 and Climate funding to join hands with Bangladesh to mobilize resources for climate and security. Germany may provide Bangladesh technological know-how on how to produce and manage sustainable and renewable energy.

The present state leader of both Bangladesh and Germany has been praised for their humanitarian stands above all other narrowly-defined state interests. The two countries are leading in sheltering refugees around the world. Since 2017, a large number of Rohingya FDMNs fled to Bangladesh due to the “genocidal intent” of the Myanmar Army. As the socio-economic, environmental and security dimensions of sheltering over 1.2 million Rohingya refugees are increasing day by day, the Prime Minister of Bangladesh Sheikh Hasina, “the mother of humanity”, has been seeking sincere response from the international community to accentuate safe and dignified repatriation of the Rohingya FDMNs. The Rohingya crisis is a haze on the economic development of the country. Germany should intensively cooperate with Bangladesh in finding a durable solution for the forcibly displaced Rohingya Muslims in Bangladesh.

People-to-People Contact

The cultural relationship and people-to-people contact of Bangladesh and Germany are very strong. Cultural cooperation is mainly directed through the Goethe Institute. In Bangladesh, the Institute is the key meeting place for all those interested in Germany. It offers diversified cultural events through film festivals, seminars and lectures on contemporary arts, culture and exhibitions of both German and Bangladeshi artists. German government has been providing different education and cultural exchange programs for the foreign students. Besides, in the higher study level, they are providing scholarships like German Academic Exchange Service (DAAD) scholarship which is a really good opportunity for people-to-people contact and cultural affinity. The DAAD and other organizations offers a number of scholarships to Bangladeshi students and young researchers each year in order to promote the academic exchange between Germany and Bangladesh. Besides, in February 2021, GIZ, a German-based organization, has expressed interest in providing more technical assistance to Bangladesh to create skilled human resources in the field of textile education. The company has proposed a new project called ‘Higher Education and Leadership Development for Sustainable Textiles in Bangladesh (HELD)’ to assist the Sustainable Development Goals by 2030.

To conclude, Bangladesh-German relations have been enjoying great historical, economic and cultural ties. Germany is one of our biggest trading partners and the second largest market for garments in particular. But now pharmaceuticals, eco-friendly agricultural products, leather and ceramic products need to be prioritized for export diversification. Germany is an all-weather development partner of Bangladesh. They are supporting Bangladesh in numerous developmental activities through GIZ in the technology, health, education, environment, climate change, good governance and renewable energy sectors. They should work in a coordinated way to develop bilateral relations and to become trusted development partners in the upcoming days.

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