Australia - Bangladesh

Regional Integration & Trade Relation

Australia and Bangladesh is celebrating 45 th anniversary of the establishment of diplomatic

relations in 2017. Australia was the fourth country (the first from the developed nations) that
extended diplomatic recognition to independent Bangladesh. A resident mission was set up in
Dhaka in 1972. The basis of Australia-Bangladesh relations hinges primarily on economic and
political pursuits, and mutual interests. Two-way imports and exports linkages are the key
elements in the bilateral relationship. Subsequently, the harmonious relations between
Australia and Bangladesh were reflected in Australian humanitarian and development
assistance for the war-ravaged country. Eventually, Australia supported the development
efforts in Bangladesh. Over the years, Bangladesh emerged as the top recipient of Australian
aid among the South Asian countries. In fact, it ranks only second to Papua New Guinea and
Indonesia as a recipient of Australian aid. But after all these years having strong diplomatic
relationship between two countries, Australia’s aid, trade, and investment linkage with
Bangladesh still remains limited. Concerned scholars and policy makers believe that there is a
need to enhance bilateral politico-economic relations as good opportunities exists for
Australian enterprises in Bangladesh.

Bangladesh - Australia Regional Integration

The Australian Government focuses on negotiating FTAs with selected partners where these
offer the prospect of significant gains ahead of what will be achievable in the WTO process.
Bangladesh also pursues a moderate foreign policy that places heavy reliance on multinational
diplomacy, especially at the United Nations and World Trade Organization (WTO). In present
days Bangladesh is not connected with Australia by any FTA’s or by regional integration.
Currently Australia is under FTA consideration with India. At the same time Bangladesh is
also keen and potential for the development relation with Australia. As a SAARC country and
being member of WTO Bangladesh should have some feasibility study in FTA with the
potential countries like Australia.

Current Trade Relation with Australia

With a share of 0.3% Australia is the 33rd export partner of Bangladesh external trade and 27 th
import partner of Bangladesh. Total merchandise trade (exports + imports) between both
countries was 454.46412 million US$ in 2009 with the growth of 11.2%. Major imports to
Bangladesh from Australia were Vegetables, Cotton Wheat Ferrous waste & scrap and major
exports to Australia were textile clothing Men's clothing (excl knitted), Women's clothing (excl
knitted), Women's clothing knitted. Australia Import from Bangladesh compared to world
import is negligible. Bangladesh exported to Australia 116004.49(US$ Thousand)1 while
Bangladesh imported from Australia 338459.63(US$ Thousand)2 in 2009. The negative trade
balance indicates that Bangladesh has trade deficit with Australia.

Australia Investment Scenario in Bangladesh

Bangladesh's investment policies remain friendly to foreign investment. The Foreign Private
Investment (Promotion and Protection) Act, 1980 governs the legal framework for foreign
investments in Bangladesh. Bangladesh has bilateral agreements for avoidance of double
taxation with Belgium, Canada, China, India, Singapore, Sri Lanka, Sweden, Thailand, the
Netherlands, and the United Kingdom. Negotiations are ongoing with Australia, Cyprus,
Finland, Indonesia, Myanmar, Nepal, Turkey, the United States, and Uzbekistan. In spite of all
the facilities the investment by Australian is very minimal of total FDI inflow to Bangladesh.
In 2009 the amount of Australian investment in Bangladesh was only 0.22 million US$3. The
major sectors for investment are petroleum and LNG.

Development Cooperation between Bangladesh and Australia

Bangladesh has five bilateral agreements with Australia. Among these agreements, MoU on
Development cooperation between Bangladesh and Australia signed in 1999. Under the
development cooperation, the Direct Aid Program (DAP) is a flexible small grants program
funded by the Australian Government through Department of Foreign Affairs and Trade –
Australian Aid and managed by the Department of Foreign Affairs and Trade. The aim of the
DAP is to advance developmental objectives and address humanitarian hardship in developing
countries. DAP is available on a not-for-profit basis to individuals, community groups, NGOs
and other entities engaged in development activities in countries that are eligible for overseas
development assistance. The Australian government provided over an estimated $61.2 million
as aid in 2009-10 year.4

http://wits.worldbank.org/CountryProfile/en/Country/BGD/Year/2009/TradeFlow/Export/Partner/AUS/Product/al
l-groups
2

http://wits.worldbank.org/CountryProfile/en/Country/BGD/Year/2009/TradeFlow/Import/Partner/AUS/Product/al
l-groups
3
FOREIGN DIRECT INVESTMENT IN BANGLADESH, PROSPECTS AND CHALLENGES, AND ITS IMPACT ON ECONOMY
by Afsana Rahman, Page 11
4
http://bangladesh.embassy.gov.au/daca/OAD.html
Import – Export Volume of 2009

(Value in million US$)

Year Export Import

2008-2009 116.00449 338.45963

Source: http://wits.worldbank.org/CountryProfile/en/BGD