Bangladesh Must Move Beyond Remittance Dependence to Tap Malaysian Investment

Proposed FTA offers opportunity to narrow $2bn trade gap, expand manufacturing, diversify exports and create jobs: Anwar Shahid

Bangladesh must move beyond exporting workers to Malaysia and start attracting Malaysian capital to build factories, create jobs and turn the country into a manufacturing and export hub, says Anwar Shahid, president of the Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI).

“The proposed free trade agreement could be a game-changer in transforming a relationship dominated by labour migration and remittances into one driven by investment, industrialisation and export expansion”, Anwar shahid said in an exclusive interview with *The Daily Observer on Monday last week.

Shahid said the proposed Bangladesh-Malaysia free trade agreement (FTA) could provide a major opening to transform bilateral economic relations, narrow the widening trade imbalance and establish Bangladesh as a more competitive manufacturing and export base.

But he warned that simply signing an FTA would not guarantee economic gains unless Bangladesh strengthened its productive capacity, improved its investment climate and ensured meaningful access for local products to the Malaysian market.

“We need more Malaysian investment in Bangladesh, more local production and a wider range of Bangladeshi products for the Malaysian market. Our objective should be to build a partnership that creates jobs, increases exports and benefits both countries,” he said.

His call comes against the backdrop of a substantial and persistent trade imbalance between the two countries, with Bangladesh importing considerably more from Malaysia than it exports.

According to Malaysian official figures, bilateral trade reached RM12.18 billion, or approximately $2.84 billion, in calendar year 2025. Malaysian exports to Bangladesh stood at RM10.08 billion, equivalent to around $2.35 billion, while imports from Bangladesh amounted to approximately $500 million. Petroleum products accounted for a significant share of Malaysian exports.

Bangladesh's fiscal-year figures reveal a similar imbalance. In FY2024-25, the country exported goods worth $282.55 million to Malaysia against imports of $2.29 billion, leaving a trade deficit of approximately $2.01 billion.

Although the figures cover different reporting periods and are not directly comparable, they underline the scale of the challenge facing Bangladeshi exporters.

“The trade deficit is a serious concern, but it should also be seen as an opportunity. Bangladesh has the capacity to produce and export much more than it does today,” he said.

He stressed that Bangladesh must identify Malaysian market demand, improve product quality and competitiveness, and establish stronger commercial connections between domestic manufacturers and Malaysian buyers.

Equally important, he said, is encouraging Malaysian businesses to establish factories in Bangladesh and use the country as a manufacturing base for supplying regional and international markets.

FTA must deliver investment, not just tariff cuts
Shahid believes the proposed FTA should be negotiated around tangible economic gains rather than the political or diplomatic achievement of signing an agreement. Beyond tariff reductions, the deal should address customs procedures, non-tariff barriers, product standards, certification requirements and other practical obstacles that prevent businesses from entering each other's markets.

“An FTA should not be judged by how quickly we sign it. We must judge it by what Bangladesh gains from it. Our exporters need meaningful market access, and our businesses need opportunities to form partnerships with Malaysian companies,” he said.

The agreement, he added, should help attract foreign investment, establish competitive industries, transfer technology and create employment while addressing the structural weaknesses in bilateral trade.

Garments can open the door to wider exports
Shahid identified sportswear, shirts, trousers, underwear, children's clothing, uniforms, workwear and modest fashion as promising areas where Bangladeshi manufacturers could expand their presence in Malaysia.

 “We already know how to manufacture garments at scale. Now we must move into more product categories, improve value addition and reach new customers. Malaysian companies can help us connect with regional markets, while Bangladeshi manufacturers can offer competitive production,” he said.

Furniture manufacturing also offers considerable potential for Malaysian investment, particularly in export-oriented factories, furniture components and associated supply chains.

Such ventures could generate employment, strengthen industrial linkages and diversify Bangladesh's manufacturing base. However, attracting investment would require consistent product quality, skilled workers, reliable raw-material supplies and more efficient port and transport services.

He also identified agro-processing, pharmaceuticals, leather goods and footwear as sectors with potential to increase exports to Malaysia.

Bangladesh must strengthen its certification systems, improve compliance with international standards and develop reliable distribution networks to turn these opportunities into actual export earnings.

He said Malaysia has developed considerable expertise in halal standards, certification and market development. Cooperation could help Bangladeshi businesses strengthen their capabilities in food processing, pharmaceuticals, cosmetics and agro-based products.

Technology partnership beyond traditional industries
Beyond conventional manufacturing, Shahid sees opportunities for cooperation in electronics, information technology, engineering services and semiconductor-related activities.

Malaysia has an established semiconductor industry, while Bangladesh has a growing pool of engineering and IT graduates. A partnership between the two countries could open avenues for technical training, embedded software development, chip-design support, electronics testing and engineering services.

He cautioned against attempting to establish sophisticated industries without adequate preparation, arguing that Bangladesh should initially target activities compatible with its existing capabilities and gradually move towards higher-value production.

“We should not try to do everything at once. We should identify the areas where Bangladesh can compete, bring in the right partners and gradually move into higher-value production,” he said.

Malaysian companies could contribute industrial expertise and technology, while Bangladeshi universities and businesses could develop the technical skills required to support these emerging industries.

Energy is another important dimension of the proposed partnership, the chamber leader said noting that Malaysia's experience in petroleum and liquefied natural gas could support Bangladesh's efforts to strengthen energy security and ensure reliable supplies for industrial production.

From labour migration to skilled workforce development
BMCCI chairman said a stronger economic partnership must also address Bangladesh's workforce development challenges. 

Although Bangladesh has a large labour force and a long-standing relationship with the Malaysian employment market, Shahid believes the next phase should focus more on skills, productivity and professional training than simply increasing the number of workers sent abroad.

Technical and vocational education, employer-linked training and internationally recognised certification should be expanded to meet the requirements of modern manufacturing, machinery operations, logistics, hospitality and digital services.

“We must move from sending workers in large numbers to preparing workers with the right skills. Training should match the needs of employers. If Malaysian companies invest in Bangladesh, they should also have access to a skilled local workforce,” he said. 

Such an approach, he argued, would serve both countries by improving industrial productivity in Bangladesh while creating better employment opportunities for its workers.

Investment climate remains the biggest challenge
Shahid emphasised that Bangladesh must address longstanding weaknesses in its business and investment environment if it wants Malaysian investors to commit capital to new manufacturing ventures.

Predictable policies, efficient customs administration, reliable industrial infrastructure, streamlined business services and faster regulatory approvals are essential to building investor confidence.

He also called for stronger institutional engagement between the two countries' business communities, with BMCCI playing a more active role in identifying viable projects, connecting investors and exporters, facilitating business partnerships and resolving commercial difficulties.

Regular business dialogues, he said, must translate into actual investment commitments and commercial ventures rather than remain confined to meetings, discussions and formal declarations.

Ultimately, Shahid views the proposed FTA as an opportunity to fundamentally reshape Bangladesh-Malaysia economic relations. For Bangladesh, the challenge is to turn a relationship traditionally dominated by labour migration, remittances and imports into one driven increasingly by investment, manufacturing, technology transfer and export diversification.

“The real opportunity is to build a partnership that benefits both economies. Bangladesh has production capacity, a large workforce and growing industrial capabilities. Malaysia has investment, technology and market connections. We need to bring these strengths together to create new industries, jobs and export opportunities,” he said.