Bangladesh and South Korea have had friendly relations since their diplomatic relations were established on December 18, 1973. South Korea established an embassy in Dhaka in 1974, whereas her counterpart did it in 1987. On March 1, 1975, South Korea established its diplomatic mission. On February 16, 1987, Bangladesh established a resident diplomatic mission in Seoul. Bangladesh and South Korea have maintained warm, friendly, and active bilateral ties since the establishment of their diplomatic relations in 1973. Since the Republic of Korea and Bangladesh signed a trade and economic cooperation agreement in the mid-1970s, the bilateral flow of goods and services has intensified, along with development in other sectors. The simple gravity equation of bilateral trade between the two countries reveals significant economic possibilities for increased trade cohesiveness and reciprocity. The implications of trade growth, particularly the export growth of both states being significantly linked with the expansion of gross domestic products, call for increased economic cooperation between these far-flung economies in order to realize untapped trade potentials.
As Bangladesh is pursuing economic diplomacy, relations between the two countries deserve special attention in the contradictory trends of globalization and economic nationalism. Korea’s engagement in Bangladesh’s development sector has continued to grow gradually. Korea’s status as a key foreign investor in Bangladesh has not changed. South Korea gives official development assistance (ODA) to other developing nations throughout the world in order to share its development experience. As a bilateral development partner, it provides ODA in the form of grants from the KOICA (Korea International Cooperation Agency) and soft loans from the EDCF (Economic Development Cooperation’s Fund) conducted by Export-Import Bank of Korea (Korea Exim Bank) to Bangladesh’s priority areas such as health, ICT, education, water treatment, energy, and transportation.
It is one of Bangladesh’s most important trading partners. Bilateral trade between the two states has been steadily increasing, with a current value of USD 1.57 billion. Bangladesh’s exports to the Republic of Korea, on the other hand, are only USD 352.82 million, and the trade balance is consistently in the Republic of Korea’s favor. The main exporting items of Bangladesh to ROK are- Leather, Woven garments, Jute manufactures, Pharmaceuticals, Jute yarn & twine, various manufactured products, Knitwear, Footwear (leather & sports), Stainless steel wares, frozen fish, Cap, Copper wire, and raw jute. Vegetable products, live animals, Mineral products, plastic & articles thereof, Textile & Textile articles, Stone, Machinery & mechanical appliances, Vehicles, aircraft, Optical, Photographic, Footwear, Umbrellas, and other commodities are among the major things imported by ROK to Bangladesh.
The Republic of Korea is one of the first countries to invest in Bangladesh, and it now ranks sixth in terms of FDI. Korean FDI inflows to Bangladesh have been steadily increasing, reaching a high of US$ 1122.86 million in December 2018. In Bangladesh, the Republic of Korea was the first country to establish an exclusive foreign Export Processing Zone (KEPZ) and it is currently one of the most important sources of FDI, particularly in the textile and garment industry. It is becoming more involved in the infrastructure, energy, ICT, and medical equipment industries. Till date, more than 200 firms from the Republic of Korea have made investments in Bangladesh. Former Korean Prime Minister H.E. Lee-Nak-yon indicated interest in making cluster investments in Bangladesh’s Special Economic Zone (SEZ) during a visit to the country in July 2019.
In 2019, Bangladesh and South Korea signed three treaties in Dhaka aimed at speeding up bilateral relations and collaboration. Following official negotiations between the two leaders, the treaties were signed in the presence of Bangladeshi Prime Minister Sheikh Hasina and her South Korean counterpart Lee Nak-yon. Dhaka and Seoul hope to expand their collaboration on diplomat training, bilateral investment, and cultural interaction through the accords. The Bangladesh Chambers of Commerce and Industry estimate that bilateral commerce between Bangladesh and South Korea totaled $1.5 billion in the previous fiscal year.
Under the Economic Development Cooperation Fund, South Korea has chosen to provide Bangladesh US$700 million in concessional loans (EDCF). In this regard, the Korean Exim Bank has written to Bangladesh’s Finance Ministry, stating that the decision was reached after “careful evaluation of the government’s development needs, its significance in Korean economic ties, as well as the present EDCF portfolio granted to Bangladesh.” The money would be granted for the years 2021 to 25 according to the Korean government’s proposal. Both the government and the borrower have the option of signing new contracts to use the loan. The decision was reached during a meeting between officials from Korea’s Ministry of Economy and Finance and Bangladesh’s Finance Ministry.
According to the Framework Agreement, which was signed in 2018, Korea agreed to contribute $500 million in concessional loans to Bangladesh from 2017 to 2020 to aid in the implementation of a variety of infrastructure projects. It has already pledged $350 million under a similar agreement between 2015 and 2017. Another meeting, termed the EDCF Policy Dialogue, is set to take place shortly, during which both parties will assess the existing condition of bilateral collaboration as well as the potential for bankrolling new projects in Bangladesh.
Under the current Employment Permit System, the labor market for Bangladeshi workers has continued to expand. Since 2008, Bangladesh has started sending unskilled employees to the Republic of Korea via the Employment Permit System (EPS), which has significantly decreased migration costs. In the Republic of Korea, over 12,000 Bangladeshi contractual laborers are employed in the industrial sector through the EPS program. Prime Minister Sheikh Hasina emphasized the need of reducing the trade deficit between the two nations, citing the 20,000 Bangladeshis working in various industries in South Korea.
As the two nations are going to mark their 50th anniversary of diplomatic ties on December 18, 2023, diplomats and academicians say they aim to push their bilateral relationship to new heights, expanding beyond textiles to ICT, energy, blue economy, climate change, and infrastructure development. Experts also recommend rushing through a free trade agreement (FTA) since Bangladesh is on course to graduate from the least developed country (LDC) category by 2024, when duty-free could be withdrawn. Since 2012, Korea has granted duty-free and quota-free access to 95 percent of Bangladeshi exports. South Korean Ambassador Lee Jang-Keun requested Bangladesh to support Korean companies who have invested in Bangladesh in running their businesses successfully and to promote a favorable business environment for foreign investors.
Bangladesh is particularly interested in fostering economic ties with Korea, and it has been making necessary efforts to improve substantive collaboration in trade, investment, and technology exchanges. In international forums, Korea and Bangladesh have maintained constructive relations. Bangladesh, as a member of the Non-Aligned Movement and a peace-loving nation, demonstrates a comprehensive awareness of the present problems on the Korean peninsula, and has expressed support for the peninsula’s peace and stability, as well as the peaceful unification of the two Koreas. It has also backed the Republic of Korea’s bids for various posts in many international organizations. On its side, the Republic of Korea has made significant efforts to expand its bilateral relations with Bangladesh, including increasing investments, commerce, and development cooperation. Korea and Bangladesh also work together to improve mutual understanding through cultural and sporting exchanges as well as visits by government and non-government officials.
Finally, one can see a new optimism as spelled out at the policy level of the two nations. During the official visit of Sheikh Hasina, Bangladesh Prime Minister in Seoul in 2010, in their joint press conference, Bangladesh and South Korea agreed: “Consolidation and enhancement of Korea-Bangladesh friendship and cooperation serve the fundamental interests of both countries, meet the common aspirations of the two [countries] peoples and are conducive to peace and development in the Asian region and the world at large.” South Korean Ambassador to Bangladesh Lee Jang-keun recently mentioned that the future of Bangladesh-South Korea relations “looks very bright and it will get brighter” with diversified success stories. It is critically important to capture the new trends and directions of bilateral relations in the changed context of regional and global politics that will contribute to the pursuit of economic diplomacy of Bangladesh.
Editor’s note: The writer, Mr. MD Pathik Hasan is a Dhaka-based NGO activist and a freelance writer (particularly on current international issues).