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Pakistan and Bangladesh Reignite Economic Partnership After Nearly Two Decades
In a major diplomatic and economic breakthrough, Pakistan and Bangladesh have revived their long-dormant Joint Economic Commission (JEC) after nearly two decades, marking a new chapter in bilateral relations. The 9th session of the JEC, held in Islamabad, was not just a bureaucratic meeting — it represented the rekindling of a relationship once defined by shared history, complicated by political sensitivities, and now driven by mutual economic pragmatism.
The meeting, the first since 2005, culminated in the signing of several memoranda of understanding (MoUs) and agreements covering trade, investment, energy, agriculture, and technology cooperation. Officials from both sides expressed optimism that this renewed engagement would open a pathway toward sustainable collaboration and regional stability.
A Revival Two Decades in the Making
The Joint Economic Commission was established as a key mechanism to strengthen economic cooperation following the 1974 recognition of Bangladesh by Pakistan. Over the years, it served as a platform for dialogue on trade, investment, and technical collaboration. However, due to political and diplomatic frictions, meetings became infrequent. The last session, held in 2005 in Dhaka, ended without concrete follow-up.
The resumption of the JEC in 2025 signals a significant thaw in relations. Both nations appear ready to move beyond historical baggage and focus on future-oriented cooperation. The meeting featured Pakistan’s Minister for Economic Affairs, who led the delegation alongside senior officials from the Ministries of Commerce, Foreign Affairs, and Industry, while Bangladesh’s side was represented by its Minister of Finance and Planning, accompanied by senior bureaucrats and trade representatives.
This renewed engagement, observers note, reflects a shift toward economic diplomacy as both countries grapple with common challenges — including energy insecurity, climate change, and external debt pressures.
Key Agreements and Areas of Cooperation
The Islamabad meeting produced a series of understandings that could reshape Pakistan–Bangladesh economic relations.
1. Trade and Investment Framework
Both sides agreed to enhance bilateral trade volumes, which currently hover around $900 million annually, with the balance tilting in Bangladesh’s favor. A major point of consensus was the removal of non-tariff barriers and preferential trade agreements to stimulate exports. Pakistan offered to increase imports of Bangladeshi textiles, pharmaceuticals, and jute goods, while Dhaka expressed interest in Pakistani engineering products, surgical instruments, and cement.
Additionally, the two countries decided to explore the creation of a Pakistan–Bangladesh Business Council (PBBC) — a joint forum comprising private sector leaders and chambers of commerce — to identify investment opportunities and promote business-to-business linkages.
2. Energy Cooperation
Given the shared challenges of energy shortages and rising costs, energy collaboration emerged as a major focus area. Pakistan proposed exporting LNG and petroleum products to Bangladesh, while Dhaka offered to share its experience in renewable energy and solar power initiatives. Both sides agreed to launch technical-level discussions on cross-border energy investments and joint ventures in oil refining and power transmission technology.
3. Agriculture and Food Security
Recognizing the importance of food security in a changing climate, Pakistan and Bangladesh agreed to strengthen cooperation in seed technology, irrigation systems, and agro-processing industries. The Pakistan Agricultural Research Council (PARC) and Bangladesh Agricultural Research Institute (BARI) will collaborate on joint research projects.
The two sides also discussed trade in rice, tea, and fisheries — sectors where both countries have competitive advantages and complementary demands.
4. Education and Technology Exchange
Education emerged as a bridge for soft diplomacy. Pakistan offered scholarships and technical training for Bangladeshi students in engineering, medicine, and IT, while Dhaka proposed exchange programs between universities to promote cultural understanding and research collaboration.
Technology cooperation was another highlight. The two governments agreed to foster partnerships between Pakistani IT startups and Bangladesh’s thriving software export firms. Both nations expressed their intent to create a Digital Cooperation Roadmap, aimed at facilitating innovation in artificial intelligence, fintech, and e-commerce.
5. Tourism and Cultural Ties
In a rare but symbolic gesture, Pakistan invited Bangladeshi artists, historians, and cultural delegations to participate in heritage festivals in Lahore and Karachi. In return, Bangladesh proposed promoting tourism exchange programs focusing on shared historical sites, such as those associated with the early independence movement of the subcontinent.
Economic Rationale Behind the Reconnection
The renewed JEC comes at a time when both Pakistan and Bangladesh are seeking new trade routes, diversified export markets, and reliable investment partnerships amid global economic volatility.
For Pakistan, strengthening ties with Bangladesh offers a chance to reconnect with a rapidly growing economy in South Asia that has become a manufacturing powerhouse. Bangladesh’s GDP growth rate — averaging above 6% for the past decade — and its booming garment export industry have earned it the label of a “rising tiger of Asia.”
For Bangladesh, re-engaging with Pakistan provides access to a large market for its consumer goods, and potential cooperation in energy and technology that could complement its industrial growth. The two countries share common goals of economic diversification, job creation, and infrastructure development — areas where collaboration could yield tangible results.
Moreover, as South Asia struggles with fragmented regional trade under SAARC, bilateral arrangements like this JEC serve as practical alternatives to multilateral frameworks that often remain dormant due to political disagreements.
Diplomatic Significance: From Estrangement to Engagement
Pakistan–Bangladesh relations have long been shaped by complex historical narratives and diplomatic sensitivities stemming from the events of 1971. However, recent years have seen a gradual warming of ties.
In 2020, the exchange of goodwill messages between Prime Minister Imran Khan and Bangladeshi Prime Minister Sheikh Hasina hinted at a desire for renewed engagement. The JEC revival now gives institutional shape to that sentiment.
Analysts say the meeting demonstrates “economic normalization” — an effort to put trade and cooperation above political disputes. “This is a mature and timely decision by both nations,” said Dr. Huma Baqai, an international relations expert. “In a global economy defined by interdependence, countries cannot afford to remain hostage to history.”
Business Communities Welcome the Move
The private sector has enthusiastically welcomed the revival of the JEC. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the Dhaka Chamber of Commerce and Industry (DCCI) have both urged their respective governments to follow up on the agreements with actionable frameworks.
Exporters, particularly in textiles, view this as a gateway to regional supply chain integration. Pakistan’s textile manufacturers could benefit from Bangladesh’s expertise in apparel finishing and design, while Bangladesh could source cotton yarn and denim fabric from Pakistan at competitive rates.
“Bangladesh has a strong garment export ecosystem, while Pakistan has raw material strength. Together, they can dominate global textile markets,” said Ghulam Sarwar Malik, a Karachi-based exporter.
Regional Connectivity and Trade Corridors
The revival of economic cooperation also ties into broader connectivity ambitions. Both Pakistan and Bangladesh are members of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and share interests in regional infrastructure under the China–Pakistan Economic Corridor (CPEC) and Bangladesh–China–India–Myanmar (BCIM) Corridor frameworks.
Experts suggest that Pakistan could provide Bangladesh with overland access to Central Asia through its Gwadar and Karachi ports, while Bangladesh could serve as a gateway for Pakistani goods to Southeast Asian markets. Such strategic connectivity could transform South Asia’s fragmented trade landscape into a network of interlinked economies.
Challenges Ahead
While optimism runs high, the path forward is not without challenges. Non-tariff barriers, banking restrictions, and limited air and sea connectivity have long constrained trade between the two countries.
Moreover, political sensitivities still linger, requiring careful diplomatic management. Analysts stress that sustainable economic cooperation depends on insulating trade policy from political fluctuations.
Another major challenge lies in logistics. Currently, there are no direct shipping routes between Karachi and Chittagong, forcing goods to transit through third countries, increasing costs and delays. The JEC has therefore prioritized establishing direct maritime and air cargo routes as a key deliverable for the coming year.
Additionally, both countries face domestic economic pressures — Pakistan with inflation and fiscal deficits, and Bangladesh with its foreign exchange constraints. Ensuring that the JEC’s promises translate into tangible trade growth will require consistent follow-up and institutional commitment.
Voices from Both Capitals
In Islamabad, the revival of the JEC was hailed as a milestone in Pakistan’s broader “Look East” policy. Officials stressed that the initiative aligns with Pakistan’s goal of diversifying partnerships beyond traditional allies and enhancing intra-regional trade.
In Dhaka, media coverage emphasized pragmatic diplomacy and economic self-interest. “This is not about the past; it’s about the future,” editorialized one leading Bangladeshi newspaper. “Bangladesh’s global ambition requires engaging every neighbor, and Pakistan is no exception.”
Political analysts in both countries view this renewed engagement as a confidence-building measure that may pave the way for higher-level visits in the near future.
Global and Regional Context
The revival of Pakistan–Bangladesh economic cooperation also fits into a larger trend of South-South collaboration and intra-Asian trade expansion. With shifting global supply chains, rising energy costs, and protectionist policies in Western economies, Asian countries are increasingly looking inward to build resilient partnerships.
China’s economic slowdown and India’s protectionist policies have opened new opportunities for mid-tier economies like Pakistan and Bangladesh to expand regional trade through flexible arrangements.
Additionally, international financial institutions such as the Asian Development Bank (ADB) and Islamic Development Bank (IsDB) have expressed readiness to support Pakistan–Bangladesh joint initiatives, particularly in green energy and infrastructure.
Environmental and Climate Cooperation
Climate change emerged as a surprising but vital area of collaboration during the JEC discussions. Both Pakistan and Bangladesh are among the countries most vulnerable to climate-induced disasters — from floods and heatwaves to rising sea levels.
The two sides agreed to share expertise in disaster management, early warning systems, and green technology. Pakistan proposed joint projects in reforestation and sustainable agriculture, while Bangladesh offered its experience in community-based adaptation and renewable energy.
Such cooperation, if sustained, could not only strengthen bilateral relations but also enhance both countries’ standing in global climate diplomacy.
Expert Opinions: A Step Toward Regional Reconciliation
Regional observers have described the JEC revival as part of a broader trend toward economic reconciliation in South Asia. “Economic interdependence fosters peace,” noted Dr. Nazrul Islam, an economist at Dhaka University. “This is a pragmatic partnership that prioritizes mutual gain over historical grievances.”
In Pakistan, foreign policy analysts see it as a moment of reflection — an opportunity to build bridges rather than barriers. “Bangladesh’s success story is a reminder that economic resilience can redefine a nation’s trajectory,” said former ambassador Salman Bashir. “Engaging Dhaka could help Pakistan learn from its export-led model.”
The Road Ahead: From Dialogue to Delivery
While the revival of the JEC is promising, the true measure of success will depend on implementation. Both sides have agreed to establish working groups on trade, energy, and technology that will meet quarterly to monitor progress.
There are also plans to hold a Pakistan–Bangladesh Economic Forum next year, bringing together policymakers, investors, and entrepreneurs from both nations. The forum is expected to announce joint projects and potential investment commitments.
Officials hinted that the two countries are exploring the possibility of a bilateral investment treaty (BIT) — a landmark agreement that could provide legal protection for cross-border investments and boost investor confidence.
Conclusion: A New Dawn in South Asian Cooperation
The 9th Joint Economic Commission between Pakistan and Bangladesh stands as a testament to the power of pragmatism over politics. After nearly two decades of silence, the two nations have rediscovered the potential of collaboration rooted in shared geography, economic necessity, and mutual respect.
In a region often defined by rivalries and missed opportunities, this revival offers a glimpse of what South Asia could achieve if nations focused on common prosperity rather than historical division.
For Pakistan, it is a step toward expanding its economic footprint in the Bay of Bengal region; for Bangladesh, it is a reaffirmation of its regional leadership and commitment to inclusive growth. For both, it marks the beginning of a new chapter — one defined not by what was lost in the past, but by what can be gained together in the future.
