Why Bangladesh

Despite ongoing challenges, Bangladesh is one of Australia’s fastest-growing trading partners in the region. A strong bilateral relationship offers Australian businesses increasing opportunities to capitalise on Bangladesh’s expanding economy.

Bangladesh’s economy has experienced significant growth over the past two decades. While the country still faces economic, social and political challenges, increased urbanisation and a growing middle-class population are driving demand for higher-value products, including processed foods, education, healthcare and consumer products. Although Bangladesh is projected to become the world’s ninth largest consumer market by 2030, its median household disposable income of AUD 6,969 and GDP per capita of AUD 4,361 remain below regional averages.

Bangladesh’s economy relies heavily on exports such as textiles, ready-made garments and agrifood products. Domestically, agriculture remains an important economic foundation, employing approximately 40 per cent of the workforce. Government efforts to encourage greater foreign investment present expanding opportunities for Australian businesses, particularly in the manufacturing sector. However, businesses should be aware that infrastructure constraints can materially affect commercial operations. Port congestion often creates delays and can increase logistics costs. Energy shortages and power interruptions can disrupt manufacturing, cold storage and distribution operations. Road quality and connectivity remain uneven outside major urban centres. Businesses should build realistic timeframes, contingency plans and additional cost buffers into supply chains and project planning.

Instability in Bangladesh’s financial and political systems has impacted investor confidence, leading to lower levels of foreign direct investment compared with regional peers. While Bangladesh offers key opportunities, businesses should approach the market with a clear understanding of governance, fiscal and macroeconomic risks.

Bangladesh faces persistent fiscal challenges including low revenue yields, widening external imbalances, and limited policy space. Bangladesh has sought to delay its graduation from least developed country (LDC) status until 2029. Retaining LDC status would allow Bangladesh to continue benefitting from preferential market access as it strengthens its domestic economy.

Export shocks or natural disasters could place additional pressure on public finances and affect government investment in infrastructure and services. These risks should be considered when assessing the broader business environment. See Section 2.2 on Managing Risks for more details.

Geographically Bangladesh sits between South and Southeast Asia, with access to major Bay of Bengal trade routes. Bangladesh has longstanding trade ties to other regional partners through its membership in the South Asian Free Trade Area, the Asia-Pacific Trade Agreement and the Bay of Bengal Initiative for Multi-Sectoral, Technical and Economic Cooperation.

Regional geopolitical dynamics can have important implications for Australian businesses in Bangladesh. The country maintains close relationships with India, Pakistan, Japan, China and the United States, each of which can impact trade, infrastructure, investment and digital connectivity. In 2026, the Government of Bangladesh sought to deepen engagement with China and Pakistan while maintaining relations with the United States and India. For Australian businesses, these shifts in Bangladesh’s relationships could affect supply chains, market access, infrastructure projects, cross-border logistics and digital services. See Section 2.2 Geopolitical Risks for further details.

Comparing key indicators: Bangladesh and Australia

Figure 1: Real GDP Growth - Bangladesh and world average (2019-2030f), %

Education and skills

With a median age of 29.6 years, Bangladesh’s youthful population is driving demand for education, skills and vocational training. At 2.3 per cent of GDP, public investment in education is low relative to peer countries, creating opportunities for private providers and partnerships. Additionally, Bangladesh’s desire to build a more highly skilled workforce is creating demand for STEM and business education. Efforts are underway by the country’s education authority to strengthen policy and regulations and increase quality standards.

In 2026, over 50,000 Bangladeshi students travelled abroad for higher education. This signals strong demand for international education pathways. Australia already has a prominent presence in this sector. Bangladesh is one of Australia’s top five international education markets. Further opportunities exist for businesses to partner with Bangladeshi universities, to provide English-language education as well as transnational education pathways such as joint degree offerings, branch campuses and vocational training to support the country’s continued economic growth.

Food and agribusiness

Agriculture and food processing is the largest economic sector in Bangladesh, contributing 16 per cent of the country’s GDP annually. Home to particularly fertile land and abundant marine ecosystems, Bangladesh’s food exports have expanded by 18 per cent since 2020. Major exports include tropical fruit, rice, jute, tea and prawns. In addition to investing in food production, Australian businesses and investors could explore opportunities in food processing technologies and cold storage infrastructure. The domestic market is also attractive for Australian exporters. Rising household incomes and increasing urbanisation are driving demand for processed foods including snacks, ready-to-eat meals, beverages and dairy products, as well as premium imported packaged food products. For example, Bangladesh is already a top three export destination for Australian chickpeas and further growth in demand is expected.

Green economy

By 2041, Bangladesh aims to obtain 40 per cent of its energy supply from renewable sources. However, at 5.4 per cent of installed power capacity in 2025, renewable power availability remains limited. The need for rapid deployment of green technologies presents an opportunity for Australian businesses to partner with local businesses in solar and wind projects, energy-efficient manufacturing solutions, green logistics and climate finance mechanisms to offer training, technology and services. Businesses should be aware that investments in power generation assets may require special government approval. While Bangladesh’s renewable energy targets are ambitious, power-sector contracts can be exposed to cost escalation, payment risks, land ownership disputes and grid capacity constraints. Investors should conduct thorough due diligence on the government’s fiscal capacity and ensure clear contractual protections are in place.

Critical and enabling technologies

Bangladesh’s digital economy is growing rapidly. The IT services market is projected to reach AUD 4.9 billion by 2029. The country is deepening its integration into global value chains through investments in data centres and hardware manufacturing. Between 2020 and 2024, more than 30 greenfield projects including data centres totalling AUD 1.6 billion in investment were announced, and demand is expected to grow. Combined with increasing satellite and 5G connectivity, these developments may make exploration and partnerships in software development, IT services, semiconductor manufacturing and electric vehicle battery operations attractive for Australian businesses.

Technology is a priority area for the Bangladesh Investment Development Authority (BIDA), who provide a range of tax and investment incentives for foreign investors operating in this sector. Businesses should assess the resilience of Bangladesh’s digital infrastructure. Digital services depend on reliable internet bandwidth, stable electricity supply and secure connectivity routes. Bangladesh’s digital economy is closely linked to regional telecommunications infrastructure, including cross-border connectivity with India. Any disruption to international internet connectivity, power supply or data-routing arrangements could affect cloud services, e-commerce operations and technologyenabled business models.

Healthcare and pharmaceuticals

The healthcare industry in Bangladesh has doubled in size since 2018, yet specialised care for complex conditions is still limited. With the middle class set to expand by 10 per cent annually, there is a growing demand for digital health information systems, telehealth and wearables, hospitals, hospital management and specialised medical education. Additionally, the rapidly growing pharmaceutical manufacturing industry has been identified by the BIDA as a priority area for foreign investment, presenting further opportunities for Australian businesses. Specific tax and investment incentives exist for businesses manufacturing active pharmaceutical ingredients, specialised drugs and healthcare products such as rubber latex or radio pharmaceuticals. Historical issues with quality control in Bangladesh’s pharmaceutical industry also present opportunities to invest in improvements to manufacturing, certification and testing.

Textiles and ready-made garments

The textile and ready-made garments sector has long been a driving force behind Bangladesh’s economic growth, accounting for 80 per cent of total exports. Bangladesh is the second largest garment exporter in the world and a key player in the global supply chain. It has developed a reliable and skilled workforce in this sector, as well as a sectoral ecosystem supporting its growth with training, technical development and logistics. To maintain competitiveness, Bangladeshi companies are transitioning from basic apparel to higher-margin garments such as technical sportswear using premium fabrics like Merino wool. Increased collaboration between Australian cotton and wool companies and Bangladeshi manufacturers is actively growing this market through new technology investments and expanded manufacturing capacity. Additionally, there is growing pressure to implement sustainable practices in this sector. This is creating opportunities for Australian businesses to provide advanced supply chain technology, sustainable raw materials and green manufacturing techniques.

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