After more than half a century, Bangladesh has resumed direct trade with Pakistan, marked by the first delivery of 50,000 tons of rice departing from Port Qasim as part of an agreement between Islamabad and Dhaka.
The two nations have seen a drastic improvement in bilateral relations since the interim government led by Nobel laureate Muhammad Yunus took power in Bangladesh after protests toppled former prime minister Sheikh Hasina last August and sent her fleeing to India.
Bangladesh was once a part of Pakistan but became independent after a nine-month war with Islamabad in 1971. After a nine-month war, Bangladesh, formerly East Pakistan, gained independence.
Bangladesh will pay Pakistan $499 per ton for white rice under the terms of the new agreement, which was signed earlier this month and is being handled by the Trading Corporation of Pakistan. The shipment will be delivered in two stages, with the remaining 25,000 tons anticipated to arrive at the beginning of March. However, the cost of rice exceeds that of grains sourced from Vietnam, which Bangladesh has been importing at $474.25 per ton.
Since medium-quality rice has been selling for around 80 taka ($0.66) per kilogram recently, the government has struggled to maintain market stability. The government is importing more rice from international markets, including tenders, and has scrapped import duties to control rice prices.
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The Bangladeshi government is increasing imports and lowering import taxes in an effort to stabilise domestic rice prices, which have risen by 15–25% in recent months. The first shipment, consisting of 50,000 tonnes of rice, has already departed from Port Qasim in Pakistan. This marks a major milestone in their bilateral relations and is expected to strengthen economic ties between the two countries.
The resumption of direct trade between Bangladesh and Pakistan is expected to have several positive impacts on both economies:
- Increased Trade Volume:
The direct trade route will likely boost the volume of trade between the two countries, reducing reliance on third-party countries for trade facilitation.
- Cost Efficiency:
Direct trade can lower transportation and transaction costs, making goods cheaper for consumers and businesses in both countries.
- Economic Diversification:
For Bangladesh, importing rice from Pakistan provides an alternative to its traditional suppliers, potentially stabilizing the rice market and reducing price volatility.
- Strengthened Bilateral Relations:
Improved economic ties can lead to better political and diplomatic relations, fostering a more stable and cooperative regional environment.
- Job Creation:
Increased trade activities can create jobs in sectors like shipping, logistics, and trade services, benefiting local economies.
Overall, this historic resumption of trade is a promising step towards enhanced economic cooperation and mutual growth for both nations.