Last week, Pakistan and Bangladesh signed a set of Memoranda of Understanding (MoU) in Dhaka during Deputy Prime Minister and Foreign Minister Ishaq Dar’s visit. The agreements signal Islamabad’s intent to anchor its geo-economic policy in broader regional engagement.

For some time, Pakistan has been pursuing a geo-economic policy aimed at reinforcing its geostrategic standing in the fast-emerging multipolar world order. At the core of this approach lies Pakistan’s deepening partnership with China and a recalibrated relationship with the United States. By seeking to balance ties with both powers, Islamabad hopes to drive sustainable growth while elevating its stature as a responsible and influential regional player.

The underlying objective is clear: to leverage Pakistan’s unique geostrategic position for maximum economic gain. Stronger bonds with countries that can support this ambition form the basis of its broader outreach. In this context, Islamabad’s warm response to Bangladesh’s renewed engagement, its reassurances to Iran, and its efforts to deepen ties with the Gulf Cooperation Council all fit into a larger pattern. Pakistan is also reaching out beyond its close neighbours to Central Asian states and Egypt and Algeria in North Africa to expand trade and build new partnerships.

Pragmatic diplomacy and a shared ambition for regional prosperity are revitalising the long-overshadowed Pakistan-Bangladesh trade. The most potent symbol of this thaw came in November 2024, when a Pakistani cargo ship docked directly at the port of Chittagong for the first time since 1971. The re-establishment of this maritime link from Karachi was more than a logistical achievement; it was a powerful gesture of reconciliation, cutting transit times by up to a third and revitalising supply chains.

The government hopes to leverage Pakistan’s unique geostrategic position for maximum economic gain

Economic dividends have followed quickly. After bilateral trade hovered around $717 million in FY24, it surged by about 21 per cent to $865m in FY25. Pakistani exports, led by textiles, machinery, and chemicals, grew 19pc to $787m, while imports from Bangladesh — though smaller in scale — jumped nearly 39pc to $78m, according to the State Bank of Pakistan.

The establishment of a Pakistan-Bangladesh Joint Business Council now provides a platform for the private sector, while MoUs — including one covering 50,000 tonnes of Pakistani rice — mark a shift toward structured government-to-government trade.

The potential for diversification is significant. Pakistan is eager to expand its exports into steel, surgical instruments, and ceramics. Bangladesh, a global garment powerhouse, could boost shipments of jute, leather, pharmaceuticals, and tea. Beyond goods, joint ventures in information technology, pharmaceuticals, and cement manufacturing present fertile ground for collaboration. Both sides also see value in empowering women-led enterprises in textiles, handicrafts, and e-commerce by leveraging platforms like Daraz and AjkerDeal.

Beyond warming up to Bangladesh, the state aims to build new partnerships with Central Asian states and Egypt and Algeria in North Africa

Furthermore, during a recent visit to Dhaka, Pakistan’s Commerce Minister Jam Kamal held a round of meetings with Bangladesh’s advisers for industries, food, and commerce, as well as leading business groups. The two sides agreed to reactivate the long-dormant Joint Economic Commission after nearly two decades, finally translating a long-discussed idea into policy reality. They also signed fresh agreements, including the creation of a joint working group on trade and cooperation between foreign service academies, alongside a diplomatic visa waiver scheme.

Beyond trade volumes, discussions opened new avenues of collaboration: agricultural modernisation, renewable energy, halal trade, minerals, shipbuilding and shipbreaking, sugar, leather, rice, and agro-processing. By broadening the economic agenda, both countries signalled that their rapprochement is meant to be comprehensive, addressing food security, industrial technology, and investment flows.

This economic convergence is mirrored by top-level diplomatic re-engagement. During his recent visit, Mr Dar met Bangladesh’s Chief Advisor Dr Muhammad Younus and Foreign Affairs Adviser Md Touhid Hossain. Their discussions focused on broader bilateral engagement on all fronts, including diplomacy, trade and investment, tourism, and culture.

Pakistan’s exports to Bangladesh are still concentrated in a few categories — cotton, cement, inorganic chemicals, cereals, hides and skins, machinery, and plastics, which together make up about 95pc of total exports.

On the import side, Bangladesh mainly sells us jute and textile fibres — over three-quarters of its shipments — along with smaller but rising volumes of hydrogen peroxide, pharmaceuticals, synthetic fibres, and medical instruments.

The Pakistan Business Council estimates a nearly $3bn export potential, with opportunities in rice, processed foods, plastics, leather, machinery, and engineering goods. Bangladesh, meanwhile, could expand in Pakistan with garments, leather goods, tea, pharmaceuticals, and IT-enabled services. Both sides agree that reviving the JEC and moving toward a preferential trade agreement will be essential to unlocking this potential.

Published in Dawn, The Business and Finance Weekly, September 1st, 2025