[🇧🇩] Partnership Between Bangladesh And South Korea

[Saif]

How the agreement with South Korea be leveraged for economic transformation

Bangladesh and South Korea signed a Comprehensive Economic Partnership Agreement (SEPA) on 4 August 2026. This agreement was finalised after nearly a year of five rounds of formal discussions and several meetings. This timing is particularly significant for Bangladesh because, in November 2026...

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How the agreement with South Korea be leveraged for economic transformation
The Comprehensive Economic Partnership Agreement (CEPA) with South Korea presents a major opportunity for Bangladesh. However, the benefits of this opportunity will not come automatically. Bangladesh must now transform market advantages into exports, investments into technology and skills, and economic partnerships into production capacity. If this can be achieved, CEPA could become a key foundation for economic transformation. Fahmida Khatun has written on the matter.

Fahmida Khatun

Bangladesh and South Korea signed a Comprehensive Economic Partnership Agreement (SEPA) on 4 August 2026. This agreement was finalised after nearly a year of five rounds of formal discussions and several meetings.

This timing is particularly significant for Bangladesh because, in November 2026, the country is scheduled to graduate from the list of Least Developed Countries (LDC). Consequently, the nature of Bangladesh's trade relationships will change in the upcoming days.

So far, as an LDC, Bangladesh has received duty-free or preferential access to the markets of developed and some developing countries unilaterally. After LDC graduation, some of these benefits will no longer be available as before. Therefore, Bangladesh must now secure new market advantages through bilateral and regional agreements.

From this perspective, CEPA with South Korea is not just a trade agreement; it could be an essential part of Bangladesh's trade, investment, and economic strategy post-LDC graduation. However, it is important to remember that signing an agreement does not automatically translate into economic benefits. The success of this agreement will ultimately depend on how well-prepared Bangladesh is and how effectively it can leverage the opportunities presented by this agreement.

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• South Korea's CEPA is not just a trade agreement; it could be a vital part of Bangladesh's trade, investment, and economic strategy after LDC graduation.​
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• In many advanced service sectors, Korean companies have much higher technological expertise and international experience than Bangladesh. Therefore, both countries will benefit from the opening of the market.​
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• Imports from Korea to Bangladesh may increase due to CEPA, raising concerns of an existing trade deficit with Korea potentially worsening.​

Beyond tariff benefits
Modern CEPA is not merely an agreement to reduce product tariffs or provide duty-free benefits. The Bangladesh-South Korea CEPA includes issues such as trade in goods and services, investment, rules of origin, customs procedures, sanitary and phytosanitary measures, trade technical barriers, digital trade, intellectual property, and economic cooperation.

Therefore, limiting this agreement to the question of 'how many goods can be exported duty-free to South Korea' would overlook its vast potential. Instead, it should be seen whether this agreement enables Bangladesh to increase and diversify exports, attract technology-based Korean investment, integrate Bangladeshi companies into Korea's supply chain, and enhance the productivity and technological capability of the country's industries.

Simply having market advantages does not increase exports
The practical benefits Bangladesh will derive from CEPA depend significantly on the rules of origin. Many of Bangladesh's export industries, including ready-made garments, rely on imported raw materials and intermediate goods. Therefore, even if South Korea offers duty-free benefits, if the rules of origin are complex, many Bangladeshi exporters may not be able to utilise those benefits fully.

The key point is that the success of the CEPA cannot be assessed simply by looking at the percentage or number of products receiving tariff preferences. We need to see how many exporters are actually using these benefits and how much they are exporting under them. This will be an important measure of how effectively the market access benefits are being utilised in practice.

Government and business organisations have responsibilities in this regard. They must provide clear information and assistance to exporters on rules of origin, customs processes, product standards, and other technical requirements in Korea. This assistance is especially crucial for small and medium-sized exporters. Large companies can understand these rules with their own personnel and experts, but small companies do not always have that capability.

The major challenge now for Bangladesh is moving from signing the agreement to effectively implementing it. Through the Foreign Trade Agreement Wing of the Ministry of Commerce, Bangladesh's capacity for trade negotiation and bargaining has improved compared to before.

Opportunities in service and digital trade
Another promising area for Bangladesh is service and digital trade. New opportunities may arise for Bangladesh in South Korea's information technology, IT-enabled services, professional services, and other knowledge-based sectors. However, even here, simply opening the market will not increase exports.

Bangladesh must first understand which service sectors in Korea have realistic opportunities for it. The Bangladeshi institutions and professionals entering this market need to know what qualifications, licences, or other rules must be fulfilled.

It should also be noted that Korean firms' technological expertise and international experience in many advanced service sectors are much greater than Bangladesh's. Thus, the opening of the market will benefit both countries. Bangladeshi companies will need to improve their technology, efficiency, and service quality to stay competitive.

The greatest potential lies in investment and technology
In the long run, Bangladesh's most significant benefit from CEPA will likely be in investment and technology rather than tariff advantages. South Korea has played an important role in the industrialisation history of Bangladesh. In the late 1970s, through collaboration between Korea's Daewoo and Bangladesh's Desh Garments, production, management, and marketing knowledge was brought to Bangladesh.

This experience later played a crucial role in the development of Bangladesh's ready-made garment industry. It is now necessary to take this experience to more advanced and technology-dependent industries.

Efforts could be made to attract Korean investment in sectors such as electronics, engineering, automotive components, renewable energy equipment, medical equipment, advanced textiles, and the digital industry.

However, the focus should not only be on increasing the amount of foreign investment. It is necessary to attract investment that will bring new technology, create a skilled workforce, and establish connections with local Bangladeshi companies. Business relationships between Korean investors and Bangladesh's small and medium enterprises must be developed, technical training provided, cooperation between universities and industry, and opportunities for joint research increased.

The crucial question is not "how much investment came', but rather how much new knowledge, technology, and production capacity this investment created in Bangladesh's economy.

Containers at Chattogram port File photo

Does a widening trade deficit cause concern?

Imports from Korea to Bangladesh may increase due to CEPA, raising concerns of an existing trade deficit with Korea potentially worsening. However, it would not be correct to conclude that the agreement is detrimental to Bangladesh just because the trade deficit widens.

If lower tariffs allow advanced machinery, raw materials for industries, intermediate goods, and technology to come from Korea, and if these enhance the productivity and competitiveness of Bangladesh's industries, then such imports could be positive for the economy. Therefore, it is important to look beyond just the volume of imports and assess whether these imports are boosting the country's production capacity.

However, there will be cause for concern if CEPA results in increased imports of primarily finished consumer goods without a corresponding rise in exports from Bangladesh or Korean investment. Therefore, the government should not focus solely on the bilateral trade deficit. It is essential to regularly monitor exports, import types, investments, employment, the impact on domestic industries, and customs revenue.

Real work begins after signing the agreement

The major challenge now for Bangladesh is moving from signing the agreement to effectively implementing it. Through the Foreign Trade Agreement Wing of the Ministry of Commerce, Bangladesh's capacity for trade negotiation and bargaining has improved compared to before.

However, implementing modern trade agreements is a more complex task.

Bangladesh has already signed an economic partnership agreement with Japan, CEPA with South Korea, and is initiating economic agreements with other countries, including Singapore and the UAE. Therefore, developing sustainable expertise on international trade, trade law, services, investment, customs, product standards, rules of origin, and digital trade is vital.

There must be effective coordination between the Ministry of Commerce, National Board of Revenue, Bangladesh Bank, Bangladesh Investment Development Authority, regulatory bodies, and other related institutions. Although responsibility is distributed across various institutions, if there is no coordination, many opportunities under the agreement will remain unrealised.

Success must be measured by outcomes

An effective monitoring system is needed to regularly review CEPA's implementation progress. Key indicators that could be looked at include how much Bangladesh's exports to South Korea are increasing, whether new products are being exported, whether exporters can practically use tariff benefits, whether service exports are increasing, which sectors Korean investment is coming into, whether technology is being transferred, and whether Bangladesh's SMEs are integrating into Korea's supply chain.

Sector-specific strategies for the Korean market are also needed for Bangladesh. Merely obtaining market privileges is not enough. Bangladeshi businesses must understand the Korean market, meet the necessary standards, and network with business organisations there. Similarly, to attract Korean investment, instead of general promotion, Bangladesh's industrialization goals should focus on specific sectors and specific companies.

Therefore, five years later, the success of the Bangladesh-South Korea CEPA should not be judged only by how many products received tariff benefits. Instead, the key is to assess whether Bangladesh's exports have increased and diversified, whether service exports have risen, whether Korean investment has come into advanced industries, and whether new technology and skills have developed among Bangladeshi companies and workers.

CEPA presents a significant opportunity for Bangladesh, but the benefits of this opportunity will not come automatically. Bangladesh must now transform market advantages into exports, investments into technology and skills, and economic partnerships into production capacity. If this can be achieved, CEPA with South Korea could become a key foundation for Bangladesh's economic transformation post-LDC graduation.

*Dr. Fahmida Khatun is an economist and distinguished fellow at CPD.​

 

[Saif]

The South Korea opportunity Bangladesh is overlooking

As Bangladesh seeks strategic diversification, South Korea offers economic, defence and human-capital opportunities that Dhaka risks overlooking.

www.thedailystar.net

The South Korea opportunity Bangladesh is overlooking

Liam Mullett

In the wake of multiple domestic and international shocks since the summer of 2024, a nascent “Bangladesh First” foreign policy and regional strategy appears to be emerging. Rather than privileging any single relationship or leaning into intensifying Indo-Pacific competition, Dhaka seeks “constructive engagement with all major powers”. The goals are sensible and likely achievable: greater diplomatic and political space, enhanced and resilient security capabilities and the systems that underlie them, continued economic development up the value chain as a manufacturing hub, development of human capital through education and training opportunities, and a respected place within an inclusive, responsive regional order.

Dhaka is therefore earnestly pursuing optionality through a robust portfolio of partnerships that hopefully will not curdle into dependencies. The vision appears not merely to balance within the traditional “big three” of India, China, and the US, but to diversify beyond those giants. Recent analysis has detailed the relationships Bangladesh ought to build with Japan, Australia, ASEAN and Gulf groupings, Turkey, and other members of the wider Western and Muslim worlds. This nascent strategy is directionally sound, but habitually overlooks what should be a critical piece of the puzzle: South Korea.

South Korea-Bangladesh ties have made tangible progress recently, most notably through an agreement in principle on the Comprehensive Economic Partnership Agreement (CEPA), which is expected to significantly open trade and investment channels once implemented. And yet, multiple otherwise excellent analyses featuring lengthy lists of bespoke, developing relationships entirely neglect even to mention Seoul. Failing to incorporate the South Korea partnership and its momentum into the guiding strategic documents would be a significant oversight, as Seoul’s offerings fit Dhaka’s needs unusually well.

To start, South Korea’s geopolitical profile suggests a high-reward, relatively low-risk proposition for Bangladesh. Seoul is a member of Washington’s regional network and cannot credibly be characterised as non-aligned. However, the ROK generally seeks to keep its hard-balancing role within that network largely bounded by the Korean Peninsula, and its relationship with China is usually more stable and less rivalrous than the China-Japan relationship. Further, Seoul has neither the intention nor the capacity to become a genuine “independent power” in distant South Asia. Rather, beyond its immediate neighbourhood, South Korea tends to behave in the wider Indo-Pacific as a low-drama, pragmatically cooperative, order-building partner. This tendency is particularly pronounced when Seoul is led by a liberal president, as was the case under Moon Jae-in and is now under the current Lee administration.

Of course, risks are not non-existent; for example, South Korea’s especially close defence and technological relationship with the US means that Korean arms procurements could be negatively perceived in Beijing. However, as far as high-capacity regional partners go, Seoul represents a comparatively low-risk partner for a Dhaka that must be wary of arousing jealousy, suspicion or tensions in Delhi, Beijing or Washington.

Commerce Minister Khandakar Abdul Muqtadir and South Korean Trade Minister Yeo Han-koo sign a joint declaration concluding negotiations on the Bangladesh-Korea Comprehensive Economic Partnership Agreement (CEPA) at the Ministry of Commerce in Dhaka on 4 August 2026. Photo: Wikimedia Commons

Prosperity: Industrial upgrading
The established and potential benefits that South Korean state and societal actors could bring to Bangladesh and its people are considerable. Foremost is the economic domain, where the CEPA agreement already holds promise. South Korea is a top-five foreign investor, accounting for over $1.5 billion, or nearly 10% of the total stock. The success of Youngone and its Korean Export Processing Zone, employing tens of thousands in the garment industry, demonstrates that Bangladeshi-Korean commercial partnerships are viable. South Korea also shows potential as a partner in improving the environment that supports those partnerships, including through frameworks for billions in development financing for infrastructure and rural areas.

Looking forward, the Vietnamese comparison deserves attention in illustrating how Bangladesh should cultivate its economic relationship with South Korea. Considerable differences between Vietnam and Bangladesh abound, and simply grafting the former’s experience onto the latter would be unsound. Nonetheless, as Vietnam achieves high levels of growth and steadily moves up the value chain from footwear to electronics, it is perhaps the best recent example for Bangladesh to look to in its bid to become a manufacturing-export hub beyond garments. Hanoi’s headline investment and trade figures, along with firm-level qualitative scrutiny, show the indispensable role that South Korea has played through investment, component imports, and integration into global value chains. South Korea can thus claim co-equal status with China and the US as one of Vietnam’s most important economic development partners. Similarly, in Bangladesh’s push into electronics, light engineering, shipbuilding, and digital and IT industries, there are very few better partner candidates than South Korea to provide the necessary capital, technology, and components.

To actually facilitate that move, Dhaka ought to target and develop the standards, efficiencies, regulatory environment, relationships, and high-performing domestic champions that relevant Korean firms such as Samsung Electronics or Hyundai seek. Perhaps most important of all, Bangladesh needs to reduce its reliance on Least Developed Country (LDC) trade preferences to attract investment. It must also be said that, from an explicitly geopolitical or strategic perspective, South Korea is an effective economic alternative to China; while Dhaka certainly cannot, and should not, “replace” Beijing with Seoul, avoiding overconcentration with China or any other partner can stave off potential dependencies or pressure from that partner’s rivals, in this case an anxious Delhi or Washington.

Peace: The ideal arms supplier?
In the security domain, with the BNP’s explicit calls to modernise and enhance the military while building the domestic defence industry in mind, South Korea can support Bangladesh’s practical and strategic diversification goals, especially from an arms-trade and defence-industry perspective. Korean defence firms have grown into bona fide global powerhouses, with equipment from Hanwha, Hyundai, LIG Nex1, KAI, and others having a reputation for affordability, reliability, and high performance across air, land, and sea domains. Export partners are often provided with cooperative arrangements featuring fast delivery, localised production, and technology transfer. Concrete examples include the apparent performance of the Cheongung-II missile defence system in the recent Middle East conflict, and South Korea becoming the Philippines’ largest defence supplier from 2019 to 2023 amid Manila’s current enhancement and modernisation drive. South Korea is not yet a major Bangladeshi supplier or domestic defence-industry partner, but the BNS Bangabandhu and related past MOUs demonstrate that such a relationship can work when sufficient effort is applied. Therefore, if deemed appropriately suitable, Bangladesh should follow through on reported interest in Korean submarines and helicopters, explore other capabilities such as howitzers, and push for localised production where possible. Analysis of Bangladesh-Japan relations shows that genuine resilience and capacity require not just the most visible military hardware, but the underlying enabling technological systems and critical infrastructure, and here too, Seoul thrives.

China has long been Bangladesh’s dominant defence supplier, and Dhaka must decide whether to deepen that relationship or pursue meaningful diversification in this sensitive domain. If it chooses the latter, the same strategic logic that underpins economic diversification applies to defence. South Korea offers an opportunity for diversification beyond China to ease Indian or American concerns about Dhaka joining a “Chinese sphere of influence”, without making Beijing feel “replaced” by an avowed rival. Thus, if Dhaka seeks partners to quickly and affordably enhance its defence capabilities with minimal political or strategic strings attached, it ought to look to Seoul.

Bangladesh Navy Ship Bangabandhu (F-25), built by South Korea’s Daewoo Shipbuilding & Marine Engineering, sails off the coast of Bangladesh during Exercise Cooperation Afloat Readiness and Training (CARAT) 2012. Photo: Wikimedia Commons

Opportunities for a greater security partnership beyond the industrial-supplier domain are more limited but real. South Korea does not have the same bandwidth as India, China, the US, or even Japan to become a regular enforcer of maritime order in the Bay of Bengal, or Bangladesh’s premier partner in intelligence, surveillance and reconnaissance (ISR), counterterrorism, or humanitarian assistance and disaster relief (HADR). It does, however, have a successful track record in naval modernisation and capacity-building, cyber cooperation, military education, and joint training with broader Indo-Pacific partners such as India and Indonesia. In this respect, Seoul could slot in as a tidy addition to Dhaka’s growing security partnerships, and perhaps is already beginning to do so.

People: Upskilling and opportunity
Given the urgency of human capital development, people-to-people and sociocultural dimensions are essential to any Bangladeshi strategic partnership. South Korea has much to offer beyond the country’s hallyu-based general attractiveness. For Dhaka’s drive to upgrade its people’s educational qualifications and technical skills, South Korean firms, universities, and government-backed initiatives, including those of KOICA, possess significant capacity.

Bangladeshis studying at Korean universities, often under scholarship programmes, or working in South Korea and sending home remittances currently number in the thousands. Within Bangladesh, KOICA has committed millions of US dollars to funding AI talent development and is upgrading the Bangladesh-Korea Technical Training Centre (BKTTC), which provides vocational and technical training to thousands annually.

These tangible results, however, should be viewed as a first step. South Korean tertiary education ranks among the best in Asia and is globally competitive, representing a leading alternative for talented young Bangladeshis beyond the West or China. Vietnam is again a compelling comparison; as it rapidly upskills, that emerging economic power now sends more students to Korean universities than to those in America, China, Japan, or Australia.

South Korea’s ageing society also suggests that the country will soon be pressed to bring in more foreign workers, representing a possible Gulf-style opportunity, if relevant policies become conducive, for those who develop language and other relevant skills. South Korea thus presents high-potential opportunities for Bangladesh with comparatively little downside, even if the relationship has flown under the radar so far.

Limitations and next steps
With tangible results and potential across diplomacy, economics, security, and human capital sketched out, the limitations of the South Korea partnership for Bangladesh must be made explicitly clear. What makes South Korea’s Indo-Pacific approach, and in turn its potential place in Bangladesh’s portfolio of partners, particularly attractive also creates a hard ceiling.

South Korean Prime Minister Lee Nak-yon (standing, right) visits Youngone Hitech Sportswear Ltd at the Savar EPZ alongside Youngone Corporation Chairman Sung Ki-hak (third from left) in July 2019. Photo courtesy: The Korea Post


South Korea’s immediate security concerns are severe, stemming from its menacing nuclear neighbour on the peninsula and, as Bangladeshis should find relatable, the overlapping great-power rivalries involving the US, China, Japan, and Russia in its immediate neighbourhood. Therefore, Seoul could not impose a strategic vision upon far-flung South Asia even if it wished to do so, and any engagement must follow the subdued, constructively results-oriented approach. Cautious restraint thus cannot be abandoned in South Korea’s own Indo-Pacific strategy, making it unrealistic to replicate, for example, Japan’s Free and Open Indo-Pacific (FOIP) approach.

Further, China’s sheer economic heft and unique advantages in cost and scale represent a permanent, distinct edge over South Korea. A properly realised South Korea partnership is therefore not a panacea for Bangladesh’s dilemma of managing so many powerful influences. Seoul’s value to Dhaka, then, lies in strategic diversification to build space and optionality, alongside accruing substantial benefits in critical domains, rather than replacing or balancing against the current major powers.

Nonetheless, the South Korea-Bangladesh relationship possesses a strong starting point, real momentum, and some solid results, such as the Youngone partnership, the BKTTC, and, most recently, CEPA. What remains unrealised, however, is the conversion of this progress into a more systematically strategic arrangement capable of delivering robust investment and industrial upgrading, more diversified and resilient defence procurement and capacity, and human capital development. Unfortunately, South Korea seems to be largely an afterthought in the otherwise sound emerging “Bangladesh First” strategy. Instead of being implicitly lumped into the “other regional actors” category, the ROK should be a leading target in Bangladesh’s push to go beyond the “big three”.

Given Seoul’s overstretched diplomatic bandwidth and lower prioritisation of South Asia, however, the likely inclination towards Bangladesh among its far-sighted politicians, diplomats, and bureaucrats will be positive but perhaps not especially proactive. In other words, the burden of initiative lies at least partly with Dhaka. It is therefore imperative that Bangladeshi analysts, strategists, diplomats, politicians, and others formulating and implementing the country’s emerging foreign policy strategy direct more attention, focus, and effort towards South Korea than is evident under the current status quo. The next steps are: One, identify and address the precise internal limitations that have made Bangladesh a less attractive destination for industrial investment than, say, Vietnam. Two, target achievable defence procurements and other partnerships geared towards front-end feasibility, expansion potential, local capacity-building, and spillover effects. Three, lean into available opportunities for human capital development, especially through Korean-language skills.

Liam Mullett is a recent graduate of the Lee Kuan Yew School of Public Policy, where he was awarded the Best Master in International Affairs Student and worked at the Centre on Asia and Globalisation. His research focuses on Indo-Pacific security, geopolitics and geoeconomics, minilateralism, and the role of regional US allies and partners, especially South Korea.​