Since establishing diplomatic ties between the Republic of Korea and Bangladesh in 1973, the Republic of Korea has been enhancing cooperation in various fields, such as politics, economy, culture, development cooperation, and human exchange. Additionally, more than 200 Korean companies are present in Bangladesh, making the Republic of Korea the largest investor in Bangladesh’s garment sector. Their investments in recent years have been diversified into infrastructure, energy, and consumer goods, which would lead to further development of our bilateral cooperation. Among the 200 Korean investment companies in Bangladesh, over 70 percent are in the RMG and textile sector employing over 150,000 Bangladesh workers. Korea is currently the fourth largest FDI investor in Bangladesh. Korea’s investment has been expanded to manufacturing industries thanks to a recent increase in investment in automobiles, mobile phones, and consumer electronics through joint ventures with local partners. Recently team Textile Focus had an exclusive conversation with Mr. Park Young Sik, Ambassador of the Republic of Korea. Ambassador Park Young Sik gave his opinion on the bilateral cooperation in the textile sector and the past, present, and future of the relations in his interview.
Textile Focus: How do you see the current situation in Bangladesh’s economy?
Park Young Sik: Bangladesh’s economy has undergone significant transformation in recent decades, emerging as one of the fastest-growing economies in South Asia, primarily driven by the export-oriented RMG sector. However, recent political upheavals, along with 15 years of economic mismanagement and plunder under the previous regime have unveiled deep-seated vulnerabilities. These include fragility in the banking sector, a mounting external debt-servicing burden, a weakening currency and dwindling foreign exchange reserves, compounded by high import bills as well as limited diversification of export markets.
However, the political transition offers a rare opportunity for Bangladesh to address lingering chronic problems and lay the foundation for stronger, more equitable and sustainable growth. By focusing on institutional reforms in economy, Bangladesh can harness its potential to overcome current challenges. Korea will stand by Bangladesh in its efforts to transition from economic turbulence to stability and prosperity.
Textile Focus: How can Bangladesh export more RMG to the Korean market?
Park Young Sik: Bangladesh has immense potential to increase its RMG exports to Korea, and several steps can be taken to achieve this goal. First, while Bangladesh’s key exports to Korea currently include knitwear and woven garments, there is a growing demand in Korea for non-cotton and synthetic garments. Bangladesh must focus on prioritizing R&D in chemicals, fabrics, and fibers to enhance the quality and diversity of its products. This requires substantial capital and access to advanced technology, areas where collaboration with Korea can play a significant role. Collaboration with Korea on cutting-edge technology will help Bangladeshi exporters meet the high standards and expectations of the Korean market. Korea is already playing a supportive role through initiatives such as ‘Technology Advice and Solutions from Korea (TASK)’ program supported by Ministry of Trade, Industry, and Energy, assisting 10 local textile companies in enhancing manufacturing technology, strengthening production capacity, and training skilled professionals. These efforts are vital for developing a robust foundation for sustainable growth.
Second, On November 28, 2024, Korea and Bangladesh announced the decision to commence negotiations for an Economic Partnership Agreement (EPA), which is expected to be a game changer. By addressing tariff barriers, the EPA will enhance the competitiveness of Bangladeshi RMG products in the Korean market. Far beyond an extension of the current GSP benefits, this agreement represents a strategic initiative to deepen bilateral trade and investment ties, foster mutual growth, and establish long-term partnerships. It is expected to strengthen economic relations between the two countries and unlock new opportunities for collaboration, particularly in the RMG sector.
Finally, Bangladesh must enhance its engagement with Korean e-commerce platforms and align its offerings more closely with Korean consumer preferences. By leveraging these digital channels and optimizing supply chain efficiency, Bangladesh can solidify its position as a key supplier in the Korean market. The above-mentioned measures, supported by the EPA and our shared commitment to innovation and collaboration, will pave the way for Bangladesh to significantly expand its RMG exports to Korea.
Textile Focus: How many Korean investors are in Bangladesh? BD RMG sector needs strong backward linkage. How can Korean investors support in this regard?
Park Young Sik: As of FY24, Korea ranks as the third-largest foreign investor in Bangladesh, following the UK and China, with an investment of USD 246.35 million, which accounts for 16.78% of the country’s total FDI inflows. Approximately 220 Korean businesses currently operate in Bangladesh, particularly in the RMG sector. Notably, Youngone Corporation has played a pivotal role in the development of Bangladesh’s RMG industry. The Korea Economic Processing Zone (KEPZ) in Chattogram is a significant example of this collaboration, currently exporting over $1.25 billion annually and providing employment to more than 70,000 Bangladeshis.
In order to strengthen the backward linkage of Bangladesh’s RMG sector, Korean investors can play a crucial role by expanding their investment in non-cotton fabric and textile manufacturing, which is currently one of the sector’s main weaknesses. Korean companies, known for their technology and efficiency, could assist by bringing advanced machinery, efficient processes, and competitive expertise to enhance local production capacity. These kind efforts of Korean companies will also help in building a more self-sufficient supply chain within Bangladesh’s garment sector, which still relies heavily on imports for raw, intermediate materials and capital machinery.
Textile Focus: How many development projects are going in Bangladesh?
Park Young Sik: As of FY2024, Korea has supported over 30 development projects primarily in infrastructure, including transport, energy, and education sectors in Bangladesh through the Economic Development Cooperation Fund (EDCF), totalling around $1.7 billion. Recently, Korea signed a new $3 billion agreement to provide concessional loans for major projects from 2023 to 2027. This deal positions Bangladesh as the second-largest recipient of South Korea’s EDCF fund globally. On top of that, the terms of the concessional loans from Korea are highly favourable compared to other donors, with an interest rate of just 0.01%, a 40-year repayment period, and a 15-year grace period. This makes Korean financing a particularly attractive option for Bangladesh’s infrastructure and socio-economic development.
Korea is playing an active role in Bangladesh’s infrastructure development, with several projects currently underway or being discussed. These projects are backed by the EDCF and Public-Private Partnerships (PPP). The Embassy anticipates that key ongoing/future infrastructure projects, such as the Karnaphuli Rail & Road Bridge, Mirsharai Water Supply Project, and Dhaka Metro, are contributing to improving the connectivity and industrial capabilities of Bangladesh. Korean companies are committed to delivering projects on time without intentional delays or cost inflation, focusing on ensuring the timely completion of projects to benefit Bangladesh’s development.
Textile Focus: What are the challenges of bilateral trade between two countries?
Park Young Sik: Bilateral trade between Korea and Bangladesh faces several challenges that must be addressed to fully realize the potential of trade and investment between the two countries. The EPA will substantially increase bilateral trade and investment.
Although RMG remains a dominant export from Bangladesh to Korea, Bangladesh needs to diversify its exports. Expanding into sectors such as footwear, light industries, ICT and pharmaceuticals could offer new opportunities for trade between the two countries.
There are many areas to be addressed to attract foreign investment. Visa delays and complicated procedures, especially for business-related travel, can significantly hinder trade and investment flow. These delays lead to missed opportunities and can disrupt collaborative efforts between businesses in both countries.
Besides, the complex and often inconsistent customs processes in Bangladesh add unnecessary costs and delays to trade. Issues such as arbitrary procedural delays and lack of transparency in customs clearance can undermine investor confidence and impede the smooth flow of goods. Simplifying business processes and addressing issues like corruption will not only improve investor confidence but also make trade operations smoother. Last but not least, the absence of direct air and maritime cargo links between Korea and Bangladesh increases shipment times and costs. Establishing direct cargo lines would make logistics more efficient as well as facilitate faster, more cost-effective trade.
