Bangladesh stands at a pivotal crossroads in 2025, with its economic future shaped by both persistent challenges and promising opportunities. For decades, the country’s prosperity has been closely tied to the ready-made garments (RMG) sector, which, according to The Daily Star, accounts for a staggering 82-85 percent of total exports. This heavy reliance has brought both fortune and vulnerability, leaving the nation exposed to the whims of global trade dynamics and abrupt policy changes abroad.
Recent events have underscored these risks. The United States, one of Bangladesh’s largest export markets, recently reduced tariffs on Bangladeshi goods from 35 percent to 20 percent—a notable improvement, but still a rate significantly higher than those enjoyed by competitors with preferential trade agreements. As industry observers and educators alike have pointed out, without a concerted effort to diversify export markets and improve competitiveness, Bangladesh’s export growth could hit a wall.
“Diversifying our export basket and taking effective measures accordingly is an urgent priority and probably the most feasible option,” wrote Sayeed Ibrahim Ahmed, Assistant Professor of Finance at American International University Bangladesh, in a recent opinion piece published on August 18, 2025. His call to action is echoed by business leaders and policymakers who now see diversification as essential to sustainable growth.
Opportunities abound in sectors that have long been overshadowed by garments. Bangladesh’s leather industry, for example, currently captures less than 0.5 percent of the global market, despite the country being a major source of raw leather in South Asia. Pharmaceuticals, meanwhile, have shown resilience and promise, posting a 4 percent year-on-year export growth in fiscal year 2024-25. Perhaps most tantalizing is the potential in information technology. The global semiconductor market alone is valued at over a trillion dollars, and even a modest 2-5 percent share could revolutionize Bangladesh’s export earnings and technological standing. Software programming, artificial intelligence, and digital services offer further pathways to high-value exports that depend more on brainpower than manufacturing capacity.
Yet, as Ahmed and other experts caution, such transformation requires more than just policy tweaks—it demands a fundamental shift in how Bangladesh invests in its people. The country’s demographic dividend—a large, youthful workforce—remains underutilized. Many university graduates, industry professionals lament, lack the basic skills needed for the corporate world, such as budgeting or understanding an income statement. “A significant number of students…do not have the basic skills required for the corporate world,” Ahmed observed, highlighting a gap that threatens the nation’s competitive future.
To address this, government subsidies for vocational education and technical training are increasingly seen as vital. Neighboring countries such as India, Pakistan, and Sri Lanka have successfully equipped millions with technological skills, enabling them to secure lucrative careers abroad. Bangladesh, too, must prepare its youth to compete globally, not just domestically. “We should prepare our youth to compete and contribute to the global workforce, considering the limited opportunities here and the growing needs for a skilled workforce globally,” Ahmed advised.
This shift also has implications for migration policy. Currently, Bangladesh relies heavily on unskilled labor migration to the Middle East and Southeast Asia—a model that often yields limited economic returns. In contrast, skilled migrants earn more, save more, and remit substantially larger amounts of foreign exchange. Prioritizing the export of skilled professionals could significantly boost annual remittance earnings, further strengthening the economy.
Amid these structural challenges, political stability and policy consistency have emerged as crucial pillars for sustained growth. The experience of the mobile manufacturing industry, as reported by The Financial Express, is instructive: initial tax concessions and export processing zone facilities attracted investment, but subsequent policy flip-flops created uncertainty and stifled long-term planning. Exchange rate volatility, fueled by political unrest, has also taken a toll. The taka’s devaluation from 85-90 to over 135 per US dollar—before stabilizing around 120—sparked investor panic and capital flight. “Foreign investors require stable frameworks for their long-term funds,” Ahmed noted, emphasizing the need for coherent exchange rate management and monetary policy.
These issues are not confined to traditional sectors. The tobacco industry, a major contributor to government revenue, faces its own set of challenges. In a recent interview with The Business Standard, Monisha Abraham, Managing Director of BAT Bangladesh, described the industry’s struggle with foreign exchange constraints, inflation, and abrupt policy shifts. Revenue growth from tobacco, which had ranged from 12-16 percent in previous years, dropped to around 5 percent in fiscal year 2024-25. Abraham attributes this slowdown to “the absence of a long-term fiscal roadmap” and frequent, unpredictable tax hikes. “Frequent and abrupt price and tax changes create uncertainty, disrupt market dynamics, and make it difficult for businesses to plan and invest sustainably,” she explained.
Moreover, high taxes and rapid price increases have fueled the growth of the illicit cigarette market, eroding both public health goals and government revenues. According to media reports cited by Abraham, the government lost nearly BDT 3,784 crore in fiscal year 2023-24 alone due to tax evasion by illegal operators. She advocates for a “pragmatic, evidence-based tax framework that safeguards government revenue while ensuring fair conditions for legitimate businesses.”
The need for predictability and collaboration resonates across industries. Abraham called for “a long-term road map combined with fiscal predictability, transparency, and collaborative policymaking” to ensure sustainable growth. She also highlighted BAT Bangladesh’s broader contributions: the company is one of the top taxpayers, contributing nearly 8 percent of the government’s internal revenue, and supports around 1.6 million livelihoods through its value chain. BAT Bangladesh’s investments in sustainability—from afforestation programs to clean water initiatives—have earned national and international recognition, including certification under the Alliance for Water Stewardship Standard.
Looking ahead, Bangladesh’s path to sustainable growth will require coordinated pushes in education, industrialization, skill development, and policy continuity. As Ahmed put it, “The next decade can be the most decisive moment as it will determine whether we can just continue with a mono-export model or converge towards a resilient, multi-industry economy.”
Ultimately, the country’s future depends on its willingness to invest in human capital, embrace diversification, and foster a stable, predictable business environment. The choices made now will shape Bangladesh’s trajectory for years to come—making this not just a moment for ambition, but for decisive, collective action.
