Bangladesh Expected to Offer Pakistan a Special Economic Zone to Boost Bilateral Trade

Bangladesh is expected to propose the establishment of a Special Economic Zone (SEZ) for Pakistan during the upcoming Joint Economic Commission (JEC) meeting later this month in Dhaka. The development marks a renewed phase of engagement between the two South Asian nations after nearly two decades of limited economic dialogue. The SEZ proposal, if approved, could become a milestone in strengthening trade and investment cooperation between Bangladesh and Pakistan, two economies with shared histories but divergent growth paths.

The planned offer comes as both countries aim to revitalize their bilateral relations through economic diplomacy and increased trade collaboration. Senior officials from Bangladesh’s Economic Relations Division (ERD) have indicated that preparations are underway to table a concrete proposal at the 9th JEC meeting, scheduled for October 27, 2025, in Dhaka. The meeting will be co-chaired by Bangladesh’s Economic Affairs Adviser Dr. Salehuddin Ahmed and Pakistan’s Minister for Economic Affairs Ahad Khan Cheema.

A Long-Awaited Meeting After Two Decades

The Joint Economic Commission between Bangladesh and Pakistan was last convened in 2005. Since then, diplomatic and economic exchanges have remained minimal due to political differences and regional complexities. However, in recent years, both countries have expressed interest in reviving official economic dialogue as part of a broader strategy to diversify trade partnerships and reduce dependency on traditional markets.

In August 2025, Pakistan’s Commerce Minister Jam Kamal Khan visited Dhaka, marking a turning point in bilateral relations. Both sides agreed to resume the JEC sessions to address trade imbalance, explore investment cooperation, and improve connectivity in key sectors such as textiles, agro-industries, pharmaceuticals, and halal food production. According to media reports from Bangladesh’s The Financial Express and Prothom Alo, officials have been actively discussing ways to make the upcoming meeting more result-oriented, with the SEZ proposal expected to take center stage.

According to sources within Bangladesh’s ERD, the proposal to offer Pakistan a dedicated Special Economic Zone is rooted in mutual economic benefit. The idea is to provide a platform where Pakistani investors can establish manufacturing and processing facilities in Bangladesh under favorable conditions. This would not only encourage foreign direct investment (FDI) from Pakistan but also enhance bilateral trade and create employment opportunities in Bangladesh.

The SEZ would likely include incentives such as tax exemptions, streamlined customs procedures, and access to key export facilities. Bangladesh’s economic planners are reportedly considering designating a location close to existing industrial clusters to ensure logistical efficiency. The government views this as an opportunity to attract joint ventures, particularly in the textile, leather, agro-processing, and halal food sectors, where both countries have complementary strengths.

Officials note that Pakistan’s expertise in textile production and halal certification could combine effectively with Bangladesh’s strong manufacturing infrastructure and skilled workforce. Such collaboration could allow both nations to jointly target the global halal market, which is projected to exceed USD 5 trillion by 2030.

Addressing the Trade Imbalance

The SEZ proposal also aims to address a long-standing trade imbalance between the two countries. According to Bangladesh’s trade statistics for the fiscal year 2024–25, Dhaka’s exports to Pakistan stood at around USD 80 million, while imports from Pakistan reached nearly USD 787 million. This significant deficit has prompted policymakers in Bangladesh to seek ways to diversify exports and gain better access to the Pakistani market.

During the JEC meeting, Bangladesh is also expected to request duty- and quota-free access for a range of its export products, including ready-made garments, pharmaceuticals, jute goods, tea, and electronics. Such concessions, combined with the SEZ initiative, could help narrow the trade gap and encourage long-term industrial cooperation.

Another key agenda item at the upcoming meeting is likely to be the formalization of halal certification cooperation between the two countries. Bangladesh plans to encourage collaboration between the Bangladesh Standards and Testing Institution (BSTI) and the Pakistan Halal Authority (PHA) to develop mutually recognized halal standards.

This move could greatly benefit both nations’ halal industries, enabling smoother export of halal-certified food, cosmetics, and pharmaceuticals to Muslim-majority markets. By aligning certification systems, both sides can minimize non-tariff barriers, ensuring product credibility in global halal markets. Industry experts believe this partnership could open new trade routes for halal-certified Bangladeshi and Pakistani products in the Middle East, Southeast Asia, and Africa.

Beyond economics, the SEZ proposal carries symbolic weight in the evolving relationship between Bangladesh and Pakistan. For decades, historical and political sensitivities hindered deeper engagement. However, the current diplomatic climate shows growing pragmatism on both sides. Islamabad has sent several high-level delegations to Dhaka in recent months, signaling renewed political will to rebuild trust and cooperation.

For Bangladesh, this proposal underscores its rising confidence as a regional manufacturing hub and a proactive partner in South Asian economic diplomacy. The government’s broader strategy aims to position the country as a bridge between South and Southeast Asia, leveraging its strong export base and stable economic growth.

For Pakistan, deeper engagement with Bangladesh offers access to a rapidly growing economy and new investment avenues. Islamabad’s policymakers see the revival of trade relations as part of a larger effort to expand South-South cooperation and reduce reliance on traditional markets.

Potential Benefits and Implementation Challenges

If realized, the proposed SEZ could deliver multiple benefits to both economies. For Bangladesh, it could attract new FDI, generate employment, and diversify export markets. For Pakistan, it provides a foothold in one of Asia’s fastest-growing manufacturing sectors and access to Bangladesh’s regional trade networks, including ASEAN and SAARC partners.

However, several challenges remain. Establishing a foreign-investor-specific SEZ requires complex negotiations regarding land, legal frameworks, taxation, and governance. Bangladesh must ensure that such a zone operates under national regulatory standards and contributes to local economic development. Meanwhile, Pakistan will need to assess the profitability and logistical feasibility of large-scale investment in Bangladesh, including cost competitiveness and supply chain factors.

Infrastructure readiness, policy continuity, and political commitment on both sides will be critical. Past attempts at similar cross-border projects in South Asia have faced delays due to bureaucratic and logistical hurdles. Therefore, clear implementation frameworks and transparent oversight mechanisms will be key to ensuring that the SEZ does not remain a symbolic gesture but becomes an operational reality.

As the October 27 JEC meeting approaches, anticipation is growing across both capitals. Policymakers, industry leaders, and trade associations are closely monitoring the agenda. Analysts believe that even if the SEZ proposal remains at the conceptual stage during this round of talks, it will lay the groundwork for future cooperation.

The upcoming meeting may also result in the signing of memoranda of understanding (MoUs) on halal certification, trade facilitation, and investment cooperation. There are expectations that a permanent trade and investment commission could be established to ensure continuous follow-up on decisions taken at the JEC.

Observers say the move represents a pragmatic shift toward economic engagement in South Asia, where political differences have often overshadowed development goals. If executed effectively, Bangladesh’s offer of a Special Economic Zone for Pakistan could set a new precedent for economic diplomacy in the region — one that prioritizes shared prosperity over historical divisions.

In the coming months, both Dhaka and Islamabad are likely to continue exploring ways to enhance connectivity, trade logistics, and private-sector collaboration. For the business communities of both countries, this development signals a new era of opportunity built on mutual respect, economic pragmatism, and forward-looking cooperation.