‘Four high-potential industries can build on Bangladesh’s industrial momentum’

While upgrading Bangladesh's ready-made garment (RMG) sector remains vital, true long-term economic resilience will depend on cultivating the country's next generation of export powerhouses, according to Aditya Gahlaut, Managing Director and Regional Head of Global Trade Solutions (GTS) for Asia at HSBC.

In an exclusive interview with The Business Standard in Dhaka recently, Gahlaut shared his insights into global economic trends, Bangladesh's trade potential, export diversification and how the country can position itself amid shifting global trade dynamics.

Speaking about industrial diversification, he cautioned against spreading resources across too many sectors or jumping prematurely into ultra-high-tech industries without first building a strong supporting ecosystem. Instead, he advocated a targeted strategy: doubling down on four high-potential industries that can build on Bangladesh's existing industrial momentum and skilled workforce.

Pharmaceuticals are one major area where Bangladesh can leverage its robust domestic manufacturing base to scale up exports. The second is ICT and technology, where the country can utilise its young, tech-literate workforce to provide tech-enabled services and develop software solutions, he said.

Light engineering and footwear are two other promising export sectors for Bangladesh. Gahlaut said the country could draw on manufacturing capabilities similar to those developed in the RMG sector to build scale, taking inspiration from Vietnam's growth story.

Bangladesh's strengths and the 'China Plus One' strategy

The top HSBC banker stressed that the global "China Plus One" strategy presents a significant opportunity for Bangladesh, particularly in its flagship RMG industry.

"Buyers no longer want just the cheapest provider. They want competitive pricing alongside certainty, trust and quality," Aditya said, pointing to several distinct competitive advantages Bangladesh holds.

As the world's second-largest apparel exporter, Bangladesh has an established supplier base that serves major global retailers. Bangladeshi manufacturers also lead in sustainability and green certifications, with the highest number of LEED-certified factories — a major factor for European and US buyers.

Competitive labour costs remain another key baseline advantage for the country, he noted.

6 strategies to unlock future growth

To fully capitalise on global supply-chain realignments, Aditya outlined six strategic imperatives for Bangladesh: moving up the value chain, embedding itself in the Asian value chain, boosting productivity through automation, advancing circularity, ensuring macroeconomic resilience, and maintaining policy certainty and consistency to attract foreign direct investment (FDI).

He said Bangladesh should transition from basic cotton products to higher-value categories such as man-made fibres, activewear, outerwear and technical textiles, where design and fabric technology can generate higher margins.

"Look beyond traditional Western markets – the US and Europe," he said, adding that intra-Asia trade now accounts for 60% of all Asian exports and is growing at twice the rate of global trade.

Aditya urged Bangladesh to focus on generating more value per worker through mechanisation and technology adoption rather than simply reducing its labour force.

He also stressed the importance of circular-economy practices, including input recycling, emissions reduction and labour compliance.

Bangladesh should also strengthen trade infrastructure, including port efficiency, streamlined customs processes and reliable power supply, while ensuring long-term policy stability to give international investors and buyers greater confidence, he said.

Replying to a query about why Bangladesh does not receive the FDI it requires, he said attracting foreign investment depends heavily on long-term policy certainty and a business-friendly regulatory framework.

"Bangladesh should focus on generating more value per worker through mechanisation and technology adoption rather than simply reducing its labour force."

Build resilience to navigate shocks

Global supply chains have faced unprecedented disruptions over the past five years, prompting businesses to shift their priorities from seeking the absolute cheapest suppliers to building long-term resilience, according to Aditya, who oversees 18 markets and more than 2,000 trade professionals.

Addressing recent geopolitical tensions and supply-chain bottlenecks – ranging from the Red Sea crisis to the situation in the Middle East – he said volatility has become the new normal for global trade.

"You've got five shocks in five years: Covid, tariffs, Russia-Ukraine, the Red Sea and the Middle East situation," Aditya said. "Corporates are now pretty comfortable managing this volatility. The key word over the last two years has been resilience."

He explained that building resilience often introduces necessary inefficiencies into business operations. To guard against disruptions, companies are holding buffer inventories, diversifying their supplier bases and keeping finished goods closer to end markets.

While these measures increase working-capital cycles, they provide essential operational stability, he said.

HSBC's role in supporting Bangladesh trade

Highlighting HSBC's long-standing presence and market leadership in trade finance, Aditya outlined three core areas where the bank supports Bangladesh's growth.

First, the bank connects buyers and suppliers by using its global network to link Bangladeshi suppliers with major international buyers through trade delegations and international roadshows.

It also plays a role in financing essential infrastructure projects, port modernisation and the transition to renewable energy, including factory solar installations.

HSBC also provides holistic supply-chain financing covering the entire value chain – from raw-material sourcing, including yarn, fabric and accessories, to the final export.