Abstract

Free Trade Agreement, FTA, has been considered a critical factor in economic development. Using ‘Free trade’ prudently, a country can boost its growth  and involving trading partners can have absolute gains from it, prominent economists suggest. However, all is not well in free trade because of the nature of free trade, and it may, in some cases, be harmful to a country to grow her domestic infant industries. Looking at the bilateral trade between Bangladesh and Malaysia, it is seen that trade is disproportionately imbalanced and in favour of Malaysia. For years, Bangladesh’s trade deficit with Malaysia has been growing. According to recent statistics, Malaysian export to Bangladesh is about $2 billion, while imports are only $140 million. Bangladesh is trying to reduce the persistent trade gap and has taken initiatives. One of the initiatives is to start negotiations with Malaysia to establish FTA. The exponents of the FTA expect that Bangladesh can be benefitted from the proposed FTA by tripling her export to Malaysia and may attract larger doses of investment  from Malaysia.

Moreover, Bangladesh can be more competitive in the Malaysian market with the exporters of India and Pakistan, enjoying duty-free access to Malaysia because of the bilateral FTA. This paper examines the recent trends and prospects of trade relations between Bangladesh and Malaysia. It assesses   the possibility of FTA bilaterally that can create a win-win situation for both countries.