Denmark today boasts the highest relative trade with Bangladesh among all EU countries, primarily driven by the Danish clothing industry, which purchases over DKK 10 billion annually from Bangladesh. Danish companies also spearhead some of the EU’s largest private investment projects in Bangladesh, particularly within the sectors of food, logistics/shipping, and renewable energy.
Bangladesh’s Strategic Importance
Bangladesh is rapidly becoming a key player in global markets, and Danish companies are positioning themselves to benefit from the country’s economic growth. The question is, what underpins Denmark’s strong trade and investment position in Bangladesh, and how can this commercial partnership continue to thrive? Denmark’s efforts involve resilience, courage, and a long-term vision, as seen during the recent student-led revolution this summer, highlighting the challenges of operating in Bangladesh. However, the potential rewards are equally significant, with Danish businesses already deeply integrated into the country’s economy.
From Development Aid to Business Partnerships
Bangladesh received the second-highest amount of Danish development aid between 1970 and 2020. Danish involvement in Bangladesh has evolved significantly, moving from development aid to commercial engagement. The Danish embassy in Dhaka established a trade department in 2010, initially with one employee, which has since grown to a team of seven. This shift is part of a broader strategy where former development aid professionals have been retrained to focus on fostering commercial partnerships between Danish and Bangladeshi businesses.
This transition from “aid to business” has allowed Denmark to establish a strong commercial foothold in Bangladesh, supported by the unique organizational structure of the Danish foreign service. Development aid, export promotion, and traditional foreign policy are coordinated under a single framework, allowing for a seamless transition into the commercial realm.
Bangladesh’s Economic Growth and the Challenges Ahead
In 2026, Bangladesh is expected to graduate from the United Nations’ “Least Developed Countries” (LDC) group, marking a significant milestone. The country has made considerable progress in reducing poverty, with rates dropping from around 50% in 2000 to approximately 15% in 2023. As it transitions from an LDC, Bangladesh will need to rely more on its economic capabilities without the favorable trading conditions previously afforded by its LDC status, such as duty-free access to the EU.
Denmark’s involvement in Bangladesh is adapting accordingly, shifting focus towards a partnership for sustainable growth. The goal is to help Bangladesh evolve from a global production hub to a sustainable production center, benefitting both nations.
EU Directives and the Future of Textile Trade
Bangladesh is now the world’s second-largest clothing exporter, second only to China. However, to maintain and grow this industry, Bangladesh must align with the EU’s new “due diligence” directive, which mandates large European companies to ensure sustainability and proper working conditions in their supply chains. Denmark’s role will be to support Bangladesh in complying with these requirements, ensuring that the new regulations act as a catalyst for sustainable transition rather than a barrier to trade.
Textiles account for 86% of Bangladesh’s exports, with nearly 60% of these exports going to the EU. The new EU regulations have the potential to drive significant social, environmental, and climate progress in Bangladesh. Simultaneously, Bangladesh faces the internal challenge of improving its political landscape, with a transitional government, led by Nobel laureate Dr. Muhammad Yunus, tasked with navigating the country through this period of transformation.
Denmark’s Role in Bangladesh’s Sustainable Future
For over 50 years, Denmark has been a close partner to Bangladesh, contributing to its economic development through traditional development aid. As Bangladesh prepares for the next phase of its economic journey, Denmark is providing new tools to support sustainable growth. The Danish embassy in Dhaka has implemented a “Sustainable Supply Chain Advisory” team, which leverages the combined expertise of both aid and commercial sectors to assist Danish companies. This team aims to improve working conditions in Bangladesh’s factories while guiding Danish businesses on sustainable practices.
Moreover, Danish investments in energy, logistics, and shipping are expected to play a pivotal role in making the entire value chain greener and more efficient, benefitting Bangladesh, Denmark, and the global climate.
By Christian Brix Møller, Denmark’s Ambassador to Bangladesh.
