It’s been two weeks since Bangladesh held a national election to select new leadership for the country, which had been operating under an interim government. The election followed the ouster of prime minister Sheikh Hasina in 2024 following a violent crackdown on what started as a youth-led dispute over labor injustices.
Along with a win for the Bangladesh Nationalist Party head, Tarique Rahman, the election cycle also ushered in constitutional changes, such as a two-term limit for the prime minister and limits to executive power. Rahman’s term is seen as an opportunity for a fresh start for the country, which had been laboring under rampant corruption. However, the incoming administration faces a slate of issues including a fragile economy and energy insecurity, as well as the ingrained graft and authoritarianism introduced by its predecessor.
Caught in the middle of this is the country’s apparel industry, which represents 80% of its export revenue.
In its 2025 Benchmarking Survey, the United States Fashion Industry Association found that while 53% of respondents were interested in increasing sourcing from Bangladesh over the next two years, social and environmental compliance concerns held them back from substantial commitments. Further, economic analyst and policy exchange chairman Mashrur Riaz said more than 200 factories had closed due to the political situation and labor unrest. In response to what it characterized as a “deepening crisis” for the ready-made garment sector, the Bangladesh Garment Buying House Association last month called on the government to address the energy issues, work to build confidence with foreign buyers and institute banking reforms to aid trade finance.
With this backdrop, the Asia Society hosted a webinar on Feb. 19, “Bangladesh After the Vote: Democracy, Reform, and Foreign Policy Outlook,” featuring Dr. Sreeradha Datta, professor, International Affairs, O.P Jindal Global University, and non-resident senior fellow with Institute of South Asian Studies, National University of Singapore; Ambassador Shahed Akhter, Bangladesh’s former ambassador to Spain, Thailand, and Cambodia; and Zafar Sobhan, editor of Counterpoint, to analyze what’s next for Bangladesh.
While the consensus was the election was the first step toward stability, the panel agreed that the incoming government must now deliver. Here, the speakers outline what must be done as it relates to foreign relations — with the U.S. and beyond — as well as the country’s internal infrastructure, particularly when it comes to job creation.
While Sobhan noted the interim government saved the country’s economy from a “free fall” following the ouster of the former leadership, he said it’s now up to Rahman to resolve the issues that derailed the country’s growth leading up to the crisis.
“Bangladesh was a big success story economically for many, many years,” Sobhan said. “It was only in the last five years that we really started to feel the pinch of the rampant cronyism, rampant corruption, and the number of nonperforming loans shot through the roof. We had entered into a number of disadvantageous energy and other financial deals, and so that’s really what we’re dealing with now.”
Stability, he said, is the first step toward any kind of economic boost.
“When a government is an interim government, people are very wary about investing, and not just foreign investment. We’re talking domestic investment as well. If you’re a business person, what you want is certainty as to what the future holds,” he said.
And the general public is looking for certainty — and results. And it needs to happen quickly, particularly when it comes to employment. Sobhan said the current honeymoon period won’t last.
“The major challenge is jobs. Let’s not forget, this was a key driver in the movement which ultimately ousted Sheikh Hasina in the Awami League,” he said. “They are promising to put jobs, especially jobs for young people, jobs for college and university graduates, front and center.”
For the country, which relies so heavily on its apparel export industry, focus has been on U.S. relations. Initially the deal the U.S. and Bangladesh struck to bring tariffs down to 19% was hotly debated by some, he said, particularly those that felt it was one-sided and inferior to those negotiated with Cambodia and Myanmar. Others were more pragmatic, saying it was the best deal the country could expect.
Speaking before the IEEPA tariffs were struck down on Feb. 20, Soban stated whatever comes next must fall in line with the new U.S. outlook on international trade.
“What we’ve noticed under the Trump administration is that the relationships the U.S. has with other countries are largely transactional. And I think we understand that it’s going to be a question of what can we give?” he said. That’s evident, he said, in the provisions that stipulated Bangladesh would purchase U.S. energy, planes, soybeans and cotton. “This is a new reality which we really have to get used to.”
Sobhan also pointed out that the relationship with the U.S. must be viewed through a wider lens.
“Bangladesh is in the position where we really have to balance out our relationships with all of the countries. We have to, of course, take into consideration our relationship with India, China, as well as Japan, Russia, so we have very little room to maneuver.”
Datta is hopeful Bangladesh and India, in particular, will follow through with overtures to reset and begin working together. The two countries have experienced ongoing tension around water sharing as well as diplomatic and security concerns. While she said she believes the leadership has been willing to collaborate, the citizens of each country have long-held animosity.
“At this point, economic stability is something that Bangladesh will really focus on, and I think India is a good partner for that,” she said. “How can Bangladesh now convince its people that working with India is beneficial to both sides? I think there has been a very incorrect perspective for very long, which has been fanned by certain elements.”
While she questions the effectiveness of multi-nation organizations like the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which faces challenges in bringing its members together, and the future of the South Asian Association for Regional Cooperation (SAARC), given tensions between India and Pakistan, she sees opportunities for smaller groups of these participating countries to collaborate.
Akter reiterated the call for collaboration across the region, particularly when it comes to issues like energy. “We are no longer looking inward. We are looking eastward,” he said. “Whether you look at SAARC or BIMSTEC or ASEAN, these are big blocs. We have to develop these areas, which are growing at a very slow pace. And there’s a lot of potential to [do so].”
When it comes to looking farther afield, Akter said Bangladesh must also be strategic in its relationship with China. Citing the recent agreement between to two countries to establish a drone assembly plant in Bangladesh, he said this is an example of how the country needs to prioritize high tech jobs for its youth.
“And the government of Tarique Rahman administration understands that in 2026 foreign policy is an external phase of domestic reform. The people of Bangladesh, their hopes and aspirations are that they want jobs, they want a better life, a better living standard for that. Obviously, our trade and commerce are very vital,” he said. “Whether we are discussing water sharing with India or high-tech trade with the U.S., the new Bangladesh engages on the basis of mutual responsibility.”
