Originally posted in The Daily Star on 14 October 2025
Bhutan wants to upgrade PTA with Bangladesh to FTA
Hydropower, trade on agenda
Bhutan is looking to transform its existing Preferential Trade Agreement (PTA) with Bangladesh, signed in December 2020, into a full-fledged Free Trade Agreement (FTA) to utilise the untapped business potential between the two countries, Bhutanese Ambassador Dasho Karma Hamu Dorjee said yesterday.
“I believe that despite current challenges, both countries can overcome them and realise the full potential of an FTA,” Dorjee said at a discussion on Bangladesh-Bhutan bilateral trade relations organised by the Bangladesh Institute of International and Strategic Studies (BIISS) in Dhaka.
“These mechanisms, whether Safta (South Asian Free Trade Area) or a future FTA, provide valuable platforms to deepen trade relations and unlock opportunities that are yet to be fully utilised,” she added.
Highlighting Bhutan’s hydropower potential, Dorjee said it is a critical resource for the country, and they are keen to explore how it can benefit the region.
She continued that Bangladesh is also interested in investing in hydropower projects and power generation infrastructure. Both governments are also engaging with Indian authorities to advance cooperation in this sector.
Highlighting Bhutan’s hydropower potential, the envoy said it is a critical resource for the country, and they are keen to explore how it can benefit the region
With changes in Bhutan’s energy policy, the country is now more open to private sector investments, both domestic and foreign, including from Bangladesh and India. “The potential here is immense, and with mutual effort, we can move forward quickly,” she said.
Speaking about connectivity and tourism, Dorjee noted that Bhutan’s geographical constraints currently limit connectivity. Paro, the country’s only international airport, operates only during daylight.
However, a new airport under development at Gelephu is expected to be ready by 2029, which will serve as a regional aviation hub and allow more frequent flights and people-to-people exchanges between Bhutan and Bangladesh, she added.
Regarding Saarc, the ambassador acknowledged that regional cooperation has been slow but said she remains optimistic. “South Asia is home to nearly 1.5 billion people, and trade potential remains largely untapped.”
Meanwhile, moderating the discussion, Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said importing power from Bhutan will have to be transmitted through the Indian grid before reaching Bangladesh, so a tripartite agreement will be very important. “That’s indeed a very encouraging development.”
The distinguished CPD fellow also highlighted lessons from the Saarc Motor Vehicle Agreement (SA MVA), which eventually became the Bangladesh-Bhutan-India-Nepal (BBIN) MVA after Pakistan raised legal concerns over cross-border incidents.
“At the last moment, Pakistan raised a question: if a truck travels from Lahore to Dhaka via India and meets an accident, which country’s law would adjudicate the dispute? That became a major sticking point,” he stated.
Nevertheless, Rahman noted that even the BBIN framework will be very important for the region.
“A motor vehicle agreement could significantly boost regional competitiveness by reducing lead time and costs,” Rahman said, acknowledging Bhutan’s environmental concerns and noting that the country wants to limit vehicular movement.
Speaking about Safta, he said, “Unfortunately, it has not seen much progress. But it is worth remembering that there is still an LDC scheme under Safta through which India provides duty-free and quota-free access to all LDCs.”
Although Bhutan is no longer an LDC, Nepal, Bangladesh, and Afghanistan continue to benefit from India’s duty-free access under this scheme since 2011, he further noted.
“Someone asked why our exports to India are increasing despite non-tariff barriers. One reason is that the zero-tariff benefit gives us a competitive advantage even when costs have gone up due to non-tariff barriers,” Rahman stated.
Mashfee Binte Shams, former secretary (East) at Bangladesh’s Ministry of Foreign Affairs, drew comparisons with other regions, highlighting the importance of regional integration.
“Looking at Asean or the European Union, we see that their colonial experiences differ. Asean countries were colonised by three different powers — the British, French, and Portuguese — while Europeans were colonisers themselves.
“Yet both regions have moved toward integration. Africa too is coming together despite its colonial diversity.”
