Bangladesh’s transition to middle-income status: a gateway for Dutch businesses

By 2026, Bangladesh is expected to transition from a low-income to a middle-income country, marking a significant shift in its development landscape. This transition opens up new opportunities for Dutch private organisations and investors to engage more deeply with Bangladesh’s development. In this transition, the collaboration will shift from aid to a partnership based on mutual interests, equal collaborations, and robust economic relations. The Dutch private sector has a chance to play a significant role in this new phase, leveraging its expertise in water management and other important sectors.

But in order to enter this tactical and operational playing field for long-term collaboration, there is work to be done. In this article, Fahim Faisal, expert, researcher, and author of a report commissioned by Partners for Water (PfW) on Public-Private Partnership (PPP) opportunities in Bangladesh; and Rubaiyath Sarwar, the expert who supported the development of a vision and strategy for the Dutch Water sector in Bangladesh beyond ODA (Official Development Aid), identify the Dutch USP (Unique Selling Point) and the six main ingredients for successful partnerships.

The Dutch USP: quality and strategic impact

The Netherlands has been historically recognised for its trustworthy advisory services, knowledge products and high-end technology, strategically working with the Government of Bangladesh (GoB) for the last 50 years on water and food security, organisational strengthening and social development topics, such as sexual and reproductive health and rights. The efforts on water and food have culminated in the Bangladesh Delta Plan 2100 (BDP2100). The emphasis on comprehensive, holistic and integrated programming and strategic impact is a hallmark of Dutch bilateral engagement. With Bangladesh’s middle-income status, the dynamics are changing for the better with sustained opportunities for Dutch technology and knowledge.

Bangladesh changes perspective

Bangladesh is evolving in its approach to development projects, emphasising not just cost but also quality and technological advancement. The government is steering this shift. As Rubaiyath notes, “When we talk about Bangladesh, often we have this perception that having a low budget is very important. That’s true in some cases, but both the government and the private sector are gradually recognising that it’s not just about low initial cost, it’s also about quality and added value.”

Government to government (G2G) collaboration to facilitate PPPs

With the transition, opportunities for new collaboration frameworks are coming to the table. One of these potential frameworks is a Government to Government Memorandum of Understanding (MoU) to facilitate PPPs. The MoU acts as a binding agreement between governments, reducing political and project risks. Fahim highlights that this form of G2G cooperation minimizes risks and attracts international funding by making projects more attractive to investors. Several countries have already signed a MoU with Bangladesh, and the Netherlands is exploring this option.

Six ingredients to start building long-term relationships in Bangladesh

To establish successful long-term business relationships in Bangladesh, local experts recommend focusing on these six key strategies.

1. Leverage expertise in the water and agricultural sector

Dutch companies face significant competition from established and low-cost consortia dominating the Bangladeshi market. However, the Dutch water sector can build on its long-standing relationships in the water and agricultural sector, and on its reputation for leadership in technical assistance. It can thus continue leading feasibility and technical supervision missions for forthcoming projects. By partnering with soft loan providers, the sector can design projects that will help Bangladesh achieve its Delta Technology goals, while leveraging Dutch technologies. These projects help Dutch companies to gain a foothold, demonstrating their added value in tactical and operational projects.

2.  Build strong relationships

Establishing robust relationships with key agencies that are new to the Dutch water sector is crucial for effective project implementation. Engaging with agencies like the PPP Authority and the Bangladesh Economic Zones Authority (BEZA) ensures reliable project execution and financial backing. Building these relationships takes time, local presence and upfront investments, but ultimately facilitates smoother project development.

Examples: By drawing on the experiences of the British and Danish private sectors, the Dutch private sector can benefit from further intensifying and utilising existing platforms like the Dutch-Bangla Chamber of Commerce & Industry. These platforms foster collaborations, enhance mutual understanding, and offer valuable partnership opportunities. Additionally, developing local lobby groups to advocate for Dutch investments could be a strategic move.

3. Showcase added value

Breaking into established consortia favoured by Bangladeshi agencies, primarily consisting of Asian contractors, is challenging. The Dutch private sector must clearly demonstrate its added value and competitive advantages to persuade the government to consider new partnerships. Effective communication of the sector’s unique strengths and capabilities is crucial in order to enter and compete in the market. As Fahim says “there is often a general awareness of Dutch expertise in agriculture and water management, but specific knowledge about individual companies and their specialties is lacking.” Enhancing the visibility and understanding of Dutch companies’ strengths will facilitate more targeted and effective partnerships with Bangladeshi firms.

Example: Chinese companies dominate the energy sector due to their long-term presence and strong local partnerships. However, despite their low overhead costs, they often fail to deliver projects on time. Highlighting Dutch companies’ superior project management and technological advancements, as well as reduced operational and maintenance costs in the long term can help overcome these established preferences.

4. Use quality as a way into existing consortiums

Dutch firms can leverage their technical expertise and high-quality technology to penetrate the market by focusing on niche opportunities that require premium, long-term solutions. Engaging in technical feasibility assessments and design missions allows Dutch firms to define their scope and demonstrate the business case for high-value investments, influencing tender documents to favour their capabilities. The Dutch private sector could be considered as the partner of choice for sustainable investments.

Example: Japan’s involvement in constructing Dhaka’s new airport terminal highlights how a focus on quality and technological superiority can secure project bids. Their participation in the feasibility study and the development of a robust technological plan, integrated into the procurement process, significantly increased their chances of winning the project.

5. Provide soft loans to reduce risks

Addressing the critical issue of soft loans can help Dutch companies overcome the perception of being expensive high-end technical service providers. Partnering with international financial agencies to offer financing solutions can mitigate the Bangladeshi government’s concerns about higher costs and enhance the attractiveness of Dutch firms in competitive tenders. Projects like these help Dutch companies to gain a foothold and demonstrate their added value.

Example: Japan provided a $1.3 billion low-interest loan for Dhaka’s new airport terminal through the Japan International Cooperation Agency (JICA). This financial support reduced the project’s risks, making it more viable and attractive.

6. Target specific sectors to capitalise on entry opportunities

There are promising opportunities for the Dutch water sector to engage with government institutes in the fields of water and delta. As Bangladesh transitions from a low-income to a middle-income country, opportunities will extend beyond government initiatives, especially in the private sector. Small to medium size companies in the readymade garment (RMG) sector are shifting towards sustainability, renewable energy, and circular economy practices. All these issues can actually provide opportunities for the Dutch private sector. “And later on Dutch firms can actually capitalise on those entry opportunities and move into other areas,” Rubaiyath explains.

Example: The collaboration within the Dutch Bangla Onion Support in the Bangladeshi onion sector highlights the broad scope of opportunities. Together, they supply integrated solutions aimed at producing better quality onions, reducing post-harvest losses, and ultimately decreasing onion imports while increasing income for onion growers and traders. This collaboration addresses agricultural storage challenges and showcases Dutch versatility beyond water management. The agricultural, circular textile, and IT sectors offer fertile ground for Dutch technological support, fostering sustainable and mutually beneficial growth.

Continued collaboration for sustainable and mutual growth

As Bangladesh evolves, the focus is shifting from merely cost-effective solutions to those that offer quality and technological advancement. This aligns well with the Dutch approach, which emphasises strategic impact and high standards. By adopting these six ingredients for building successful long-term business relationships, Dutch companies can further penetrate the Bangladeshi market. In doing so, they can foster sustainable and mutually beneficial growth, thereby contributing to SDG5 and achieving the Dutch policy goal to increase water security and safety for over a hundred million people worldwide by 2030.