Blue Economy

Bangladesh's Blue Economy: Underutilized Frontier, Actionable Gains

Bottom Line

Bangladesh controls 118,813 sq km of exclusive economic zone and 354,000 sq km of continental shelf, territory secured by landmark ITLOS (2012) and Annex VII Tribunal (2014) rulings. That maritime endowment is equivalent to 80% of the country's land area. Yet the Blue Economy Index sits at 37.7/100, marine GDP contribution stands at 3.0% of output, and 18 of 26 offshore gas blocks remain unexplored. Three specific structural gaps explain this underperformance: absent maritime spatial planning legislation, no deep sea fishing fleet, and zero offshore wind project commissioning. Closing even two of these gaps would materially shift marine GDP contribution toward peer-country norms (Vietnam: approximately 10% of GDP from marine sectors).

Fisheries: Scale Achieved, Sustainability Not

Marine capture reaches 350,000 MT annually (YoY: trend data unavailable), sustaining 500,000 fishers. That is a functioning industrial-scale fishery. The problem is the quality of that catch: only 60% is estimated within sustainable limits by DoF assessment. At current exploitation rates, stock depletion is the base-case outcome within one generation. The risk case is faster degradation driven by IUU fishing from foreign-flagged trawlers, which face minimal VMS enforcement across a 580 km coastline. Hilsa has partially recovered under the 65-day Jatka ban and 22-day breeding closure, proving that targeted restrictions work. Extending that logic to non-hilsa demersal species requires stock assessments that do not yet exist.

Port Throughput: One Gateway, One Constraint

Chittagong handled 3,409,069 TEU (YoY: trend data unavailable), making it the dominant trade gateway for a ~$450B economy. Its 9.1m draft ceiling is the binding constraint: Panamax and post-Panamax vessels cannot call, forcing transshipment via Colombo and Singapore and adding 10-14 days to North American and European transit times. Matarbari deep sea port (Maheshkhali, JICA-funded, 18m draft, 4M TEU planned capacity) resolves this if delivered on schedule. The base case, delivery by 2029 per revised JICA project docs, would position Bangladesh as the Bay of Bengal's primary transshipment node. The risk case is further delay past 2030, ceding that window to Colombo's port expansion. Mongla and Payra require separate investment tracks: Mongla for southwest regional freight, Payra for bulk commodity handling.

Offshore Energy: 5 Tcf Estimate, 8 of 26 Blocks Explored

An estimated 5.0 Tcf of offshore gas remains largely uncharacterized: 8 blocks have seen meaningful exploration, 18 have not. At Bangladesh's current gas consumption trajectory, a proven offshore reserve in the middle of that range would extend domestic supply by 15-20 years, materially reducing LNG import dependence. Exploration has stalled primarily on unfavorable production sharing contract terms that did not attract international oil company bids in the 2023 licensing round. Offshore wind is the second energy opportunity: SREDA and IRENA estimate 20+ GW potential in the Kutubdia-Moheshkhali corridor, a shallow-water zone compatible with fixed-bottom turbine technology. Zero projects have been commissioned. Each year of inaction extends fossil fuel lock-in.

Ship-Breaking: Revenue Asset, ESG Liability

Chittagong operates 150 active yards recycling 3,500,000 MT of steel annually, approximately 50% of global ship recycling volume. The industry generates $2,500M in revenue and employs 25,000 workers directly, supplying 50-60% of domestic steel industry raw material. That is a genuine industrial comparative advantage. The liability is regulatory: hazardous material handling (asbestos, PCBs, heavy metals) and worker fatality rates that exceed any peer-country benchmark. Bangladesh ratified the Hong Kong Convention in 2023 and the Ship Recycling Act 2018 provides the legal framework. Enforcement has not followed. The commercial risk is concrete: European and Japanese ship owners face ESG scrutiny for Chittagong calls; green recycling certification from competing yards (Turkey, India) is improving. The industry either upgrades or loses market share within a decade.

Marine Ecosystem: Blue Carbon Opportunity, MPA Gap

The Sundarbans (6,017 sq km on the Bangladesh side) is simultaneously a storm surge barrier, a biodiversity hotspot, and a blue carbon asset. Mangroves sequester carbon at 3-5x the per-hectare rate of terrestrial tropical forest. VCS/Verra registration of Sundarbans carbon stocks would open a verified credit revenue stream, with proceeds legally ringfenced for mangrove restoration and coastal community livelihood support. Marine protected areas currently cover 4.0% of the EEZ. The CBD Kunming-Montreal Global Biodiversity Framework target is 30% by 2030. Reaching 30% from 4.0% in seven years requires a managed area expansion plan that does not yet exist in draft form.

Emerging Sectors: Small Base, Scalable Logic

Seaweed production stands at 200 MT from Cox's Bazar pilot farms. The addressable market is not commodity seaweed; it is high-value applications in food ingredients, pharmaceutical precursors, and agricultural biostimulants where Asian producers command $2,000-8,000/MT. At current pilot scale, the sector produces negligible export revenue. A 10x production increase over five years, feasible given coastline availability, would require structured offtake agreements with processors before farm expansion. Coastal tourism (Cox's Bazar, St. Martin's Island, Kuakata) generates $120.0M. Infrastructure bottlenecks and environmental degradation of coral ecosystems constrain further growth more than demand does.

Recommendations (Prioritized)

1. Pass a Maritime Spatial Planning Act (12-month target). Establish a National Maritime Authority with cross-ministry jurisdiction over the full 118,813 sq km EEZ. Formalize zoning that separates artisanal fishing grounds from industrial trawler corridors, designates offshore wind development areas, and buffers MPAs. Without this, every downstream investment faces regulatory conflict risk.

2. Revise offshore PSC terms to attract IOC bids (18-month target). The 2023 licensing round failed on contract economics. Mobilizing the 5.0 Tcf estimated reserve requires internationally competitive fiscal terms. Commission BAPEX-IOC joint feasibility studies for the 18 unexplored blocks as an immediate signal of intent.

3. Green-certify Chittagong ship recycling under Hong Kong Convention (24-month target). Mandate phased yard upgrades tied to a certification timeline. Yards that certify within 24 months access a preferential bank financing facility. Yards that do not face escalating port-access levies. This protects the $2,500M revenue base from ESG-driven market exit.

4. Launch a 100 MW offshore wind pilot (36-month financial close target). Structure as a competitive IPP tender for the Kutubdia-Moheshkhali corridor, with SREDA as off-taker and JICA/ADB as concessional debt providers. A successful pilot de-risks the technology for the broader 20+ GW pipeline and creates a replicable procurement template.

Sources: ITLOS Case No. 16 (2012); Annex VII Tribunal (2014); DoF Yearbook of Fisheries Statistics 2022-23; Petrobangla; BAPEX; Chittagong Port Authority; JICA; IRENA; SREDA; IUCN; BBS National Accounts; NGO Shipbreaking Platform; BSBA 2023.