An In-Depth Analysis February 1, 2026

Executive Summary

Bangladesh’s ongoing economic crisis, triggered by the August 2024 political upheaval that ousted Prime Minister Sheikh Hasina, presents multifaceted risks and opportunities for Singapore across trade, finance, labor, and geopolitical dimensions. With 240 factory closures, rising unemployment, and five consecutive months of declining exports through December 2025, Bangladesh’s troubles reverberate through regional supply chains, financial markets, and migrant labor flows that directly affect Singapore’s economy.

This analysis examines Singapore’s exposure across seven critical areas: textile and garment supply chains, financial sector risk, Bangladeshi worker remittances, port and logistics operations, investment portfolios, regional trade dynamics, and strategic geopolitical considerations. While Singapore’s diversified economy provides substantial resilience, targeted risks require monitoring, particularly in financial services exposure and supply chain dependencies.

1. Textile and Garment Supply Chain Disruption

Direct Trade Exposure

Singapore’s bilateral trade with Bangladesh, while modest in absolute terms compared to major trading partners like China or Malaysia, encompasses strategic sectors vulnerable to Bangladesh’s factory closures. The textile industry’s collapse—with 240 factories shuttered since August 2024—affects Singapore in several ways:

Raw Material Trading: Singapore-based commodity traders source cotton, synthetic fibers, and textile inputs for re-export to Bangladesh’s garment manufacturers. The sector’s contraction has reduced demand for these intermediary goods, affecting trading houses with Bangladesh exposure. Major Singapore-domiciled trading firms have reported declining volumes in South Asian textile-related commodities, though most have been able to redirect flows to Vietnam and Cambodia.

Garment Re-exports: Some Bangladeshi-manufactured garments transit through Singapore’s ports for quality inspection, labeling, and consolidation before final shipment to Western markets. The export decline—down for five consecutive months through December 2025—has reduced these transit volumes, though the impact on Singapore’s overall port throughput remains minimal given the dominance of Chinese and Southeast Asian manufacturing.

Manufacturing Equipment: Singapore companies have historically provided textile machinery, automation systems, and industrial equipment to Bangladesh’s garment sector. With factories closing and new investment frozen pending the February 12 elections, orders for manufacturing equipment have stalled. This particularly affects mid-sized Singapore industrial equipment suppliers who had cultivated Bangladesh relationships over the past decade.

Regional Supply Chain Reconfiguration

The more significant impact lies in supply chain reconfiguration. Global apparel brands—many of which have regional procurement offices in Singapore—are reassessing Bangladesh exposure after the political instability. This creates both challenges and opportunities. On one hand, established supply relationships are disrupted. On the other, Singapore-based sourcing firms and logistics providers may benefit from managing the transition of orders to alternative production bases in Vietnam, Indonesia, and Cambodia. Singapore’s role as a supply chain coordination hub could strengthen as brands seek expertise in managing multi-country manufacturing networks to reduce single-country risk.

2. Financial Sector and Banking Exposure

Direct Banking Exposure

Singapore’s major banks—DBS, OCBC, and UOB—maintain limited direct exposure to Bangladesh through trade finance, correspondent banking, and small commercial lending portfolios. However, the deteriorating economic conditions raise specific concerns:

Trade Finance Risk: Singapore banks provide letters of credit and trade finance facilities for Bangladesh-Singapore trade flows. With 240 factories closed and many owned by associates of the now-fugitive Sheikh Hasina, some trade finance exposures may become non-performing. Banks have reportedly tightened credit lines to Bangladesh counterparties, particularly for entities with political connections to the previous regime.

Correspondent Banking: Singapore serves as a correspondent banking hub for South Asian institutions. Bangladesh’s banking sector repair—mentioned as showing “signs of improvement” by local economists—remains fragile. Any systemic banking crisis in Bangladesh could create settlement and counterparty risks for Singapore banks, though strong risk management frameworks likely limit this exposure.

Capital Markets: Singapore-based fund managers and private banking clients hold positions in Bangladesh equities and bonds. The Dhaka Stock Exchange has experienced volatility amid political uncertainty. While Bangladesh represents a tiny fraction of regional emerging market allocations, mark-to-market losses have affected some frontier market and South Asia-focused funds managed from Singapore.

Remittance and Payment Flows

An often-overlooked dimension is remittance flows. Bangladesh workers in Singapore send substantial sums home, making Singapore one of the larger remittance corridors for Bangladesh. With declining economic conditions in Bangladesh, remittance flows remain critical for recipient families. Singapore-based remittance companies and money transfer operators have seen stable volumes, as workers prioritize supporting families facing inflation and unemployment. This provides modest revenue stability for Singapore’s fintech and money transfer sector, though margins are thin in this competitive market.

3. Labor Market and Migrant Worker Dynamics

Bangladeshi Workers in Singapore

Singapore hosts a significant Bangladeshi migrant worker population, primarily in construction, shipbuilding, and manufacturing. The economic crisis in Bangladesh has several labor market implications:

Increased Labor Supply: With unemployment in Bangladesh rising to 4.63% (from 3.95% the previous year) and textile workers like Sabina Khatun unable to find jobs after months of searching, migration pressure increases. More Bangladeshis may seek overseas employment, potentially increasing applications for Singapore work permits. This could benefit Singapore employers facing labor shortages, though it also raises questions about worker welfare and fair wages amid increased supply.

Remittance Dependence: Bangladeshi workers in Singapore become even more critical to their home country’s foreign exchange earnings. Bangladesh’s foreign reserves, while reportedly improved from crisis lows, remain under pressure. Worker remittances from Singapore and other destinations provide essential hard currency. This may lead Bangladesh authorities to facilitate labor outflows, potentially streamlining work permit processes for Singaporean employers.

Social Stability: Economic hardship at home can affect worker morale and wellbeing in Singapore. Organizations supporting migrant workers may see increased demand for services as workers worry about families facing inflation, unemployment, and food insecurity (as reflected in testimonies of workers no longer buying fish or meat). Singapore’s migrant worker support infrastructure may face increased strain.

Skills and Demographics

Bangladesh’s textile industry collapse also creates a potential skilled labor opportunity. Thousands of experienced garment workers, quality control specialists, and textile technicians have lost jobs. Singapore’s own textile and apparel sector—though much smaller than Bangladesh’s—might attract some of this talent for specialized roles in technical textiles, R&D, or regional management positions. Similarly, Singapore companies expanding in Vietnam or Cambodia to replace Bangladesh capacity could recruit experienced Bangladeshi managers and technicians familiar with international compliance standards.

4. Port and Logistics Operations

Container Throughput Impact

Singapore’s port, the world’s second-busiest by container volume, handles substantial Bangladesh cargo, both direct calls and transshipment. The economic contraction affects port operations in several ways:

Export Volume Decline: Bangladesh’s five consecutive months of merchandise export declines through December 2025 directly translate to reduced container volumes moving through Singapore. Many Bangladesh exports to Europe and North America route via Singapore for consolidation and transshipment. Shipping lines have reduced Bangladesh-Singapore service frequencies in response to lower demand.

Import Weakness: The reported weakness in Bangladesh’s imports of heavy machinery and raw materials also reduces Singapore’s role as a supply hub. Normally, industrial inputs from China, Japan, and Southeast Asia would transit through Singapore before reaching Bangladesh. Reduced investment and manufacturing activity in Bangladesh has dampened these flows.

Warehousing and Distribution: Singapore-based logistics providers offering warehousing and distribution services for Bangladesh-bound goods have seen reduced activity. This affects both Singapore companies and the local employment they generate in logistics and handling operations.

Offsetting Factors

However, the impact should be kept in perspective. Bangladesh-related cargo represents a small fraction of Singapore’s total port throughput, which is dominated by China, Malaysia, Indonesia, and transshipment between Europe and Asia-Pacific. The port’s overall resilience means Bangladesh-related volume declines are easily absorbed. Additionally, if manufacturing shifts from Bangladesh to other Southeast Asian countries (Vietnam, Cambodia, Indonesia), Singapore may see increased cargo flows from these alternative origins, partially offsetting Bangladesh declines.

5. Investment Portfolios and Fund Management

Direct Investment Exposure

Singapore investors, including Temasek Holdings, GIC, and private equity funds, have historically made selective investments in Bangladesh infrastructure, telecommunications, and financial services. The current crisis creates a complex investment landscape:

Near-Term Valuation Pressure: Existing investments face mark-to-market losses amid economic contraction and political uncertainty. Bangladesh’s 3.7% growth in 2025 represents a significant slowdown from the 7%+ annual growth rates under Sheikh Hasina’s tenure. Portfolio companies are experiencing weaker profitability and cash flows.

Long-Term Opportunity: Paradoxically, the crisis may create attractive entry points for patient capital. If the February 12 elections produce a stable, reform-oriented government, Bangladesh could emerge stronger. At a population of 170 million and with infrastructure and digitalization needs, Bangladesh represents a substantial long-term opportunity. Singapore investors with a multi-year horizon may view current distress as a buying opportunity, particularly in sectors like digital payments, logistics, and renewable energy.

Political Risk Assessment: The uncertainty surrounding the elections and potential for continued instability weighs on investment decisions. Singapore fund managers are reportedly in a wait-and-see mode, monitoring the political transition before committing new capital. The fact that Sheikh Hasina faces death sentences in absentia for crimes against humanity and allegations of national wealth looting creates concerns about asset recovery and rule of law.

Regional Fund Performance

Singapore-managed regional and emerging market funds with Bangladesh exposure have underperformed. Frontier market funds, in particular, have seen outflows as investors reduce exposure to higher-risk markets. This affects Singapore’s asset management industry’s assets under management (AUM) and fee revenues, though the impact is modest given Bangladesh’s small weight in most portfolios.

6. Regional Trade Dynamics and Competitive Positioning

Bangladesh-US Trade Deal: Implications for ASEAN

The August 2025 Bangladesh-US trade deal, which scaled back President Trump’s threatened tariffs to 20%, has regional implications. While still substantial, the 20% rate is lower than the broader tariff threats against China and some other Asian exporters. This creates complex dynamics:

Competitive Pressure on ASEAN: If Bangladesh stabilizes politically and maintains preferential US market access relative to some ASEAN competitors, it could recapture garment market share from Vietnam and Cambodia. This would affect Singapore indirectly, as Singapore companies have invested in Vietnam and Cambodia manufacturing to serve Western markets. However, this remains theoretical given Bangladesh’s current dysfunction—as noted by former industry association head Mohiuddin Rubel, US orders have “remained static” despite the trade deal.

Singapore’s Role in Trade Diversification: More immediately, the situation reinforces the value of Singapore’s trade agreement network and political stability. As companies seek alternatives to Bangladesh, Singapore’s free trade agreements with the US, EU, China, and others position it as an attractive coordination hub. Singapore benefits when companies choose multi-country sourcing strategies requiring sophisticated supply chain management—a core Singapore strength.

South Asian Regional Dynamics

Bangladesh’s troubles occur against a backdrop of broader South Asian economic challenges. Sri Lanka recently emerged from debt default and economic crisis; Pakistan faces persistent economic instability. India remains the bright spot with strong growth. For Singapore, this reinforces the strategic importance of ASEAN integration and the diversification benefits of Singapore’s Southeast Asian versus South Asian exposure. Trade and investment flows are likely to continue shifting toward ASEAN, benefiting Singapore as the region’s financial and logistics hub.

7. Geopolitical and Strategic Considerations

India-Bangladesh Relations and Singapore Interests

Sheikh Hasina’s refuge in India, where she faces death sentences in absentia from Bangladesh courts, creates regional tensions. India’s handling of the situation—whether to continue harboring Hasina or cooperate with Bangladesh’s new government—has implications for regional stability. Singapore’s interests include:

Regional Stability: Singapore benefits from a stable South Asia, both for trade flows and as a marker of broader Asian political stability. India-Bangladesh tensions could complicate regional cooperation frameworks and create unpredictable diplomatic dynamics.

Great Power Competition: China has historically competed with India for influence in Bangladesh. The political transition creates opportunities for both powers to cultivate relationships with new leaders. How this plays out affects regional geopolitical balance, which Singapore carefully monitors as it maintains constructive relationships with both China and India.

Governance and Democratic Transitions

Bangladesh’s transition from autocratic rule to promised democratic elections resonates with broader regional questions about governance models. Singapore, while maintaining its own distinct political system, has consistently advocated for stable, effective governance and rule of law. The outcome of Bangladesh’s February 12 elections—whether they produce a legitimate, stable government or deepen divisions—will be closely watched as a case study in political transition management.

Risk Assessment Matrix

The following matrix summarizes Singapore’s exposure across key dimensions:

Sector	Exposure Level	Risk Level	Time Horizon
Trade & Supply Chains	Low-Medium	Low	6-12 months
Financial Services	Medium	Low-Medium	3-6 months
Labor Markets	Medium	Low	12-24 months
Port & Logistics	Low	Very Low	Immediate
Investment Portfolios	Low-Medium	Medium	6-18 months
Geopolitical	Low	Low	12-36 months

Strategic Recommendations for Singapore Stakeholders

For Financial Institutions

Enhanced Due Diligence: Banks should conduct thorough reviews of Bangladesh exposure, particularly trade finance lines to entities with connections to the previous regime. Stress testing Bangladesh-related credit portfolios against scenarios of prolonged instability is prudent.

Selective Engagement: Post-election, opportunities may emerge to support Bangladesh’s recovery through infrastructure finance, trade facilitation, and investment in restructured enterprises. Banks with patient capital and strong risk management capabilities may find attractive risk-adjusted returns, particularly if political stability improves.

For Trading and Logistics Companies

Supply Chain Diversification Support: Singapore logistics providers should position themselves as partners for brands diversifying away from single-country concentration. Offering integrated solutions across Vietnam, Cambodia, Indonesia, and potentially a stabilized Bangladesh creates value.

Bangladesh Re-engagement Preparation: While near-term prospects are uncertain, Bangladesh’s 170 million population and strategic location make it a market worth monitoring. Companies should maintain relationships and be prepared to re-engage if stability returns and economic reforms progress.

For Investors and Fund Managers

Opportunistic Positioning: Long-term investors should view Bangladesh’s crisis as potentially creating attractive entry points, contingent on political stabilization post-election. Sectors like digital infrastructure, renewable energy, and logistics could offer compelling risk-adjusted returns if governance improves.

Risk Management: In the near term, maintaining underweight Bangladesh exposure in regional portfolios is prudent. The economist’s warning that “there is no quick fix” and that many problems are structural suggests a multi-year recovery timeline, even in optimistic scenarios.

For Singapore Government and Policymakers

Regional Stability Engagement: Singapore’s interests are served by a stable Bangladesh that successfully transitions to democratic governance. Through ASEAN and bilateral channels, Singapore can offer technical assistance in areas like economic management, public administration, and trade facilitation where Singapore has recognized expertise.

Labor Policy Considerations: Given increased migration pressure from Bangladesh, Singapore should ensure work permit policies balance legitimate labor market needs with fair treatment of workers and management of social integration. Enhanced cooperation with Bangladesh authorities on worker welfare and skills verification may be valuable.

Trade and Investment Facilitation: If Bangladesh stabilizes and pursues economic reforms, Singapore could explore enhanced trade and investment frameworks. Singapore’s role as a bridge between South Asia and Southeast Asia could be strengthened through initiatives that support Bangladesh’s integration into regional supply chains.

Conclusion: Resilience and Opportunity

Singapore’s exposure to Bangladesh’s economic crisis, while real across multiple dimensions, remains manageable due to Singapore’s diversified economy, strong risk management frameworks, and adaptive business community. The direct financial impact is likely to be modest—measured in basis points of GDP growth rather than percentage points.

However, the situation merits careful monitoring for several reasons. First, Bangladesh’s 170 million population and geographic position make it strategically significant for regional trade and stability. Second, the crisis illustrates vulnerabilities in global supply chains that depend heavily on single-country production, reinforcing the value of Singapore’s role in supply chain risk management. Third, the political transition provides a case study in governance challenges that resonate across emerging markets.

The February 12 elections represent a critical juncture. A successful democratic transition and commitment to economic reform could set Bangladesh on a path to recovery, creating opportunities for Singapore businesses and investors. Prolonged instability, conversely, would deepen economic distress and potentially create broader regional ripple effects.

For Singapore stakeholders, the appropriate strategy combines prudent risk management in the near term with preparation for potential opportunities in the medium to long term. Bangladesh’s structural challenges—deteriorating law and order, weak private sector credit, declining exports—will not resolve quickly, as the economist Fahmida Khatun correctly noted. But neither are they insurmountable with proper governance and policy reforms.

Singapore’s own experience demonstrates how effective governance, rule of law, and strategic economic management can transform prospects even for small, resource-constrained nations. While Bangladesh faces different challenges given its size and history, the principles of sound governance, investment in human capital, and integration into global markets remain universally relevant.

As workers like Sabina Khatun continue searching for employment and families struggle with rising food costs, the human dimension of the crisis should not be forgotten. Singapore’s approach—balancing commercial pragmatism with recognition of broader regional development goals—positions it well to contribute constructively to Bangladesh’s eventual recovery while protecting its own economic interests.

The story is far from over. Bangladesh’s next chapter, beginning with the February 12 elections, will determine whether this crisis becomes a footnote in a larger story of democratic transition and economic renewal, or a prolonged period of difficulty that reshapes South Asian economic geography. Singapore, as always, will be watching carefully and positioning itself to adapt to whatever scenario unfolds.