Bangladesh’s progress towards LDC graduation

It is indeed a positive news Bangladesh is graduating from a LDC state into a developing one in 2026. Graduation typically constitutes an exciting moment of national pride, which allows reaffirmation and strengthening of the country’s long-term development vision.

The graduation will not only enhance Bangladesh’s prestige in the global arena, it will have tangible benefits as well after the graduation, Bangladesh will hank higher in the investment index, suggesting that the cost of investment in Bangladesh will be significantly lower if the volume is larger. The interest rate that Bangladesh has to use for borrowing internationally will be low substantially.

These and other potential benefits should not usher in complacency. Pertinent observers believe that the real challenges will come after Bangladesh officially becomes a developing country. And to meet those post LDC graduation challenges the country must be fully prepared. 

Indeed, we would lose many facilities in trade concessions and intellectual patent rights mainly in the pharmaceutical sectors. The withdrawal of existing GSP facilities after LDC graduation may have an adverse impact on the export earnings unless certain measures are not initiated both on the domestic front and international support with major trade partners with whom the country enjoys a historical trade surplus. The country should aggressively pursue strategies to promote regional trade and reconfigure bilateral trade through preferential or free trade area agreements with symmetry in the trade balance. We may not receive concessionary finance from the climate fund after graduation. 

The government is evidently aware of the facts and as a recent TBP report states it has taken initiatives to identify incentives which encourage direct exports and the sectors which are subsidised with cash incentives. The endeavours follow the Commerce Secretary Dr Tapan Kanti Ghosh’s acknowledgement that the country’s impending LDC would present new challenges as well as opportunities for the economy

The government has also initiated to identify all the subsidies that will not be compatible with the relevant provisions of WTO after the LDC graduation. Recommendations are being made on what to do in respect of these subsidy activities.

The government is working on strategies to circumvent the graduation problem in this sector so that the economy can cope with the uncertainty in international business.

We believe that the government should focus on ensuring development and the growth of investment, employment, individual income and productive capacity. It also needs to start communicating with other nations to manage their export-import-related relations to cover the limitations. Bangladesh has to engage in bilateral FTA discussions with significant trade partners to offset risks posed by the graduation to a developing country. To meet the challenges, Bangladesh also requires economic diversifications, technological advancements and increased labour productivity. 

The education sector, especially tertiary education, can play a crucial role in this graduation episode through human capital formation. Unfortunately, Bangladesh hires foreign nationals for management jobs from India, Pakistan, Nepal, Sri Lanka, and the Philippines. Between January 1 and November 29, 2021, the Department of Immigration and Passport gave an extension to employment visas for 7,822 foreign nationals. The country needs an extensive database on foreigners both documented and undocumented to assess the required skill gap in designing an appropriate policy in both tertiary and vocational education sectors for gainful employment of natives that could save hard-earned foreign currency to the tune of over 6 billion.

It is also important to ensure good governance with accountability and acceptance of responsibility. This extends to the need for strengthening institutional arrangement for administration by government ministries.

The gaps in skill formation, infrastructures bottlenecks, and rationalization of tariff structure need to be addressed during these four years to circumvent the post-LDC graduation challenges.