The length in-between government is transferring forward with finalising a put up-LDC survival technique by October as ministries continue to work on the draft transition idea for Bangladesh’s graduation from the least developed country (LDC) dilemma in 2026.
Despite calls from industry leaders to prolong the graduation following the tumble of the Awami League government on 5 August, no instructions earn been issued to postpone the timeline.
The Economic Relatives Division (ERD) has sought input from varied ministries to variety the technique, which is able to elucidate steps for the country’s transition both sooner than and after graduation.
Various officers serious about the graduation project, talking on situation of anonymity, suggested TBS that they are proceeding below the conclusion that the graduation will happen in 2026.
They are saying the Ministry of Commerce has begun drafting policies on subsidies for fisheries and agriculture, whereas the Finance Division is working on doubtless decisions to money incentives for the export sector.
The UN Committee for Vogue Policy (UNCDP), to blame for figuring out LDC dilemma, meets every three years and has its next session in November.
If Bangladesh needs to postpone its 2026 graduation, it must post a successfully-justified application sooner than that assembly, officers acknowledged.
Dr Zahid Hussain, frail lead economist of the World Bank’s Dhaka dilemma of enterprise and member of the length in-between government’s economic white paper drafting committee, suggested TBS, “An application to prolong the graduation will now no longer be permitted if we declare the earlier government basically based fully mostly its decision on unsuitable statistics. Even with statistical errors or discrepancies, Bangladesh’s characteristic would mild surpass the brink for LDC graduation.”
He added, “Arguments that Bangladesh is unprepared or that its exports will suffer put up-graduation will additionally now no longer be legitimate as commercial advantages will remain readily available in key markets, collectively with the European Union, even after graduation.”
Honest currently, Finance Advisor Dr Salehuddin Ahmed suggested reporters that LDC graduation is a major milestone, emphasising that it involves a number of requirements. He stressed the need for the associated ministries and departments to actively have interaction in assembly those requirements.
Five strategic pillars for a soft transition
The LDC Commencement Relaxed Transition Intention (STS), drafted in June, outlines a roadmap for Bangladesh to shift from reliance on preferential tariffs and low-stamp competitiveness to a more sturdy economic model pushed by innovation, quality, and export diversification.
To discontinue this transformation, the STS is constructed on five key pillars – guaranteeing macroeconomic balance, securing commerce preferences and favourable transition measures beyond LDC graduation, bettering commerce competitiveness, bettering productive capability, and strengthening international partnerships and cooperation.
Bangladesh needs to rob away administrative inefficiencies, nick industry costs and toughen commerce negotiation capacities to offset the put up-LDC loss of preferential market entry, which is feared to nick the country’s exports by 14%, it says.
For a soft transition, Bangladesh needs to circulation in direction of a structurally transformed and globally competitive economic system, which requires a strategic skill to be certain that accelerated inclusive inform, dynamic industrialisation, and enhanced international commerce competitiveness, the draft technique elaborates.
It identifies key principles that contain promoting structural transformation to manual particular of the heart-profits trap and appealing with evolving international traits.
‘Excessive-road skill’ to economic transformation
In keeping with the draft STS, though LDC graduation will live commerce preferences with capacity export loss, it offers Bangladesh a wide gamble to modernise its commerce policy and industrial technique, appealing level of curiosity to innovation and quality to emerge even stronger globally.
“This transition can drive sustainable inform by prioritising compliance and environmental sustainability,” it says.
Commencement offers a wide gamble to toughen competitiveness amid appealing commerce patterns and geopolitical tensions, for which Bangladesh needs to pork up its economic fundamentals and drive structural transformation.
It suggests the concept of the “excessive-road economic fashion” technique that emphasises the enhancement of productiveness, innovation, and quality requirements in dilemma of relying faithful on low-stamp opponents.
This skill advocates investments in education, abilities fashion, and skills to obtain a highly knowledgeable body of workers as well to enchancment in labour requirements, environmental safety, and social equity.
The excessive-road economic transformation skill relieves the stress of low wages and payment-cutting on requirements and compliance, within the damage constructing stamp worth to turn out to be a competitive economic system.
Integrated as an LDC in 1975, Bangladesh is residing to graduate from the team on 24 November 2026 after assembly UN requirements. Earlier in 2015, the country moved from low-profits to decrease-heart-profits dilemma, in accordance to the World Bank classification of international economies.
While this would possibly perchance perchance be a milestone fulfillment, graduation from LDC will suggest Bangladesh will lose the WTO’s pork up measures, equivalent to responsibility-free market entry that covers around 73% of the country’s exports.
This would possibly perchance put an live to export subsidies which helped export industries, attire in particular, thrive over the a long time.
Looming fears of shedding out to Vietnam within the EU market
Bangladesh does now no longer obtain any commerce desire to its largest market, the United States, whereas the European Union, a destination for forty five% of Bangladesh’s exports, offers very generous LDC preferences. So, the general put up-graduation implications for Bangladesh will severely depend on how Bangladesh faces tariffs within the EU market, the draft technique gains out.
Other main markets such because the UK, Canada, India, Japan, Australia, and China that offer LDC-particular preferences additionally considerably matter to Bangladesh.
Bangladesh will turn out to be less competitive than Vietnam within the EU market, it warns.
“While tariff hikes are anticipated for Bangladesh after its LDC graduation, utterly different international locations thru free commerce agreements would possibly perchance perchance execute additional competitiveness, namely in Bangladesh’s largest export market, the EU. For occasion, Vietnam – already a top attire exporter – now has an FTA with the EU, which entered into force in August 2020.”
Vietnam will look for tariffs on its attire exports to the EU progressively decline from the sizzling moderate of 9% to at last zero, whereas Bangladesh would possibly perchance perchance look for its moderate tariff rising from at this time zero to around 11% once the three-twelve months put up-LDC transition length ends in 2029, it gains out, elaborating how the Asian neighbour stands to earn the earnings of its FTA with the EU.
It cites the US market where Bangladesh’s market fragment has risen no matter the lack of tariff preferences.
“Additionally, the evolving nature of commerce policies of accomplice international locations methodology all preferences would possibly perchance perchance now no longer be misplaced simultaneously and would possibly very successfully be extended in some situations,” it says, relating to the EU and the UK’s offer for a 3-twelve months transition length for graduating LDCs.
Quality issues, excessive tariff wall would possibly now no longer abet
The draft STS explains how the retaining tariff regime has kept Bangladesh’s industries less competitive and why the country needs to negotiate now no longer easy to strike preferential commerce offers with key markets to terminate loss of market to capacity opponents equivalent to Vietnam.
It finds that domestic products on the total discontinue now no longer meet the quality requirements of international markets, reducing their competitiveness for export.
“In consequence, non-garment producers, namely those with cramped sources, are sunless from pursuing export alternatives,” it says.
Least afflicted about product requirements and shielded by excessive tariff safety, native producers if truth be told feel less product quality and innovation, shedding export capacity. But that does now no longer affect their native gross sales, it says.
“As an instance, many international merchants earn ceased sourcing leather products made of native hides on account of their failure to conform with international environmental requirements, but products intended for the domestic market remain unaffected.”
The draft transition technique finds Bangladesh’s tariff structure highly retaining and anti-export bias which has helped native industries at the worth of wounding the export sector. A excessive tariff wall has made the domestic market beautiful to merchants and producers, with import-competing actions having fun with 30% better incentives than export sectors thru effective exchange rate, it gains out.
It asks for modifications within the economic policy skill which, “by disincentivising exports and shielding domestic industries from opponents,” prevents native sectors from being competitive and progressive.
“In a creating country fancy Bangladesh, the role of commerce and industrial policy in promoting its domestic industries cannot be overpassed, nonetheless very excessive safety sustained over many a long time appears to be to signify now no longer serving to them prepare for the international market as their export response remains cramped,” it says.
