[🇧🇩] LDC Graduation For Bangladesh

[Saif]

Wahiduddin stresses FTAs for successful LDC graduation

Planning Adviser Dr Wahiduddin Mahmud has highlighted the need for free-trade agreements (FTAs) among the member- countries of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Addressing a programme marking BIMSTEC's 28th founding anniversary in the cap

thefinancialexpress.com.bd

BIMSTEC 28th founding anniversary
Wahiduddin stresses FTAs for successful LDC graduation

FE REPORT
Published :
Jun 18, 2025 08:28
Updated :
Jun 18, 2025 08:28

Planning Adviser Dr Wahiduddin Mahmud has highlighted the need for free-trade agreements (FTAs) among the member- countries of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

Addressing a programme marking BIMSTEC's 28th founding anniversary in the capital on Monday evening, he pointed out that Bangladesh needs FTAs with BIMSTEC members as well as other countries for a smooth transition to the post-least- developed-country (LDC) graduation period.

He also stressed seamless multimodal connectivity among BIMSTEC members, saying it is a pre-condition for trade and investment promotion, people-to-people contacts, and energy cooperation, which are facilitators for economic development.

"Bangladesh remains strongly committed to advancing regional economic integration as a lead country in the trade, investment and development sector, including the blue economy," he added.

Reaffirming Bangladesh's commitment to regional cooperation, he expressed confidence in BIMSTEC's potential to become a dynamic and result-oriented organisation that delivers tangible benefits to its people.

BIMSTEC was established on June 6, 1997, through the signing of the Bangkok Declaration.

Fisheries and Livestock Adviser Farida Akhter, secretaries and officials of the government of Bangladesh, ambassadors and high commissioners, heads of international organisations, members of the diplomatic corps, media personnel, representatives of think tanks, and members of the BIMSTEC Secretariat attended Monday's event.

Welcoming the guests, BIMSTEC Secretary General Indra Mani Pandey noted that BIMSTEC, since its inception, has made significant progress in forging regional cooperation in various sectors.

It has succeeded in creating the institutional framework that it needs to function as an efficient and effective regional organisation, he said.

Besides, it has its own charter and well-established core and sectoral mechanisms, including senior officials meetings, ministerial meetings, and summits, he said.

Reflecting on BIMSTEC's 28-year journey, Mr Pandey highlighted the significant outcomes of the 6th BIMSTEC Summit held in Bangkok in April this year.

He said at the summit, BIMSTEC leaders, apart from their comprehensive summit declaration, adopted BIMSTEC Bangkok Vision 2030, providing a roadmap for building a prosperous, resilient, and open BIMSTEC.

They proposed a number of steps to enhance regional cooperation under BIMSTEC, he also said.

In addition to signing and adopting the Agreement on Maritime Transport Cooperation, memoranda of understanding between BIMSTEC and its developmental partners, the Indian Ocean Rim Association, and the United Nations Office on Drugs and Crime were also inked.

As part of the anniversary celebration, BIMSTEC member states showcased the cultural "unity in diversity" of the Bay of Bengal region by presenting their dance performances, exhibiting artefacts and other unique and symbolic items, and the march past, with the representatives proudly carrying their national flags in a symbolic display of unity and solidarity among member states.

Since September 2014, the BIMSTEC Secretariat located in Dhaka has been committed to supporting the member states to implement the decisions made by the leaders.

At Monday's programme, the organisation's secretary general conveyed that the BIMSTEC Secretariat was immensely grateful to the government of Bangladesh for hosting the Secretariat and providing it with all the necessary support.

He said the BIMSTEC Secretariat was also grateful to the embassies and high commissions of the BIMSTEC member states in Dhaka for their continued cooperation, including the organisation of the reception.

The celebration reaffirmed in a unique way BIMSTEC's growing importance as a regional platform for the realisation of the goals of peace, prosperity, and development in the Bay of Bengal region.

It also reflected the commitment of the member states to the organisation's success.

BIMSTEC comprises seven countries of the Bay of Bengal region - Bangladesh, Bhutan, India, Myanmar, Nepal, Sri Lanka, and Thailand.

It pursues regional cooperation in seven broad sectors - agriculture and food security; connectivity; environment and climate change; people-to-people contact; science, technology and innovation; security; and trade, investment and development.

The cooperation also covers eight sub-sectors - blue economy, mountain economy, energy, disaster management, fisheries and livestock, poverty alleviation, health, and human resource development.​

 

[Saif]

Bangladesh's LDC graduation: risks & readiness

Bangladesh is at a landmark in the nation’s life—one of jubilation and an invitation to strategic contemplation. Bangladesh. With its anticipated graduation from the United Nations’ List of Least Developed Countries (LDCs) by 2026, the nation is poised to turn a new page in its de

thefinancialexpress.com.bd

Bangladesh's LDC graduation: risks & readiness
Trade Dividends, Investment Climate, and Competitiveness

Serajul I Bhuiyan
Published :
Jul 08, 2025 22:28
Updated :
Jul 08, 2025 22:30

Bangladesh is at a landmark in the nation’s life—one of jubilation and an invitation to strategic contemplation. Bangladesh. With its anticipated graduation from the United Nations’ List of Least Developed Countries (LDCs) by 2026, the nation is poised to turn a new page in its development history. The graduation is a strong indication of Bangladesh’s progress in achieving phenomenal success in poverty reduction, improvements in health and education, increased per capita income, and macroeconomic stability.

But with this latter benchmark comes also a set of structural and economic problems. Graduation means the end of some of the world’s special treatment—above all, access to the world’s markets duty-free and concessionary lending and technical assistance—on which the country’s export-led success and infrastructure growth have relied all these years. For a nation that still lags in addressing chronic inequality, climate vulnerability, and productivity disparities, the post-graduation phase must be met with a different agenda and policymaking approach.

This article addresses the most relevant risks and drivers of readiness concerning LDC graduation, including the risk of trade concession losses, the shift in the investment climate, and the need to establish national competitiveness. Since Bangladesh stands at the threshold stage, the question is not whether it will happen but whether it can thrive after graduation. It is a time to reflect, look forward, and move forward with resolve to ensure this milestone is not a stumbling block but a stepping stone towards shared and sustainable prosperity.

The Loss of Preferential Market Access: The most direct and far-reaching consequence of Bangladesh’s graduation from LDC status is the phased withdrawal of preferential market access that is currently available under international trade regimes, such as the European Union’s Everything But Arms (EBA) policy. These trade patterns have played a crucial role in driving Bangladesh’s export-led growth, particularly in the ready-made garments (RMG) sector, which accounts for more than 80 per cent of the country’s total exports and employs over four million workers, the vast majority of whom are women.

Bangladesh will face higher tariffs—12 per cent in some of the most valuable markets—if other trade facilitations are not realised. This directly threatens Bangladeshi products in the global market. In line with this, the government has doubled efforts to achieve the Generalized Scheme of Preferences Plus (GSP+) with the European Union, demanding rigorous compliance with labor, environmental, and human rights conventions.

Meanwhile, Bangladesh is also diversifying its export basket, shifting its focus from textiles to sectors such as ICT, pharmaceuticals, leather, and jute goods. Trade diplomacy has also been undertaken to sign new bilateral and regional trade agreements in Asia, Africa, and Latin America. Value addition is also being enhanced as factory standards are raised to international levels and production facilities are modernised, enabling Bangladesh to remain a competitive partner in evolving global supply chains.

Investment Climate: Though an LDC, Bangladesh benefited from concessional credits, technical assistance, and differential treatment in accessing international aid-for-trade program benefits. With these privileges now poised to end, the spotlight falls on domestic readiness and institutional strengths in attracting high-quality investment.
The government of Dr. Muhammad Yunus has drawn up a vision-led forward roadmap to decouple aid dependence and trigger investment-driven growth. The highest priority is being accorded to the following:

Policy Predictability. A coherent, transparent regulatory framework for reducing risk perceptions of investors.

• Infrastructure Upgradation: Significant investments in ports, power, and transport corridors to reduce logistics costs and improve efficiency.

• Economic Zones and Industrial Parks: Bangladesh Economic Zones Authority (BEZA) is fast-tracking the establishment of industrial enclaves with plug-and-play infrastructure and fiscal incentives.

• Digital Governance: e-registration, e-taxation, and single-window services are some of the measures being introduced to simplify investor procedures and eliminate bureaucratic barriers.

• Legal and Judicial Reforms: Measures are being taken to reform the enforcement of contracts, land acquisition, and arbitration processes to instill confidence in investors.

• In addition to these, Bangladesh is also actively wooing diaspora investment under special bonds and incentive programs while encouraging local entrepreneurs to improve their access to finance, training, and markets. These across-the-board reforms reflect the country’s need to consolidate its fragile investment success into a strong and durable foundation.

Creating Competitiveness for a Post-LDC Economy: As Bangladesh advances towards graduation from the LDC existence, national competitiveness is no longer a requirement—it is a strategic necessity. Graduation will put the country on a level playing field with advanced developing economies; hence, it is imperative to transition from low-cost to high-value, innovation-driven industries.

The RMG sector, the cornerstone of Bangladesh’s export economy for decades, must undergo structural changes. This involves investing in automation and digitalisation to improve productivity, adopting sustainable and ethical business practices to meet evolving consumer and regulatory demands, and advancing up the value chain by building design capabilities, enhancing branding, and diversifying product lines.

Garment non-appearing industries are emerging as new sources of competitiveness:

• Pharmaceuticals: Through high API (Active Pharmaceutical Ingredient) strength and export to over 150 export markets, the sector can become a $5 billion industry by 2030.

• Information and Communication Technology (ICT): Digital Bangladesh and the nascent tech startup ecosystem are driving exports in software, BPO, and digital services.

• Agro-processing: As the world demands more safe, traceable food, Bangladesh’s robust agricultural base can be leveraged through modern processing, packaging, and export chains.

• Shipbuilding and Light Engineering: With its skilled labor force and competitive production costs, Bangladesh is making promising progress in these sectors as a niche manufacturing hub.

To consolidate and scale up these gains, human capital development is crucial. The interim government is further investing in Technical and Vocational Education and Training (TVET), as well as academia-industry partnerships and digital literacy programs. Bangladesh’s demographic dividend, comprising more than 60 per cent of the population aged under 35 years, can be reaped only if the youth are future-proofed with the necessary skills. Additionally, the formation of the Dhaka-Chattogram Economic Corridor and improvements in connectivity with regional transportation networks are enhancing the efficiency of trade logistics. Customs modernisation, electronic certificates of origin, and integration into global value chains are also becoming a priority to reduce the time and cost of doing business. Bangladesh’s ability to transform its enormous potential into long-term competitiveness will shape its post-LDC success story. Innovation, diversification, and wise investment in systems and individuals will be the cornerstones of this advancement.

Strategic Readiness to Face a Post-LDC World: The interim government has proposed a national roadmap for readiness that outlines the key vulnerabilities and opportunities associated with graduation from LDC status. These are:

• Institution Building: Establishing a robust institutional setup of trade policy, intellectual property rights, and alternative dispute resolution mechanisms.

• Human Capacity Development: Initiating national vocational and technical education programs to bridge the skills gap and meet global labor market needs.

• Innovation Ecosystem: Promoting research and innovation by industry-university partnerships and startup incubation centers.

• Green Industrial Policy: Enabling sustainable industrialization by green finance, eco-labelling, and low-carbon production methods.

• Social Protection: Enhancing the social protection system to include the poor and vulnerable in the economic transformation process.

The interim government is also leveraging international goodwill to secure strategic partnerships with countries and multilateral organisations for dignified and graceful graduation.

Conclusion: Graduation from LDC status is not a ceremonial upgrade; it is a landmark in the growth history of Bangladesh. It sires global respect but also demands institutional strength, fiscal resilience, and vision-oriented governance. The path ahead will require astute policymaking, economic inclusiveness, and collaboration in the public, private, and international sectors. Together, with determination, Bangladesh can turn this transition into an opportunity—not only to consolidate its previous achievements but also to leap ahead as a proud, self-sustaining, and competitive middle-income country. As Bangladesh steps into the global scene with a fresh image, let it not forget: the fight is far from won, but the promise of a better, more honourable tomorrow has never appeared so within reach.

Dr Serajul I Bhuiyan is a professor and former Chair of the Department of Journalism and Mass Communications at Savannah State University, Savannah, Georgia, USA.​

 

[Saif]

https://thefinancialexpress.com.bd/economy/ca-chairs-high-level-review-meeting-on-bangladeshs-ldc-graduation

CA chairs high-level review meeting on Bangladesh’s LDC graduation

Published :
Jul 30, 2025 14:14
Updated :
Jul 30, 2025 14:14

A high-level review meeting on the country's preparation for graduation from Least Developed Country (LDC) status to a developing country was held today, with Chief Adviser Professor Muhammad Yunus in the chair.

The meeting took place at the Chief Adviser’s Office (CAO) in Tejgaon, Dhaka, BSS reported, citing Chief Adviser’s Deputy Press Secretary Abul Kalam Azad Majumder.​

 

[Saif]

Experts suggest delaying LDC graduation

Experts on Monday at a discussion suggested delaying the country's LDC graduation until it is ready to absorb the shock after the graduation happens. Giving instances of some other countries, they also said Bangladesh can delay the deadline for its transition from a least developed country

thefinancialexpress.com.bd

Experts suggest delaying LDC graduation

FE ONLINE REPORT
Published :
Aug 11, 2025 20:12
Updated :
Aug 11, 2025 20:12

Experts on Monday at a discussion suggested delaying the country's LDC graduation until it is ready to absorb the shock after the graduation happens.

Giving instances of some other countries, they also said Bangladesh can delay the deadline for its transition from a least developed country (LDC) to a developing one, as this is not a difficult process.

Bangladesh’s major export destinations are the US and EU countries, which would face higher tariffs if the country is graduated.

They made the suggestions at the discussion styled “the impact and challenges of Bangladesh's transition from the LDC list” at the Press Institute (PIB) in the city, jointly organised by an international research organisation Third World Network (TWN) and Nagorik Uddyog (The Citizen's Initiative).

Senior researchers of TWN Sanya Reid Smith and Ranja Sengupta, Taslima Jahan, a lawyer and intellectual property law expert at the Supreme Court, spoke at the event, among others.

They said Bangladesh can submit a delay request at any point before the final approval stage at the General Assembly in the LDC transition process.

Sanya Reid Smith said many countries have extended the deadline for LDC graduations, with some having a longer pause.

Countries like Myanmar and Timor have delayed the graduation, citing political or economic reasons despite meeting the criteria at the UN committee level, she stated.

Bangladesh has seen some major events that affected the local economy, while there have been changes in domestic and international politics and trade, she added.

The decision to graduate was taken during the previous government. Subsequently, there have been major changes in the local politics and economics, the experts highlighted.

Furthermore, the US President Donald Trump's tariff policy has created the biggest global trade shock in the last 200 years. These issues were not known when the decision was made on Bangladesh's LDC graduation, Ms Smith underlined, adding that “all those changes create a rationale for Bangladesh to delay the LDC. Now the Bangladesh government has to decide whether they want this.”

The experts also said Bangladesh will lose some important economic benefits with the LDC transition. Bangladesh can now produce and export new drugs without intellectual property restrictions in the pharmaceutical industry.

After the transition, patents will be mandatory on these drugs, which may reduce investment and make the drug costlier.

Sengupta said at least nine countries have postponed the LDC transition deadline in the past decade.

“Transition does not only mean meeting the per capita income criteria; rather, it is important to consider whether it can survive in the competition after losing duty-free benefits in the international market. Therefore, it is risky to rush if you are not prepared,” she added.

Taslima Jahan said that as an LDC, Bangladesh used to enjoy some special relaxations or exemptions in intellectual property rights (IPR). After the LDC transition, these benefits will gradually be limited or discontinued.​

 

[Saif]

Extend LDC graduation timeline

A clarion call now comes from leaders of major trade bodies for deferring Bangladesh's LDC graduation by three to five years as businesses are rendered unprepared by last few years' economic volatility. At a meet Thursday in Dhaka, they said the businesses were reeling from severe fallouts from Co

thefinancialexpress.com.bd

Trade bodies, experts’ clarion call from ICCB stage
Extend LDC graduation timeline
Years of volatile economic condition upends business advances, trade leaders say to underpin their demand

FE Report
Published :
Aug 14, 2025 23:40
Updated :
Aug 14, 2025 23:40

Participants are seen at the ICC-B seminar on 'LDC Graduation: Some Options for Bangladesh' held on Thursday at a city hotel. ICC-B Chairman Mr Mahbubur Rahman presided. — FE Photo

A clarion call now comes from leaders of major trade bodies for deferring Bangladesh's LDC graduation by three to five years as businesses are rendered unprepared by last few years' economic volatility.

At a meet Thursday in Dhaka, they said the businesses were reeling from severe fallouts from Covid-19, the Russia -Ukraine war, higher global inflation, higher bank interest, the July-August political upheaval of last year, higher cost of production and last, but not the least, the higher US tariffs imposed by the Trump administration.

So, this is not the time for smooth graduation and the graduation should be deferred three to five years, the speakers said at the seminar on 'LDC Graduation: Some options for Bangladesh', arranged at a hotel by the International Chamber of Commerce -Bangladesh (ICC-B) in collaboration with Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Association of Pharmaceutical Industries (BAPI).

Private-sector entrepreneurs, traders, economists, exporters, importers, trade- body leaders, business-chamber leaders and researchers joined voice at the meet to make the call for extending the current graduation timeline that ends late next year.

The businesses also demanded a draft of application to be signed by different trade bodies and business chambers to submit to Chief Adviser of the interim government Prof Muhammad Yunus for deferring graduation of the country from the club of world's least-developed countries (LDCs).

The business magnates also urge the government to go for signing free-trade agreements (FTAs) and other trade deals with major trading partners soon to retain the preferential trade benefit even after the graduation.

Moderating discussions at the seminar, ICC-B President Mahbubur Rahman said graduation would mean loss of duty-free market access in the EU, the UK, and other destinations, with tariffs potentially rising to 12 per cent.

And the high incidence of tariffs would eat up 6-14 per cent of exports, unless GSP+ or similar arrangements are secured, he alerts.

Businesses are calling for a three-to five-year extension, the ICC-B president also said.

Mr Rahman also forewarns that LDC graduation means the end of WTO special benefits - from export subsidies to relaxed intellectual property rules for generics, stricter rules of origin, raising production costs in apparel and other sectors and reduced concessional finance, replaced by costlier loans on tighter terms.

"Today's question is not whether we graduate - that is settled. The challenge is how we graduate successfully," he told the meet. That means defending market access, building competitiveness and acting with urgency, not just planning.

In her keynote presentation, Sanya Reid Smith, legal adviser and senior researcher at The Third World Network (TWN), mentioned the possible legal adviser and senior researcher at The Third World Network (TWN), mentioned the possible impacts of Bangladesh's LDC graduation. Once Bangladesh graduates, it must comply with the WTO's intellectual property (IP) rules (TRIPS), including 20-year patents on new medicines delaying market entry of generics.

"If it were a new medicine after Bangladesh graduates, insulin prices in Bangladesh could be 11 times more expensive so the poverty rate among households needing insulin could increase by between 15 and 200 percent." The patented version of medicines to treat AIDS cost US$15,000 per patient per year, but the generic version only costs US$61 per patient per year.

The patented medicines can be 1,044-percent more expensive than their generic equivalents in Malaysia, Smith also said.

Citing deferment instance, she said Angola should have graduated in 2018, but it delayed it then in 2024 and no longer met the graduation criteria so no date is currently set for its graduation.

Similarly, Timor-Leste should have graduated in 2021 but no date has been set for its graduation and Myanmar should have graduated in 2024, but no date has been set for its graduation.

Because of the graduation Bangladesh will also face reduction in preferential export-market access such as the EU, Bangladesh's largest export market (48 percent of Bangladesh's exports go to the EU) and for about 93 percent of Bangladesh's exports to the EU which currently enter the EU with zero-rated tariffs while Bangladesh is an LDC, she also said.

Syed Nasim Manzur, President of Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh (LFMEAB), said LDC graduation at this time will be a suicidal decision as the domestic economy witnessed an unprecedented shock. It would be "throwing away the advantage to other countries".

He also identified unusually higher shipping cost in Bangladesh, lower competitiveness, economic challenges following July revolution, and higher interest rates as some of the pressing challenges for the manufacturers in the country.

He thinks six more years after 2026 will be required for the country to get prepared for smooth graduation.

"Let's start now-there is no need to confuse national pride with national interest," he said.

ICC-B Vice-President AK Azad said gas reserve is depleting fast and Bangladesh will have to spend $4.0-$5.0 billion annually for importing gas in next few years to ensure energy security.

He called upon the businesses to get united soon and send a letter to Chief Adviser of interim government Professor Muhammad Yunus for deferment of the LDC graduation.

President of BAPI Abdul Muktadir said over the last six years business was affected by many things, such as Covid-19, capital flight, high bank interest rate. So Bangladesh needs another six years of deferment as far as graduation is concerned. "Let us have consensus and work together."

President of BGMEA Mahmud Hasan Khan said, "We are in mindset that we are graduated, but we need more time."

Because, he said, Bangladesh will have to compete with some other countries such as Vietnam, Cambodia and India.

Dr. Zaidi Sattar, Chairman, Policy Research Institute of Bangladesh, Mr. Naser Ezaz Bijoy, Vice President, ICC Bangladesh and Chief Executive Officer, Standard Chartered Bank, Taskeen Ahmed,President, Dhaka Chamber of Commerce & Industry (DCCI), Abdul Hai Sarker, President of Bangladesh Association of Banks, Fahmida Khatun, Executive Director of the Centre for Policy Dialogue, M. Masrur Reaz, Chairman of Policy Exchange, Bangladesh and Selim Raihan, Executive Director of South Asian Network on Economic Modeling, also spoke.

ICCB Executive Board Members Ms. Simeen Rahman, CEO, Transcom Group & Director, Transcom Limited, Md. Fazlul Hoque, Managing Director, Plummy Fashions Limited, Syed Ershad Ahmed, President, American Chamber of Commerce in Bangladesh (AmCham), ICCB Secretary-General Ataur Rahman, Kaiser Kabir, CEO & Managing Director, RENETA PLC, Md. Rezwan Selim, Vice-President, BGMEA, Asif A. Chowdhury, Managing Director, Bay Consolidation Ltd, Rasheed Mymunul Islam, Managing Director, Monno Ceramic Ind. Ltd, Minhaj Ahmed, Ahmed Food Products (Pvt.) Ltd, Tanvir Ahmed , Managing Director, Sheltech Ceramics Limited, Mohd. Arshad Ali, Managing Director, The Merchants Limited, RafidulHaq, Managing Director &CEO,General Group, Mojibul Islam, Managing Director, Amic Pharma, M Mohibuz Zaman, Managing Director & CEO, ACI Healthcare Ltd, and Sheikh Mohammad Maroof, Managing Director, Dhaka Bank PLC, were also among others present.​

 

[Saif]

Prudence needed in LDC graduation deferment decision

Postponing LDC graduation needs careful deliberation by all stakeholders.

www.thedailystar.net

Prudence needed in LDC graduation deferment decision
Postponing LDC graduation needs careful deliberation by all stakeholders

VISUAL: STAR

The question of whether Bangladesh should defer its graduation from the UN's Least Developed Country (LDC) category and the challenges likely to arise when it makes the transition have been a topic of debate for months. Considering the shocks impacting the country's economic growth and activities in recent years, business leaders—mostly from export-oriented industries—have asked to defer the graduation from 2026 to 2032 at a recent roundtable discussion organised by The Daily Star. Their concern is not without merit, yet there is much to consider before deciding on this matter.

As reasons for this deferment, speakers at the event cited a lack of preparedness to cope with the loss of trade preferences following the graduation. Among all the LDCs, Bangladesh—an entirely export-dependent economy—enjoys preferential access to the international markets the most. It is also the only LDC that uses the TRIPS waiver extensively in its pharmaceutical sector, and will suffer a huge blow in terms of drug production and prices when the waiver is lifted post-graduation. Bangladesh is also quite underprepared with coping mechanisms to deal with post-graduation repercussions. Although it will retain LDC trade benefits for three years after graduation, the country is nowhere near its biggest competitors, such as Vietnam and India, who have already secured free trade agreements with some of our biggest markets. For a country that has been waiting to become a developing country since 2018, there has been no real initiative to negotiate bilateral agreements with our biggest markets. Bangladesh also has alarmingly high logistical costs, poor governance, bureaucratic complexities, high cost of doing business, and weak infrastructure. Furthermore, compliance costs in labour standards, environmental protection, and intellectual property rights will also shoot up.

Despite these hurdles, some experts believe it's best to go along with the graduation schedule set by the UN. The white paper on the economy, published in December 2024, also states that there are "no plausible reasons" why it should be postponed. The incumbent planning adviser said a deferral might not be an option, despite there being several precedents. Indeed, Bangladesh cannot make the decision unilaterally; it needs to negotiate with the UN and the two other countries set to graduate with it in 2026—Nepal and Laos—to secure the deferment, needing to present strong evidence that a smooth transition would be significantly undermined.

In this situation, we urge the interim government to take a pause and consider all options. It must organise a national dialogue, bringing all stakeholders to the table, to consider all perspectives. The concerns raised by the business leaders must be reviewed carefully, and a pragmatic approach must be taken to deal with this situation, keeping in mind that very little time is left. Simultaneously, the issues cited above must be addressed with due haste to improve Bangladesh's competitiveness in global trade. Whatever decision is made, it must be in the country's and its people's greater interest.​

 

[Saif]

Bangladesh's decision on LDC graduation deferral needs careful assessment

Short-term image building rather than long-term readiness drove the eagerness to graduate.

www.thedailystar.net

Bangladesh's decision on LDC graduation deferral needs careful assessment

FILE VISUAL: SHAIKH SULTANA JAHAN BADHON

Bangladesh is scheduled to graduate from the United Nations' Least Developed Country (LDC) category on November 24, 2026, having met the three graduation criteria—Gross National Income (GNI) per capita, Human Assets Index (HAI), and Economic and Environmental Vulnerability Index (EVI)—for two consecutive triennial reviews since 2018. A major milestone for Bangladesh, it reflects the economy's strength, achieved through decades of progress in economic growth, poverty reduction, human development, and resilience. Yet, graduation also entails significant costs, leading to the loss of crucial international support measures (ISMs) such as duty-free quota-free (DFQF) access to developed markets, special treatment under World Trade Organization (WTO) rules, and concessional financing.

While the previous government highlighted LDC graduation as a political symbol of success, the data integrity was questionable. Short-term image building rather than long-term readiness drove the eagerness to graduate. Businesses, though outwardly supportive, have been apprehensive about whether Bangladesh is structurally ready to withstand the post-graduation challenges.

Recently, the private sector has been urging the government to seek a deferment of graduation for at least three years, citing both economic vulnerabilities and the precedent of other countries that successfully postponed their transition. Notably, the European Union (EU) has already committed to extending duty-free market access for goods originating from graduating LDCs for an additional three years after their respective graduation.

The greatest risk associated with LDC graduation is the loss of trade preferences. Bangladesh's exports are highly dependent on preferential market access. The RMG sector, which accounts for 85 percent of exports, relies heavily on DFQF access to several developed country markets, including the EU, Canada, Australia, and Japan. Our RMG products also enjoy duty-free access in some developing countries on a limited scale. In fact, Bangladesh was among the few LDCs that reaped the most benefits from preferential market access offered by developed countries. This implies that Bangladesh has the most to lose. Estimates show that preferential access covers 70 percent of our global exports. Therefore, Bangladesh's competitiveness in the global market will significantly erode after graduation.

LDC status also guarantees access to concessional development finance from multilateral institutions. Graduation will increase borrowing costs significantly. This is especially concerning for Bangladesh, given its already rising external debt service burden and low foreign exchange reserves. As one of the world's most climate-vulnerable countries, Bangladesh needs to integrate climate resilience into its economic planning, which requires adequate and continued LDC-specific climate funds to rely on. The loss of such support will increase our climate vulnerability.

Besides, Bangladesh, as an LDC, currently enjoys exemptions from several WTO obligations, including the rules on Trade-Related Intellectual Property Rights (TRIPS) and subsidy disciplines. Post-graduation, Bangladesh will lose these flexibilities, constraining industrial policy space when export diversification remains limited.

If Bangladesh seeks to defer its graduation, a strong case of its vulnerabilities derailing a smooth transition must be made. Although the country's inflation is slowly declining now, it has been above nine percent for about three years. Similarly, the foreign exchange reserve, despite its gradual increase and present stability, is much lower compared to the period when the country's reserve was equivalent to almost five to six months' import value. As of August 14, 2025, the foreign exchange reserve was $25.82 billion, which, as per the International Monetary Fund (IMF)'s benchmark, can cover about three months of imports. The government also needs to service its high external debt, borrowed by the previous government for several large infrastructure projects. The banking sector was also left in distress by the previous government. As of March 2025, the share of non-performing loans (NPLs) in the banking system had increased to 24.13 percent of total loans disbursed. Once Bangladesh Bank completes full assessment of the asset quality of all weak banks, NPL may increase further. This indicates the banking sector's constraints in providing loans to genuine businesses at a competitive interest rate. Governance failures in both state-owned and private banks have undermined financial stability, critical for supporting investment in a post-graduation scenario.

Besides, Bangladesh has not diversified its exports significantly beyond garments. Despite having huge export potential, sectors such as pharmaceuticals, leather, and ICT remain underdeveloped. Graduation without diversification could expose the economy to concentrated risks.

In addition to all the above, Bangladesh is passing through a political transition under an interim government. In the past, reforms in governance, regulatory frameworks, and transparency remained an unfinished agenda during every regime. While the current interim government has initiated a few reform measures over the last one year, the major reforms are yet to be implemented. Therefore, after the national elections, announced to be held in February 2026, reform measures must continue in the medium and long terms to achieve national economic objectives and comply with global requirements.

Several countries have been successful in deferring graduation, noting various vulnerabilities. Nepal deferred graduation after the devastating 2015 earthquake and subsequent macroeconomic challenges. Vanuatu's graduation was deferred in 2012 due to natural disasters and external shocks. Similarly, Tuvalu's graduation was postponed in 2012 for environmental vulnerabilities. Maldives' smooth transition period was extended in 2005 due to the Indian Ocean tsunami and the country graduated in 2011. The graduation of the Solomon Islands, scheduled to happen in 2024, was extended in 2023 by three years to December 13, 2027, due to various shocks disrupting its graduation process. Angola's graduation has been deferred due to the deterioration of its economy to an unspecified date. Bangladesh and Nepal were supposed to graduate in 2024, but the UN General Assembly (UNGA) extended the timeline due to the impact of the Covid-19 pandemic.

LDC status also guarantees access to concessional development finance from multilateral institutions. Graduation will increase borrowing costs significantly. This is especially concerning for Bangladesh, given its already rising external debt service burden and low foreign exchange reserves.

Therefore, deferment is not unprecedented, and the UN Committee for Development Policy (CDP) recognises exceptional circumstances, such as climate shocks, financial crises, or political instability as legitimate grounds that can cause serious setbacks to a country's development progress. Bangladesh can make a compelling case by citing the combined effect of global economic downturns, domestic macroeconomic fragility, and climate vulnerability. The recent tariff regime may impact many economies, including Bangladesh's, negatively. To overcome these challenges, the government needs to improve institutions and governance to ensure conducive fiscal, monetary and trade policies, and the private sector should work towards upgrading compliance, technology, and productivity.

If the government decides to request LDC graduation deferment and if the UNGA grants the extension, we must not forget the hard work that lies ahead. Moreover, the preparation for a smooth transition cannot be delayed. The deferral should be considered an opportunity to upgrade infrastructure; improve human capability; reform economic sectors, including trade, investment, banking, fiscal system; reduce bureaucratic red tape; and ensure transparency and accountability. Therefore, Bangladesh's requests for a deferral of the LDC graduation period should be framed as a move towards strategic readiness. Without credible reforms, deferment would merely postpone the crisis.

Dr Fahmida Khatun is executive director at the Centre for Policy Dialogue.​