[🇧🇩] LDC Graduation For Bangladesh

[Saif]

Bangladesh needs strong diplomatic engagement to delay LDC graduation, says RAPID chief

Bangladesh needs strong diplomatic engagement to delay its graduation from the Least Developed Country (LDC) category, as the country is likely to face multiple post-graduation challenges without adequate preparation, said Dr Mohammad Abdur Razzaque, chairman of the Research and Policy Integration

thefinancialexpress.com.bd

Bangladesh needs strong diplomatic engagement to delay LDC graduation, says RAPID chief

FE ONLINE REPORT
Published :
Dec 15, 2025 14:29
Updated :
Dec 15, 2025 14:32

File photo of Dr Mohammad Abdur Razzaque

Bangladesh needs strong diplomatic engagement to delay its graduation from the Least Developed Country (LDC) category, as the country is likely to face multiple post-graduation challenges without adequate preparation, said Dr Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), on Monday.

He made the remarks at a seminar titled ‘Socio-economic Priorities for the Next Government’, held at the CIRDAP Auditorium in Dhaka.

Dr Razzaque noted that the next government’s first major test would be crisis management, leaving limited scope for articulating long-term vision statements in the early phase of its tenure.

“Immediate challenges related to inflation, banking sector stability, foreign exchange reserves, and LDC graduation will shape the entire term of the next government,” the economist said.

He stressed that the incoming administration must prioritise securing the EU’s GSP+ facility, implementing the ninth five-year plan with a strong focus on job creation, ensuring energy security to support urban development and manufacturing industries, enhancing export competitiveness, attracting greater foreign direct investment (FDI), and strengthening human resource development.

Dr Razzaque warned that failure to act promptly would narrow the policy space and lead to more costly adjustments later, adding that while structural reforms are crucial, they can only succeed if short-term macroeconomic stability is ensured.

“Credible actions taken within the first year can help restore confidence among households, investors, and development partners,” he said.

The seminar was attended by National Board of Revenue (NBR) Chairman Md Abdur Rahman as the chief guest. Other speakers included former caretaker government adviser Rasheda K Chowdhury, RAPID Executive Director Dr M Abu Eusuf, Bangladesh Chamber of Industries President Anwar Ul Alam Parvez, among others.​

 

[Saif]

Export diversification crucial in post-LDC Bangladesh: roundtable

Experts on Thursday said that export diversification, industrial upgrading and linking external support with national strategies are crucial for the country’s development after its upgradation from the Least Developed Country status.

www.newagebd.net

Export diversification crucial in post-LDC Bangladesh: roundtable
Staff Correspondent 18 December, 2025, 23:40

Experts on Thursday said that export diversification, industrial upgrading and linking external support with national strategies are crucial for the country’s development after its upgradation from the Least Developed Country status.

In the event hosted by Centre for Governance Studies at a Dhaka hotel, people related to private sector, national economy and development partners discussed how development partners could better coordinate with government agencies when the LDC-specific benefits phased out from the country.

A press release issued on the day said that private sector representatives, talking about the issue, highlighted the need for targeted reforms and support to strengthen capacity for sustainable growth in post-LDC graduation.

The roundtable titled Strengthening Bangladesh’s institutional capacity for a smooth LDC graduation: priorities, sequencing, and strategies to avoid the middle-income trap, was aimed at identify practical and coordinated measures to safeguard the country’s competitiveness and resilience.

Addressing challenges like the loss of trade preferences and higher financing costs in Bangladesh, foreign development partners and diplomatic missions staff also shared their financial assistance strategies and plans to adjust cooperation frameworks, the press release said.

Moderated by CGS president Zillur Rahman and executive director Parvez Karim Abbasi, the roundtable was addressed by Centre for Police Dialogue’s distinguished fellow Professor Mustafizur Rahman, Apex Footwear managing director Syed Nasim Manzur, Dhaka University’s economics teacher Professor Selim Raihan, World Bank’s senior economist Nazmus Sadat Khan, The Asia Foundation’s chief strategy and legal adviser Michael Kim McQuay, Delegation of the European Union’s deputy head of mission Baiba Zarina, among others.​

 

[Saif]

LDC exit nears but trade deals stayed in waiting mode in 2025

As 2025 winds down, Bangladesh is staring at an approaching deadline with growing concern.

www.thedailystar.net

LDC exit nears but trade deals stayed in waiting mode in 2025

As 2025 winds down, Bangladesh is staring at an approaching deadline with growing concern.

Less than a year remains before the country formally graduates from the least developed country (LDC) club in November 2026. For an economy built on garment exports, this milestone is not just symbolic; it comes with the real risk of losing duty-free access to major markets.

The government has intensified trade talks with key partners to preserve preferential market access, guided by the Smooth Transition Strategy (STS) -- a policy roadmap designed to soften the graduation shock.

Yet, despite nearly two decades of negotiations, most agreements are still in early stages. Apart from a small number of exceptions, few have reached enforcement, leaving exporters in a state of limbo.

Over the years, some progress has been made. One notable breakthrough came yesterday as Bangladesh and Japan concluded negotiations on a bilateral Economic Partnership Agreement (EPA). The deal, once signed and ratified, will grant duty-free access to 7,379 Bangladeshi products to Japanese market, including ready-made garments, while Bangladesh will offer zero-duty entry to 1,039 products from the island nation.

The agreement also covers services, with Bangladesh opening 97 sub-sectors and Japan 120, creating scope for investment and technology transfer. The EPA will now move towards formal signing and approval by Japan's parliament, the Diet, before it comes into force.

South Korea is another relative bright spot.

According to Commerce Secretary Mahbubur Rahman, talks on a separate EPA with Seoul are close to a conclusion. The authorities hope for a near-term signing.

Apart from Japan and South Korea, Bangladesh is juggling preliminary discussions with a number of partners, including the European Union, the Regional Comprehensive Economic Partnership (RCEP), Asean countries, China, India, Australia and the United Arab Emirates.

However, having so many talks has not accelerated progress. In many cases, Dhaka is still waiting for dates to sit across the table from prospective partners.

For slow progress, economists point to structural constraints at home.

For example, the average import tariff of Bangladesh is more than 28 percent, far higher than regional peers such as Malaysia, where rates are around 5 percent.

"High protection discourages potential partners from committing to comprehensive trade agreements," said Zaidi Sattar, chairman of local think tank Policy Research Institute of Bangladesh (PRI).

While lowering tariffs could speed up negotiations, it runs into fiscal realities. Import duties are still a major source of government revenue. Trade policy reform is therefore politically and economically sensitive.

According to the PRI chairman, institutional capacity also poses a barrier.

Bangladesh often does not have sufficient negotiating manpower, and key export-import policy documents are not always available in English. These issues limit the accessibility of foreign counterparts.

Meanwhile, the business community watches the developments anxiously.

High interest rates, inconsistent energy supplies, rising production costs and inflation are already squeezing enterprises, making the timing of LDC graduation particularly challenging.

"Trade agreements take time, and we had urged the government to seek a deferment of LDC graduation," said Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries.

"This is not the right moment for graduation, given the economic pressures businesses are facing," added the business leader.

Garment exporters, who are the backbone of the country's export sector, are especially concerned.

Inamul Haq Khan, senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said businesses are critical stakeholders whose concerns often go unheard.

Industry leaders have repeatedly called for a six-year deferment of graduation, citing the absence of major trade agreements and limited preparedness on both public and private fronts.

"The country is going to graduate next year, but it is very unfortunate that we have yet to sign any trade agreements to retain the major trade partners," Khan said.

He warned that the loss of duty-free access could put exports under severe pressure.

"Export incentives have already been reduced, and while government support schemes aim to boost competitiveness, their impact may not be enough to offset the loss of LDC benefits," he added.

Other sectors are also facing the pinch.

Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), said primary textile manufacturers are already under strain.

"Cheap yarn imports from India have surged, rising 137 percent over the past year, squeezing domestic spinning mills grappling with inadequate gas supply."

He warned that any setback in the garment sector could jeopardise roughly $25 billion invested in the country's primary textile industry.

Despite the challenges, some policymakers see opportunities.

Mohammad Abdur Razzaque, chairman of local think tank Research and Policy Integration for Development (RAPID), described the Japan EPA as a meaningful milestone.

He said that RCEP has requested documentation to assess Bangladesh's eligibility for membership in January, alongside Hong Kong, Chile and Sri Lanka.

If approved, it would give Bangladesh access to the world's largest trade bloc, added Razzaque.

He said negotiations with the EU should secure the GSP Plus facility, preserving access to European markets.

The stakes are high. At present, about 73 percent of Bangladesh's exports rely on LDC-related duty-free access to 38 countries. Studies suggest losing these preferences could slash up to 14 percent of exports, roughly $8 billion annually.

As the year ends, the status of trade negotiations is clear.

Bangladesh has opened channels, laid out strategies, and crossed a few important milestones. Yet the distance between negotiation and enforcement remains the defining challenge on the country's trade frontier.​

 

[Saif]

Is Bangladesh ready for LDC exit?

After decades on the global list of the poorest economies, Bangladesh is now set to cross an important economic threshold as it prepares to graduate from the Least Developed Country (LDC) category in November, 2026. This status change follows the country meeting all three United Nations graduation

thefinancialexpress.com.bd

Is Bangladesh ready for LDC exit?

SYED MUHAMMED SHOWAIB
Published :
Dec 26, 2025 22:16
Updated :
Dec 26, 2025 22:16

After decades on the global list of the poorest economies, Bangladesh is now set to cross an important economic threshold as it prepares to graduate from the Least Developed Country (LDC) category in November, 2026. This status change follows the country meeting all three United Nations graduation criteria including per capita gross national income, the human assets index and the economic and environmental vulnerability index on two consecutive occasions. While this progress reflects years of steady growth, graduation also brings in new challenges, particularly the phasing out of international support measures that have played an important role in that journey. Acknowledging this concern, the United Nations General Assembly resolution 59/209 emphasises that graduation must not derail development and urges a carefully managed transition to minimise the fallout from the loss of LDC-specific privileges.

The economic transformation that has paved the way for this graduation is hard to dispute. Over the decades, Bangladesh has undergone a fundamental shift in its economy, with agriculture's share of GDP falling from nearly 60 per cent in the early 1970s to just 11 per cent in 2022-23. Over the same period, merchandise exports expanded dramatically, rising from less than two billion dollars in the early 1980s to more than 43 billion dollars in 2022-23, driven largely by the export-oriented readymade garments sector. Today, Bangladesh is the world's second-largest apparel exporter, supplying more than a tenth of global demand.

This economic progress has been recognised on its achievement of various international milestones. In 2015, Bangladesh transitioned from low-income to lower-middle-income status according to World Bank classifications. This was soon followed by meeting the criteria for LDC graduation in 2018 and again in 2021, and the UNGA subsequently decided that Bangladesh's graduation would take effect on 24 November 2026 following a five-year preparatory period.

Graduation, however, will fundamentally reshape the external conditions under which these gains were made. This is because, unlike most least developed countries, Bangladesh has been the single largest beneficiary of LDC-specific international support measures, particularly unilateral trade preferences. Nearly three-quarters of its merchandise exports currently enjoy LDC-related tariff preferences. In major markets such as Australia and the European Union, more than 90 per cent of Bangladesh's exports enter duty-free, while in Canada, the Republic of Korea and the United Kingdom the share exceeds 80 per cent. The readymade garment sector, which has been the main engine of this preference-driven export growth, is therefore likely to face significant changes in importing countries' trade regimes after graduation, with tariffs rising sharply.

The World Trade Organisation has estimated that the loss of preferential market access could reduce Bangladesh's exports by more than 14 per cent. This risk is especially troubling because the country's economic transformation has so far relied heavily on a narrow comparative advantage built on low wages, limited regulation and cost minimisation. Graduation now makes it imperative for Bangladesh to move away from a trade-preference-dependent, low-wage export model and towards one grounded in higher productivity, innovation and quality, rather than price competitiveness alone.

The most immediate challenge centres around trade preferences, especially in the European Union, Bangladesh's largest export destination. RMG sector has prospered in the EU taking advantage of the EU's Everything But Arms (EBA) facility designed for LDCs. After graduation, Bangladesh will lose these EBA benefits and might be replaced by standard GSP for which tariff preferences are limited. Another option is to apply for the GSP+ scheme which offers duty-free access to 66 per cent of EU tariff lines including textiles and clothing. Even then, Bangladesh's apparel exports could still be subject to EU safeguard measures as the country already accounts for a large share of GSP-covered apparel imports. In such a scenario, Bangladeshi clothing exports to the EU could lose all tariff preferences and face an average duty of around 11.5 per cent.

Such an outcome would place Bangladesh at a significant disadvantage relative to competitors. Vietnam, for example, already benefits from a free trade agreement with the EU under which apparel tariffs are being phased out. By the time Bangladesh completes its transition period, Vietnamese garments are expected to enjoy zero duty access, creating strong incentives for buyers to shift sourcing away from Bangladesh. This risk of trade diversion is real and could undermine employment in a sector that employs millions, particularly women, and forms the backbone of the country's manufacturing base.

Any access to GSP preferences after LDC graduation will come with far more demanding rules of origin. For non-apparel products, exporters will be required to achieve at least 50 per cent domestic value addition while apparel exports will need to meet a double-stage transformation requirement, assuming the relevant safeguard provisions are amended. Although Bangladesh has built relatively strong backward linkages in knitwear, the woven garment segment remains heavily reliant on imported fabrics. As a result, complying with stricter origin criteria will be difficult without substantial investment in upstream industries or adjustments to the rules themselves. Moreover, all preference schemes are conditional and can be temporarily suspended if trading partners conclude that commitments related to labour standards or human rights are not being adequately upheld.

These requirements for double transformation in apparel and high domestic value addition for non-apparel exports are quite stringent. Under the current global system driven by value chain-led trade where countries specialise in just one or a few components of the overall production of final items, fulfilling such high rules of origin requirements is extremely difficult, especially for capacity-constrained countries transitioning out of LDC status.

At this stage, it is clear that Bangladesh is only partially prepared for graduation and remains far from insulated against its risks. The country has repeatedly defied expectations in the past, but the challenges it will face in 2026 are qualitatively different from those encountered before. This is because the heavy economic concentration in the ready-made garments sector that previously fuelled rapid growth now emerges as a key vulnerability. Graduation, therefore, should be seen not as an endpoint but as a deadline. Whether it serves as a springboard towards a more resilient and sustainable economy or becomes a source of significant disruption will hinge on the urgency, depth and seriousness with which policymakers address the post-LDC realities.​

 

[Saif]

Experts stress efficient trade diplomacy ahead of LDC graduation

Bangladeshi exporters are likely to absorb about 40 per cent of the tariff they might face after the grace period for graduating from least developed country status to export to the European Union, according to a recent study...

www.newagebd.net

Experts stress efficient trade diplomacy ahead of LDC graduation
Staff Correspondent 29 December, 2025, 22:24

Bangladeshi exporters are likely to absorb about 40 per cent of the tariff they might face after the grace period for graduating from least developed country status to export to the European Union, according to a recent study.

It also stated that in the post-2029 period, Bangladesh might face 12 per cent tariffs on exports to the EU, while Vietnam, Pakistan, and Sri Lanka would face zero tariffs due to free trade agreements and GSP+.

Deen Islam, an associate professor at Dhaka University, presented the study at a seminar titled ‘Assessing Tariff and Exchange Rate Pass-through in Apparel Export Policies in the European Union: LDC Graduation Implications for Bangladesh’, organised by the Research and Policy Integration for Development and the International Growth Centre at Dhaka University.

‘For every 10 per cent tariff imposed by the EU, Bangladeshi exporters will lower pre-tariff prices by about 4 per cent to remain competitive,’ he added.

The study also showed that the top ten apparel items have an average weighted price of about 36 per cent lower than that of China and Vietnam.

He also said that even Cambodia, another LDC, achieves a higher average price than Bangladesh.

Bangladesh is scheduled to graduate from the LDC category in 2026, with a transition period allowing temporary continuation of specific trade preferences.

Experts said that LDC graduation could pose a threat, as exporters might bear a large share of the tariff costs; however, early and coordinated preparation could soften the transition’s impact.

He said that exporters are already operating on thin profit margins, leaving little capacity to absorb new tariff costs without significant financial strain.

For every 10 per cent tariff imposed by the EU, Bangladeshi exporters will have to lower pre-tariff prices by about 4.0 per cent to remain competitive, he said.

The study also explored to what extent exporters can adjust their prices when exchange rates change, he said, adding that an appreciating currency has been eroding competitiveness.

The study showed that between 2012 and 2022, the taka appreciated significantly in real terms against the currencies of its main rivals, like China, Vietnam, and Cambodia.

This decade-long currency trend has made Bangladeshi exports progressively more expensive relative to its key competitors, adding another layer of pressure, it said. Bangladesh’s cost competitiveness has been silently eroding, even before the tariff shock, it said.

The woven sector is more vulnerable due to its heavy reliance on imported raw materials, such as fabrics, the study added.

He recommended that the government and exporters secure market access by focusing on diplomatic and trade negotiations, strengthening supply chains and the business environment, and pursuing industrial strategy, product and market diversification, and boosting backward linkages.

In his speech, Munir Chowdhury, national trade expert for the World Bank-initiated Bangladesh Regional Connectivity Project, said that Bangladesh suffers from a serious gap in trade diplomacy and negotiation capacity, which could undermine the country’s export competitiveness after it graduated from the least developed country status.

He also said that without skilled trade negotiators and a strategic approach to trade diplomacy.

‘Trade diplomacy is not optional anymore. If we fail to negotiate effectively, we would lag behind our competitors in export markets,’ he said.

He pointed out that competing countries are aggressively negotiating favourable trade deals, while Bangladesh remains behind in securing similar arrangements.

‘Vietnam will enjoy zero-duty access to the EU under its free trade agreement. But after the LDC grace period ends, Bangladesh’s exports to the EU could face tariffs of around 12 per cent if we fail to sign an FTA,’ he said.

He warned that such a tariff burden would severely affect Bangladesh’s readymade garment sector, which accounts for the bulk of the country’s export earnings.

He argued that Bangladesh should immediately establish a dedicated trade negotiation pool or a specialised wing within the government to conduct trade talks in a professional and coordinated manner.

He also emphasised the need for capacity building, data-driven negotiation strategies, and a harmonisation of all trade-related policies.

‘In the current global trade, we must focus on non-tariff barriers as these are not less important than tariff barriers,’ he added, saying that proper logistics, less lead time, efficient ports, and transport are the main components of nontariff barriers.

In his speech, Md Mamun-Ur-Rashid Askari, joint chief of the Bangladesh Trade and Tariff Commission, said that FTAs and trade negotiations mainly depend on the negotiator’s skill.

‘It could be complete in a short time if both parties are convinced,’ he added.

He also said that Bangladesh is in another FTA negotiation with South Korea, with the second round expected in January.

M Abu Eusuf, executive director of the RAPID, gave the welcome remarks, while Md Taiabur Rahman, dean of the Social Science Faculty of the DU, gave the concluding remarks.

Academics, experts, and government officials also spoke at the event.​

 

[Saif]

Businesses underprepared as LDC graduation clock ticks

With less than eleven months left before Bangladesh exits the least developed country club, businesses say they are still not adequately prepared to face the harsher realities of a post LDC world.

www.thedailystar.net

Businesses underprepared as LDC graduation clock ticks

With less than eleven months left before Bangladesh exits the least developed country club, businesses say they are still not adequately prepared to face the harsher realities of a post LDC world.


At the core of their concerns is the absence of trade agreements that would allow exporters to retain preferential market access once the country formally becomes a developing nation.


Business leaders also point to weaknesses at home, from infrastructure and logistics to limited product diversification and high production costs, all of which undermine competitiveness against regional peers.

Manufacturers say if the government presses ahead with graduation without adequate preparation, they may lose at least $8 billion a year in overseas sales currently protected by preferential treatment.


The interim government has repeatedly said it will stick to the November 2026 graduation deadline. But in the face of widespread opposition, it invited a United Nations (UN) body to assess conditions on the ground.

The United Nations Committee for Development Policy (UNCDP) conducted its first assessment in November last year, gathering views from business leaders, policymakers and economists. A second round-up is scheduled for February, the same month the next national election is due.

Now business leaders say they plan to approach the next government to seek a deferment of at least six years.


AT LEAST $8B AT STAKE

Studies suggest Bangladesh could lose around 14 percent of its annual export earnings, equivalent to about $8 billion, once it leaves the LDC group and preferential access begins to fade.

At present, exporters enjoy duty-free or preferential entry to 38 countries and several trade blocs. About 73 percent of national exports benefit from these facilities.

According to trade data, Bangladesh alone accounts for 67 percent of total LDC preference utilisation among the 46 countries in the group.

Economists say these advantages have been central to export growth over the past decades. Since joining the LDC category in 1975, Bangladesh has used preferential access to build a strong export base, especially in garments.

Last year, apparel exports reached $39 billion, making Bangladesh the second-largest garment exporter after China with close to 8 percent of the global market. Meanwhile, the country's economy has grown into a $456 billion market.

The risk, according to economists, is concentration. Unlike many countries that have graduated, Bangladesh is heavily reliant on a single export sector and a limited number of markets, leaving it more exposed to any sudden loss of trade privileges.

FEW TRADE DEALS SO FAR

To manage the graduation shock, the government last year adopted a Smooth Transition Strategy (STS). The strategy envisaged signing trade agreements with major partners to preserve market access after graduation.

But the progress has been slow so far.

Till January this year, Bangladesh has signed just one preferential trade agreement (FTA) with Bhutan, effective since 2022.

Negotiations with Japan on an Economic Partnership Agreement (EPA) were completed in December last year. Commerce Adviser Sk Bashir Uddin said the deal with the island nation is expected to take effect by the end of January.

Talks with other key partners and blocs, including the European Union (EU), South Korea, the United Arab Emirates, Indonesia, RCEP and Asean, continue with no clear timelines.

At home, businesses say conditions have worsened rather than improved. Bureaucratic delays, policy uncertainty and infrastructure bottlenecks continue to push up overhead costs and weaken competitiveness.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said the government does not have a clear roadmap for graduation.

"The interim government did not sit with businessmen and did not prepare any concrete plan for the post-LDC period," he said.

HOME FRONT WEAK TOO

Last year, leaders of 16 major trade bodies and chambers wrote to Chief Adviser Professor Muhammad Yunus, urging the interim government to seek a deferment of at least six years.

They cited a long list of pressures, including high interest rates, stress in the financial sector, gas shortages, rising energy prices, limited industrial land and inadequate workforce skills.

Business leaders argue that pressing ahead without proper groundwork would be a costly error.

"The decision on LDC graduation should not be whimsical. It must be based on detailed studies," said Anwar-ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Industries (BCI) and a former BGMEA president.

Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), said primary textile producers are already struggling under higher production costs. "Gas prices were raised locally although international prices fell, which hit production hard," he said.

He added that recent improvements in foreign exchange reserves and remittance inflows do not yet point to economic stability. "Graduating in such a situation would not reflect wisdom," he said.

Some economists echo these concerns.

Mohammad Abdur Razzaque, chairman of local think tank Research and Policy Integration for Development (RAPID), said the level of overall preparation is inadequate given the limited time left.

"Bangladesh must identify a small number of top priorities that can realistically be addressed within the next six months," said the economist.

Those priorities, according to him, include reducing the cost of doing business, improving law and order, streamlining customs procedures and stepping up engagement with the European Union to secure GSP Plus status after graduation.

Razzaque said that while deferment remains an option, the looming election and political transition make decisions more complex.

Even so, he said graduation could still serve as a policy anchor if used to accelerate long delayed reforms.

Anisuzzaman Chowdhury, special assistant to the chief adviser of the interim government, said progress should be viewed in relative terms, as there is no single benchmark.

He said the government has identified 12 priority export sectors beyond garments and is working to improve compliance and the broader business environment.​