Debapriya Bhattacharya, a member of the United Nations Committee for Development Policy (UN CDP) and a distinguished fellow of the Centre for Policy Dialogue (CPD), discussed the challenges Bangladesh may face due to LDC graduation, on 28th February (Sunday).
The prominent economist presented a keynote paper titled, “Bangladesh qualifies for LDC graduation: What next?”
He said Bangladesh is likely to lose a wide variety of preferences and privileges after graduation from the least developed country (LDC) status.
The preferences include loss of duty-free and quota-free (DFQF) provisions to export markets, which impacts will be beyond trade as well. Relinquishing of preferences and privileges can be considered as a severe shock to garment exports – according to him.
Referring to CPD’s distinguished fellow Prof Mustafizur Rahman, Dr. Bhattacharya said export earnings would be declined by 8-10 per cent amounting to $2.5 billion annually after graduation. About 85 per cent of the products that have access to the European Union and Canada with LDC benefits are from Bangladesh.
Besides, grants from developed countries will stop coming in and concessional loans will be reduced.
Agriculture and infant industries will be affected by reduced subsidies after graduation. Therefore, he urged on transparency and control in the distribution of subsidies.
Again, Bangladesh will lose the rebate from the Trade-Related Aspects of Intellectual Property rights (TRIPs), which other LDC countries will enjoy until 2033. That will pull back the thriving pharmaceutical industry. Under the circumstances, the country’s pharmaceutical industries have to stop enjoying patent waivers.
Other than this, the country would not get funds from the special access to climate finance.
“If these possibilities can be taken advantage of, foreign direct investments and loans at comparatively less interest rates will increase,”
According to him, Bangladesh will face challenges that emerged from the Covid-19 pandemic, and Rohingya maintenance and repatriation have to be addressed.
Lowering inequality and ensuring good governance will also come as other major challenges, he said.
The country will also suffer because the government will have to take visible steps to stop the use of pirated software. It will also lose the benefits of technology transfer. Also, all innovations have to be patented, which is expensive.
“All these issues should be discussed and a work plan has to be chalked out,” he suggested.
However, he recommended some coordinated steps, which can overcome challenges.
First, the government has to make a transition strategy in line with the eighth five-year plan, second Perspective Plan, Climate Change Strategy and Action Plan, Delta Plan, and Sustainable Development Goals (SDGs).
Moreover, the Economic Relations Division, the foreign ministry, Planning Commission, the Bangladesh Bureau of Statistics, and the commerce ministry should work in coordination to formulate and implement the strategy.
Dr. Bhattacharya focused on four major challenges facing Bangladesh on its path to graduation; the Rohingya problem, post-Covid economic recovery, inequality, and the lack of good governance.
Inequality should be addressed to ensure sustainable development. Inequality is visibly increasing in income, expenditure, and wealth. The marginalized population has endured deprivation due to Covid-19. The international community wants underprivileged people to get the benefits funded by it. he added.
Meanwhile, Bangladesh has witnessed a significant rise in per capita income from 2019 to 2021 and made good progress in the human asset index.
But it did worse in the latest Economic and Environmental Vulnerability Index than what it did before. It scored 27 on a scale of 0 to 100 with 0 representing the best performance. Earlier, its score was 25.2. To graduate from the LDC status, a nation should not score above 32.
The economist suggested the government should make a framework for a robust LDC transition strategy for the next five years and beyond.
Mr. Bhattacharya also pointed out the necessity of economic diversification, technological development, and improvement in labor productivity.
On the whole, in a virtual workshop organized by Business Initiative Leading Development (BUILD) and International Finance Corporation (IFC), the speakers said, Bangladesh is likely to lose about $7 billion in export earnings annually after its LDC graduation by 2026.