In a recent webinar titled “Bangladesh’s Transition to Developing Country – Biggest Milestone in Her Development Journey”, experts urged the government to design proper framework and to be prepared for any post-graduation challenges Bangladesh may face when it leaves the list of least-developed countries (LDC) in 2026.
The virtual seminar was organized by the Canadian University of Bangladesh. The speakers discussed the benefits and challenges of graduation.
Preparations need to be made from now on in order to overcome the challenges of graduation so that the country does not need to apply for a further extension of its transition period, the experts said.
Bangladesh also needs to build capacity as a production dependent and skills dependent country, before graduating from the Least Developed Country (LDC) status.
Addressing LDC graduation, a huge accomplishment for the country, they highlighted the need to ensure smooth and sustainable graduation.
The discussants said it would be a shame for the country if it has to appeal for more time to make the transition.
In the last week of February, the UN Committee on Development Policy gave a final recommendation on the country’s graduation to a developing nation.
According to the committee’s guidelines, Bangladesh was supposed to leave the LDC group in 2024, but the government demanded to extend the transition period by two years due to the economic fallouts of Covid-19.
Dr Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue, said, “We have five years to prepare for a smooth and sustainable graduation. At this point, we need to build capacity as a production dependent and skills dependent country.”
He said, “We need to work extensively on getting access to markets, because when we lose duty-free, and quota-free facilities, Vietnam will get these facilities from China, Japan, Korea, and Australia.”
“Earlier we took advantage unilaterally, but now if we want benefits from a country, you have to offer it benefits too,” he added.
Mirza Azizul Islam, a former advisor to the caretaker government, said, “We need to increase bilateral and regional trade agreements in such a way that the loss of duty-free facility will not create problems.”
Pointing out the increased cost of borrowing from the Asian Development Bank (ADB) and the World Bank after being recognised as a developing country, he said, “We are already in ADB and the World Bank’s Blended Financing. So, I do not think it will hurt us too much.”
He further said, “It is difficult to anticipate an increase in foreign investment as Bangladesh’s position on the Ease of Doing Business Index was not very satisfactory. The private sector should also be cautious of low interest rate foreign loans.”
Ahsan H Mansur, executive director of the Policy Research Institute, said the graduation is not any single person’s achievement; rather it is an achievement for the entire nation.
Mansur also said the country’s per capita income, which was at $123.50 until 1971, drastically dropped to $94 in 1972 following the war.
“It was such a great shock to the country and its economy when the central bank did not have a single dollar to operate foreign trade. We had no gold in our fund,” he said.
“But for Bangladesh to reach its current stage from that devastating position is such a great achievement,” Mansur added.
The post-1972 assessment of Bangladesh was very frustrating as there was a general consensus that the international community would need to protect and support the country forever. However, foreign aid now accounts for just 1.5 per cent of the country’s national income.
The noted economist also stressed the need to open up the local market for international players.
While tagging the local market as highly protected, Mansur said the country’s average protection level is as high as around 27 per cent.
The average protection level in both India and China stands at 9 per cent, while it is 7.4 per cent for Asean countries.
“We need to build up a competitive economy as we can’t progress much with a protected economy,” Mansur said.
The export volume of both Bangladesh and Vietnam was just $1 billion in the early 1990s. Vietnam’s current exports amount to $270 billion against Bangladesh’s $40 billion.
“We need to reach that level,” said Mansur, also a former official of the International Monetary Fund.
He also said that the country should work to strengthen its international political and economic diplomacy to achieve its various interests, such as securing the generalised system of preferences-Plus after graduation.
Sheikh Mamun Khaled, pro-vice-chancellor of the Canadian University of Bangladesh, and Prof Shibli Rubayat-Ul-Islam, chairman of the Bangladesh Securities and Exchange Commission, also spoke.