Bangladesh's LDC graduation: Exciting ride ahead
A cocktail of challenges and opportunities await Bangladesh as it enters the developing nation bracket in 2026 after the United Nations General Assembly on November 24 gave its graduation the final approval.
While the EU and the UK would continue their preferential trade benefits until 2029, the others would withdraw them, meaning the local exporters, businesses and traders will face severe competition in the global value chain.
"Bangladesh will have to do some homework religiously to turn those challenges into opportunities," said Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue.
Different estimates suggest a loss of more than $4 billion worth of trade only from the EU in a year.
The graduation implication will be felt in four important areas: erosion of preferential market access, special and differential trade benefit, ensuring stringent globally standard compliance and erosion of non-reciprocal trade benefit, Rahman said.
"We do not want aid but trade -- LDC graduation a matter of pride for us," said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.
The country's image has brightened as it has fulfilled all three necessary conditions for graduation: human development, economic vulnerability and per capita income, Rahman said.
The brightened image will bring better prices from the international clothing retailers, according to Hassan.
"Graduation has challenges but the sector is also ready to face those challenges -- we have a lot of time to prepare."
For instance, the primary textile sector is building its capacity to be able to supply more and more raw materials to domestic apparel manufacturers, Hassan added.
"We wanted to graduate and finally we got it. We are happy," said Commerce Minister Tipu Munshi, adding that his government is taking preparation to face the graduation challenges.
Already a high-powered committee with seven sub-committees are working under the prime minister's office to face the challenges of LDC graduation, Munshi said.
Bangladesh is negotiating with some potential countries to sign free trade agreements, preferential trade agreements and comprehensive economic partnership agreements to retain the trade privileges.
Moreover, it is expected that Bangladesh will be eligible for the EU's Generalised System of Preferences between 2024 and 2034 for fulfilling all the conditions, Munshi added.
Graduation does not mean that all the trade facilities have vanished overnight as the developing nations also enjoy a lot of trade privileges, said Abdur Razzaque, research director of the Policy Research Institute.
"We need to find those opportunities," Razzaque said.
This is another milestone in Bangladesh's march towards becoming a developed country by 2041, said Nihad Kabir, president of the Metropolitan Chamber of Commerce and Industry.
"MCCI is sure that Bangladesh will rise to the challenge and make the best of the new opportunities brought about by the graduation," she added.