LDC graduation: Govt says deferral not possible, businesses question readiness

It is not possible to defer Bangladesh's graduation from the Least Developed Country (LDC) category, Chief Adviser's Special Assistant Anisuzzaman Chowdhury categorically said today (13 September), despite concerns voiced by business leaders and experts about the country's readiness.

"The interim government has no intention of delaying the LDC graduation process, nor does it have the scope to do so," he said.

Anisuzzaman made the remarks while speaking at a seminar titled "LDC Graduation and Bangladesh's Preparedness," organised by the Economic Reporters Forum (ERF) at its Paltan auditorium in the capital.

Businesses and experts at the seminar argued that Bangladesh is not ready for the transition and that proceeding without adequate preparation would expose the country to major new challenges in the global market.

The interim government has no intention of delaying the LDC graduation process, nor does it have the scope to do so.

Chief Adviser's Special Assistant Anisuzzaman Chowdhury

In response, the chief adviser's special assistant said that the government cannot do anything at the moment. He suggested that the businessmen could try to do something by holding talks with the United Nations, although experts say there is no such scope in reality.

Stating that he was speaking as an expert and not a government representative, Anisuzzaman explained the procedural complexities of the graduation process. An application to delay graduation must be submitted to the UN-DESA in February for the proposal to be reviewed by the Committee for Development Policy (CDP) and presented at the UN General Assembly in July, he said. 

"As no such application was made this year, the issue is not on the agenda for the upcoming session. Given that the current government is only in office until February, the decision to seek a delay next year will be a matter for the newly elected administration," he added.

There needs to be consensus on what problems might arise after graduating from LDC status and what the solutions are.

BKMEA President Md Hatem

The special assistant expressed scepticism about the potential for a successful delay, pointing out that Bangladesh already meets all the criteria for graduation. He also noted that for a delay to be approved, more than half of the UN members would need to support the proposal. "Other LDCs, which might perceive Bangladesh as already having leveraged all possible benefits, are unlikely to lend their support."

In a contentious moment, Anisuzzaman advised business leaders to approach their international buyers and seek support from their respective countries to back a delay.

Private sector raises alarms

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), described the country's economic situation as "still fragile" and "on life support" in some areas, despite progress in certain indicators. 

"There needs to be consensus between the government and businessmen on what problems might arise after graduating from LDC status and what the solutions are," he said.

Pointing out that eight countries have previously left the LDC group, Hatem suggested that it is necessary to get an idea of the identity and export earnings of those countries.

Echoing Hatem, Inamul Haq Khan (Bablu), senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), called for a three-year LDC graduation delay to allow the country to prepare. 

He noted that the apparel industry is not ready for the "terrible rules" of compliance coming from the European Union and that graduation in the coming year would mean losing vital preferential market access. He stressed that a delay would provide a total of six years to prepare and for the government to negotiate new Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs).

Mustafizur Rahman, CEO of the Bangladesh Association of Pharmaceutical Industries, also raised concerns about the ongoing energy crisis and the potential for a decline in pharmaceutical exports after graduation due to the loss of patent waivers.

Diverging views

Anisuzzaman's suggestion that businesses lobby the UN was met with strong criticism. Speaking on condition of anonymity, one business leader told TBS that the UN process is reserved for governments, and the special assistant's advice was an attempt to shirk responsibility.

M Masrur Reaz, chairman of Policy Exchange Bangladesh, provided a more nuanced view, stating that while graduation is inevitable, the timing must be a topic of open discussion. 

He urged the private sector to provide detailed data to the government to justify its request for a delay. 

Masrur said that data manipulation has certainly occurred. He also said that after August 2024, the reserves and balance of payments started to return to a good position. "However, the macroeconomy has not recovered yet. The 8% inflation rate does not reflect a lot of things. There is a major energy crisis, and food and health security are also dependent on imports." 

Chief Adviser's Press Secretary Shafiqul Alam at the seminar reiterated the government's position, stating that it is not considering a delay. He urged businesses to be "risk takers," noting that they have successfully navigated difficult situations imposed by buyers and Western powers in the past. This approach, he said, has benefited both industry and labour.

The seminar was presided over by ERF President Daulat Akter Mala and moderated by the organisation's General Secretary Abul Kashem.