Bangladesh risks $17.5b export hit after LDC graduation: Commerce minister

Bangladesh could face a potential loss of $17.5 billion in exports after graduating from the least developed country category due to the loss of preferential market access in developed economies, Commerce Minister Khandakar Abdul Muktadir told parliament today (8 June).

Replying to a question from Chattogram-11 lawmaker Jasim Uddin Ahmed during the second day of the second session and first budget session of the 13th Jatiya Sangsad, the minister said the government had already launched a series of trade and market diversification initiatives to address the challenges arising from the country's transition to developing nation status.

"Bangladesh will soon graduate from the LDC category. As a result, the country will lose preferential market facilities currently available under various trading schemes offered by developed countries, which may adversely affect exports worth around $17.5 billion," he said.

To mitigate the impact, Bangladesh has already concluded an Economic Partnership Agreement with Japan, while negotiations for a Comprehensive Economic Partnership Agreement with South Korea are underway, the minister said. 

He said that the government has also initiated efforts to sign EPA, CEPA or Free Trade Agreements with the European Union, the Regional Comprehensive Economic Partnership, the United Arab Emirates, Singapore, Indonesia, China and other potential export destinations.

The minister attributed the country's widening trade deficit partly to policy failures of the previous government and partly to global economic factors, including the energy crisis, the Russia-Ukraine war, rising commodity prices, dollar shortages and adverse international market conditions.

He said that higher import costs for fuel, food and industrial raw materials, coupled with slower export growth, had contributed significantly to the trade imbalance.

According to data presented in the JS, Bangladesh's trade deficit widened to $24.16 billion in the financial year 2024-25 from $21.50 billion in FY2023-24. 

Exports stood at $55.19 billion against imports worth $79.35 billion during the period.

The minister said that despite exporting goods to 202 countries and territories in FY2024-25, the readymade garment sector still accounted for 84 per cent of the country's export earnings.

He said that to reduce dependence on a single sector, the government has undertaken initiatives to extend facilities similar to those enjoyed by the garment industry to other promising export sectors. 

Partial exporters in eight sectors, leather and leather goods, jute and jute products, agricultural products, pharmaceuticals, ICT and software services, light engineering products, frozen foods and fish, and plastic products, have already been granted bonded warehouse facilities against bank guarantees, the minister said.

Muktadir said that the government was also supporting entrepreneurs in eight priority sectors through the Business Promotion Council and had formulated the Export Policy 2024-2027 to strengthen Bangladesh's position in global trade through sustainable export growth.

To expand market access and remove trade barriers, Bangladesh is continuing engagement through various bilateral platforms, including trade and investment arrangements with Australia, the United Kingdom, Vietnam, Thailand, Uzbekistan, Belarus and Canada, he said.

The minister said that efforts were also underway to explore new export markets in Latin America, Africa and the Commonwealth of Independent States through trade missions comprising government and private sector representatives.

Other measures include strengthening economic diplomacy through Bangladesh missions abroad, providing foreign currency loans from the Export Development Fund for raw material imports, and creating a Tk5,000 crore low-interest pre-shipment loan fund for export-oriented industries through Bangladesh Bank.

commerce minister said that the government had declared paper and packaging products as the Product of the Year 2026 in a bid to diversify exports, create employment and promote women's economic empowerment, he added.

Replying to a separate question from Bagerhat-4 lawmaker Abdul Alim, the minister outlined Bangladesh's ongoing efforts to strengthen trade ties within South Asia.

He said Bangladesh and Bhutan signed a PTA in December 2020, under which 100 Bangladeshi products and 34 Bhutanese products enjoy duty-free market access. 

Negotiations on PTAs with Nepal and Sri Lanka are progressing, while Bangladesh is also preparing for further negotiations with India on a proposed Comprehensive Economic Partnership Agreement.

Muktadir said Bangladesh was prioritising bilateral, regional and multilateral trade agreements with key economic blocs and countries in Asia, Europe, Africa and the Middle East to strengthen export competitiveness and attract investment after LDC graduation.

In response to another question from reserved-seat lawmaker Selina Sultana, the minister said that Bangladesh continued to face trade deficits with several SAARC countries, particularly India.

In the FY2024-25, Bangladesh recorded a trade deficit of $7.86 billion with India, the largest among SAARC member states. 

The country also posted trade deficits with Afghanistan, Bhutan and Sri Lanka.