Business leaders warn of unpreparedness as UN reviews LDC transition
Business leaders cautioned that without concrete transition planning, factories could close and jobs could be lost
The United Nations assessment team visiting Dhaka has asked Bangladesh's business community to provide a roadmap for the Smooth Transition Strategy (STS) to ensure a sustainable graduation from the Least Developed Country (LDC) status.
Neither the previous nor the current government had taken adequate preparations for Bangladesh's STS for LDC graduation, business leaders told the visiting UN representatives during a meeting today (10 November).
They explained the types of challenges the country might face during this transition and said that Bangladesh would need at least five more years to complete the necessary preparations.
Keep updated, follow The Business Standard's Google news channel
According to sources present at the meeting, the UN delegation wanted to learn about these challenges from the business community and requested a detailed roadmap for the STS if an extension of time is granted.
"We told the UN team that although the government has talked a lot about graduation from LDC status, it has not taken concrete preparations," Bangladesh Employers' Federation (BEF) President Fazlee Shamim Ehsan, who attended the meeting, told The Business Standard.
"We are still dependent on a single export product – ready-made garments – and export market diversification has not taken place. Our economy remains vulnerable, and many challenges can't be addressed within a year," he said.
"If graduation happens under the current circumstances, factories might be forced to shut down amid intense competition, leading to unemployment – especially among women workers, who make up more than half of the workforce. This could trigger a socioeconomic crisis," he added.
"They wanted to know the detailed challenges we face and also asked for a roadmap outlining our preparations over the next five years," Ehsan said, adding that the roadmap would be shared with the UN team soon.
Leaders from the ready-made garment sector, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), and other major business organisations attended the meeting.
The meeting was held in two sessions at the UN House in Gulshan, where a three-member UN delegation, led by Roland Mollerus, director of the Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries, and Small Island Developing States (UN-OHRLLS), met with business leaders.
The delegation is currently in Dhaka to conduct an independent assessment of Bangladesh's LDC graduation preparedness.
The team is also scheduled to meet with government officials and political leaders.
Business leaders highlight key challenges
According to a statement by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), several major challenges were presented during the meeting.
BGMEA President Mahmud Hasan Khan said, "At this crucial juncture of LDC graduation, Bangladesh's apparel industry is simultaneously facing rising operational costs and infrastructural constraints."
"Between 2016 and 2023, gas prices rose by 286%, and from April 2025, there will be further significant hikes – 40% for captive power and 33.33% for industrial users – which severely hampers production capacity," he said, adding that non-performing loans have surpassed 27%, while bank interest rates have climbed to 15%, discouraging private investment.
The BGMEA president also said exporters are struggling with logistics inefficiencies. "Despite existing delays and inefficiencies at ports, Chattogram port charges were increased by 41% in October 2025, and lengthy transport times on roads are further undermining industrial competitiveness."
"Moreover, the 56% wage hike in 2023, the increase of annual increments from 5% to 9% in 2024, and a 60% reduction in cash incentives without any compensatory support measures have placed this export-orientated sector at high risk, pushing it towards economic vulnerability," he added.
The BGMEA president also pointed to key macroeconomic weaknesses, including slower GDP growth, persistent inflation above 8%, a low tax-to-GDP ratio of 6.6%, and a foreign exchange reserve of USD 27.5 billion (as per BPM6), which remain major concerns.
Bangladesh's exports may fall by up to 25%
BEF President Fazlee Shamim Ehsan said a top official of a leading foreign buying house in Dhaka, who attended the meeting, warned that Bangladesh's exports could decline significantly following LDC graduation.
"The brand representative said that if Bangladesh graduates from LDC status in 2026, exports may fall by 17% to 25%," Ehsan told The Business Standard.
