Private sector urges for deferring LDC graduation by at least 2-3 years

The country's private sector has urged the government to delay Bangladesh's graduation from the least developed country (LDC) status by at least two to three years considering the prevailing global and local economic challenges.

The calls were made during a focus group discussion on "Implementation of the STS for Smooth Transition from LDC Status," jointly organised by Support to Sustainable Graduation Project (SSGP), Economic Relations Division (ERD) and Dhaka Chamber of Commerce & Industry (DCCI) at the DCCI Auditorium today (10 March).

Speaking at the discussion, DCCI President Taskeen Ahmed said, "Bangladesh's economy is facing multiple challenges, and amid these, we are set to graduate from LDC status in 2026." 

He called for deferring the LDC graduation citing the various challenges the country is facing including the acute shortage of energy in the industrial sector, high inflation and high duty on import, high interest rate, procedural complexities in obtaining credit from banks and lack of access to credit to the private sector.

While presenting a keynote paper from the private sector perspective, he pointed to the country's sluggish economic growth, with GDP growth recorded at only 1.8% in the first quarter of the current fiscal year and manufacturing sector growth at just 1.43%.

He outlined key priorities for implementing the Smooth Transition Strategy (STS), including the need for a strong leadership framework, policy integration, trade agreements, and financial support mechanisms. 

He also stressed the importance of skill development in the SME sector, ensuring long-term access to low cost credit, signing of free trade agreements to expand exports to the Middle East and South Asian countries, infrastructure development to attract FDI, revision of revenue policy and related policies.

ERD Secretary Md Shahriar Kader Siddiky, speaking as the chief guest, acknowledged the economic challenges but noted that Bangladesh's current account and financial account positions have improved. 

"We must build capacity at all levels to handle the impact of losing trade benefits in the post-LDC period," he said. 

He also announced that a committee comprising trade organisation representatives would be formed to assess private sector needs and propose solutions.

Commerce Secretary Mahbubur Rahman, present as the special guest, admitted that initial planning for LDC graduation was inadequate and stressed the need for greater involvement of the private sector. 

He encouraged businesses to focus on product diversification beyond the readymade garments sector, particularly in promising industries such as packaging.

In his welcome speech, AHM Jahangir, additional secretary and project director of the SSGP under the ERD, emphasised that the private sector would face the most challenges in Bangladesh's transition from the least developed country.  

"In such a situation, along with support for the private sector, coordinated efforts among relevant stakeholders are essential for implementing the STS to address the overall challenges of LDC graduation," he said.  

Dr Mostafa Abid Khan, component manager of SSGP and former member of the Bangladesh Trade and Tariff Commission, noted that currently, about 73% of Bangladesh's total exports enjoy duty-free benefits, which will no longer be available post-LDC graduation. 

The country will also lose several institutional benefits, he added.

He further pointed out that the lack of export diversification remains a major challenge and must be addressed urgently. In addition to attracting both local and foreign investment, he stressed the need for skill development, institutional capacity building, and enhanced coordination between the public and private sectors.

Rizwan Rahman, former DCCI president, stated that the business community is not yet prepared for the transition and urged the government to consult with the private sector before making a final decision on the timeline.

Manwar Hossain, chairman of Anwar Group of Industries, pointed to infrastructure deficits and gas shortages in the steel and cement sectors, which are hampering production. "Until our exports exceed imports, we cannot say we are truly ready for LDC graduation," he said.

BKMEA President Mohammad Hatem noted a declining trend in economic indicators since 2022, citing high interest rates, policy inconsistencies, and gas shortages as major challenges. "The private sector needs more time to prepare for graduation," he said.

Former BGMEA director Asif Ashraf stressed the need for backward integration to secure Generalised System of Preferences (GSP) Plus benefits post-LDC graduation. 

DCCI Senior Vice President Razeev H Chowdhury, Vice President Md Salem Sulaiman, and members of the board of directors and representatives of the public and private sectors attended the event.