LDC graduation essential for Bangladesh, export diversification crucial: Commerce adviser

Graduating from the status of least developed country (LDC) is now a necessity for Bangladesh, and as the country relies heavily on a single-sector export, diversification is crucial, Commerce Adviser Sheikh Bashir Uddin said today (19 March).

"We must diversify our exports, whether we graduate or not," he stated while addressing a seminar titled Diversification of Bangladesh's Export Basket: Challenges & Opportunities in the Post-LDC Graduation, where he was the chief guest.

The seminar was organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at the FBCCI Auditorium, Motijheel, Dhaka.

The adviser further said, "Given the necessity of graduation, we must focus on the micro level to ensure a smooth transition."

"After LDC graduation, we will lose preferential treatment and tariff protections. We are working hard on SEPA, PTA, and FTA agreements to address this," he added.

He also mentioned concerns about the law and order situation and corruption. "Corruption can't be eliminated suddenly, but it can be made more difficult," he said, adding, "We must reduce it gradually, and it is already decreasing."

Referring to opportunities for halal businesses in the global market, he said that simply obtaining a certificate from an Islamic foundation is not enough; it also involves business competition.

He further stated, "Capital formation was completely hindered during the fascist [Awami League] regime."

Among the special guests at the seminar, Mahbubur Rahman, secretary of the Ministry of Commerce, said, "We need a smooth LDC transition plan."

Moinul Khan, chairman of the Bangladesh Trade and Tariff Commission, addressed the seminar as a special guest. He mentioned that the government is working on 33 bilateral agreements, including SEPA, PTA, and FTA. Japan, Singapore, UAE, China, and Sri Lanka are among the countries involved.

He also stated, "We want to engage with sector leaders and provide innovative support to exporters, similar to India's approach. We are committed to turning challenges into opportunities."

Addressing the seminar as a special guest, Md Anwar Hossain, vice chairman of the Export Promotion Bureau (EPB), said that trade facilitation is the main obstacle to diversification.

He added, "If we could save 10% in costs, we wouldn't need preferential treatment."

He also mentioned that when the proposal for an energy price hike was made, some foreign direct investors hesitated to make decisions.

"Competitive advantage cannot be achieved by the private sector alone unless government policies support infrastructure development and ease the business environment," he said.

Call for product diversification

Speakers at the seminar stated that product diversification is the only alternative to address some of the challenges Bangladesh will face after LDC graduation.

Bangladesh is set to graduate from LDC status in November 2026, leaving no room for further debate. Therefore, businesses must prepare instead of relying solely on the government, they emphasised.

Dr Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said LDC graduation is now a reality for Bangladesh, making a shift in the mindset of businesses the most crucial factor.

He pointed out that instead of focusing on enhancing their capabilities, businesses are still looking to the government for direction. He also stressed that bilateral agreements between countries will become increasingly important in the future, and the government must take them seriously.

During the keynote address, he said, "We have experience in overcoming losses during quota withdrawal under the MFA, as we will lose preferential market access."

Dr Moazzem said to bring FDI the government have to improve facilities as their is not minimum data and information over the market opportunities and raw materials supplies in Bangladesh, as most of them want to explore the local market opportunities.

As a panel discussant, Dr M Masrur Reaz, chairman & CEO of the Policy Exchange Bangladesh, stated that the country is expecting a twin transition – LDC graduation and moving from lower-middle income to upper-middle income status.

"We need to create 2.2 million jobs every year, which is crucial for a smooth transition," he added.

He emphasised the need to reduce trade protectionism, noting that the USA is the largest export market, but the trade surplus with the USA puts us at risk.

He mentioned that many Japanese companies are looking to shift from China, and Bangladesh must facilitate this move.

"We need positive branding"

Uzma Khan Chowdhury, director of PRAN-RFL Group, said, "Business is always the survival of the fittest."

She added that Moody's downgrade increases costs, even when everything else remains the same, emphasising, "We need positive branding."

She also stated, "The law and order situation is worsening, which is affecting our productivity."

Uzma Khan Chowdhury highlighted that policy inconsistency is one of the major barriers to doing business in Bangladesh.

Shamim Ahmed, president of Bangladesh Plastic Goods Manufacturers & Exporters Association (BPGMEA), mentioned that most domestic plastic products are copied (counterfeit).

He warned that if FDI focuses on domestic plastic products, it could harm all local companies.

Salim H Rahman, chairman of the Bangladesh Furniture Shilpa Malik Samity and Managing Director of Hatil Complex Ltd, said that only 8%-10% of exports come from local raw materials.