The opportunity of an extension could help the country brace for post-graduation challenges
- LDC graduation expected in 2024
- Duty-free access to EU market by 2027
- 9.5% duty to apply to Bangladeshi goods after 2027 in EU
- Exports to face setback after graduation
- Extension could help brace for post-graduation challenges
- Product diversification stressed to boost exports
- Post-LDC to hit employment in RMG sector
- Bond facility encouraged for export products beyond RMG
Bangladesh should take time and capitalise on the pandemic situation to graduate from its least developed country (LDC) status, experts have said.
They think that the opportunity for an extension will help the country better prepare for post-graduation challenges.
Such opinions were shared at a webinar titled "LDC Graduation in 2024: Challenges and Opportunities" organised by the Department of Economics of Mawlana Bhashani Science and Technology University on Saturday.
The virtual discussion was chaired by the university Vice-Chancellor Md Alauddin.
According to the experts, Bangladesh lags far behind when it comes to making preparations to meet the challenges that entail graduation.
Unlike Bangladesh, many of its competitors adjust themselves to the international market through a free trade agreement (FTA).
Although there are discussions about increasing exports through product diversification, there are lackluster efforts to do this, and exports might face a major setback after graduation, observed the speakers.
MA Razzaque, research director, Policy Research Institute (PRI), maintained that sometimes opportunities that are easy to avail are not given due importance, while the same opportunities at other times are availed with more efforts.
"We want graduation from LDC and also duty-free market facilities. But after a while, there will be no LDC facility. As a result, preparations need to be made from now on," he said.
Bangladesh is due to graduate from LDC in 2024 and get duty-free market access to the European Union (EU) for the next three years following graduation.
Vietnam has an FTA with the EU. As a result, Vietnam's products will have zero tariffs in the EU market by 2027, whereas an about 9.5% duty will be added to Bangladeshi goods.
China is potentially a large market for the future. After graduation, Bangladeshi products will have to pay a 16.2% duty to enter the Chinese market.
Apart from China, it is necessary for Bangladesh to strengthen its bilateral relations with countries like Japan and India.
Nazneen Ahmed, senior research fellow, Bangladesh Institute of Development Studies, said, "We have a misconception that we cannot make much profit by exposing the market. That is why we did not insist on the FTA."
She observed that exports will decline after graduation, and it will also have an impact on employment, decreasing women's employment – especially in the ready-made garment (RMG) sector.
However, the market for toys and electronic products in Bangladesh has great potential to grow, she said.
"If exports could be increased through product diversification beyond ready-made garments, it would create new employment opportunities. However, in order to increase the skills for this, it is necessary to take initiative to train the workers," added the researcher.
Md Shahjahan Siddique, co-convener, Bangladesh Columnists Forum (BCF), said the country lags behind when it comes to dealing with the FTA.
Bond facilities are given only to the RMG, leather and shipping sectors, but there are a lot of products that could potentially be widely exported if the bond facility was awarded to them, he suggested.
"Loans are given on building and machinery, but not on working capital," he observed, saying that this is one of the main reasons for being a defaulter.
"It is not only the borrower who is responsible for the default, the lender should also bear the responsibility," added Shahjahan.
After the graduation from LDC, there will be a big push for revenue collection and that requires major reforms. Customs duty and income tax are much higher in Bangladesh than in neighboring countries.
In his address, Engineer ATM Iftekhar Hossain said without proper planning, the government is spending thousands of crores of Taka to establish economic zones across the country.
He stressed the need for separate economic zones for the ICT, leather and RMG industries to reap benefits.
Professor Shahadat Hossain Siddique, Department of Economic, University of Dhaka, also attended the virtual discussion.
He said, "We have to find products with potential like ready-made garments for our export diversification."