LDC graduation
7 sub-committees formed to address challenges of LDC graduation
Some seven sub-committees are preparing draft strategies with a time-bound action plan to meet the challenges of Bangladesh's LDC graduation.
According to an official document,Bangladesh will be facing some challenges, such as loss of duty free – quota free access, unilateral, preferential market access, reduced scope for concessional or low interest funding from international and bilateral development partners, preference erosion, and strict compliance with stringent standards.
The government has formed a committee under the chairmanship of the Principal Secretary of the Prime Minister’s Office to prepare for the possible challenges that Bangladesh will face as a result of its graduation from a least developed country to a developing country.
Also read: Bangladesh’s creditworthiness becomes high after graduation from LDC
The document mentioned that there will be seven sub-committees under this committee. Each sub-committee has members from private sector stakeholders and development researchers.
“These sub-committees are preparing draft strategies with a time-bound action plan to meet the challenges of LDC graduation,” it said.
The document mentioned that the present government has adopted the policy of executing Bilateral Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) in the context of potential trade challenges arising from LDC graduation.
Read Tax corporates at par with region to face challenges of LDC graduation: DCCI
Strategies for Preferential Market Access and Trade Agreement have been formulated as ways to address these challenges.
In this context, Bangladesh has signed the Preferential Bilateral Trade Agreement (PTA) with Bhutan, under which 34 products of Bhutan will be duty-free in the market of Bangladesh and 100 products of Bangladesh will be duty-free in the market of Bhutan.
In addition, a prioritization list for the execution of PTA/FTA/CEPA with 13 potential trading countries/trade organizations such as India, China, Japan, Singapore, Indonesia, Sri Lanka, Malaysia, Nepal, USA, Canada, Eurasian Economic Union, ASEAN, and Mercosur has been prepared.
Read EU assures continued trade benefits to Bangladesh after LDC graduation
“A preliminary draft of the Regional Trade Agreement (RTA) Policy Guideline has been prepared with the aim of signing bilateral trade agreements with various countries,” the document said.
In 2021, the United Nations made the final recommendation for the graduation of Bangladesh from the least developed country category for its progress in various socio-economic fields in recent years.
LDC graduation is one of the important milestones that Bangladesh has achieved in its journey towards development.
Read UK with Bangladesh in achieving smooth graduation: Dickson
After graduation, Bangladesh’s participation in international trade and productivity in industrial production will rise to the next level fuelled by new-found zeal and confidence.
The transition will improve the country’s credit rating, increase productive efficiency, and enhance our ability to compete globally, broadening our scope of export earnings. International financial institutions and credit rating agencies will evaluate Bangladesh more favourably after graduation.
This will enhance our scope of attracting foreign funding both in the public and also in the private sector for investment and development financing purposes. Foreign direct investment will get a boost enabling new developments.
Also read: Post-LDC Bangladesh: Pharmaceutical experts for amendment of Patent Act 2022
This will lead to massive development of infrastructure in the country, new job creation, and overall better living standards for the people of Bangladesh.
As per the document, Bangladesh is pursuing hard at the WTO, along with other LDCs, to extend this exemption for some more years for the graduating countries.
The loss of the LDC specific benefits will create an obligation for the country to increase its productive capacity and efficiency to compete in the export market, diversify our export basket and create new markets.
Read BGMEA seeks UN support for smooth, sustainable LDC graduation
Besides, this will both encourage and force the country to go for higher value added products.
The document said that Bangladesh will have to utilise with farsightedness the period from 2022 to 2026 for our preparation to the graduation from Least Developed Countries so that Bangladesh can move forward even after graduation and sustain its position as a graduated country.
To that end, it said, the ongoing development process must continue to ensure smooth graduation.
“The Government of Bangladesh is fully committed to make this graduation smooth and sustainable. In this context, various policies, strategies, programs, and measures have been adopted.”
Read Rebuilding Bangladesh: A resolute plan for resilient recovery
According to the United Nations Capital Development Fund (UNCDP) recommendation, Bangladesh's transition will be effective in 2026. It means until 2026, Bangladesh will be able to enjoy all these benefits applicable to LDCs.
However, under the current rules, Bangladesh will be able to enjoy duty-free and quota-free market access for another three years, i.e. until 2029, into the EU market after completing its graduation in 2026.
The UNCDP upon the request of the government has recommended that against the backdrop of COVID-19 pandemic, the preparation period for the transition will be five years instead of three. During this period, that is, until 2026, all international facilities will continue.
Read Capacity building needed for sustaining growth, tackling trade-related challenges
The LDC Group of the World Trade Organization (WTO) has put forward a proposal to ensure that all trade facilities pertaining to LDCs remain in force for another 12 years after transition.
Bangladesh has actively participated in this process, and is continuing its efforts to get this proposal accepted.
The document said that the government has already taken steps to avail the advantage of GSP+ in EU countries after the graduation.
Read Life after LDC graduation: BGMEA steps up economic diplomacy
Moreover, the government has taken effective steps to improve its ranking in the Ease of Doing Business Index to increase the flow of foreign direct investment (FDI), although the index itself has been discontinued by the World Bank.
The benefits of these steps are becoming evident, the document reads.
The government is also in discussion with development partners, trade partners and relevant international organisations will continue to ensure that some important international facilities remain available even after the graduation.
Read IMF keen to work closely for Bangladesh’s RMG sector’s development
Training arrangements will be made for stakeholders to enhance their ability to deal with post-graduation situations.
To develop human resources, steps will be taken to enhance efficiency as per the demand of the market at home and abroad.
"Steps have been initiated to conduct sector-wise research activities on the opportunities created by Bangladesh's LDC graduation and what can be done to meet the challenges," the document reads.
Read Plans afoot to transform Bangladesh’s economy in view of LDC graduation
Bangladesh’s creditworthiness becomes high after graduation from LDC
Bangladesh’s graduation to lower middle income country from low income bracket has improved the credit worthiness of the country, according to an official document.
This has also opened new windows for financing of Bangladesh development projects by the World Bank and other development partners with slightly higher interest rates, says the document obtained by UNB.
In line with the Public Money and Budget Management Act, 2009, the government aims at minimizing interest costs and risks by choosing an appropriate borrowing mix.
Also read: International solidarity key to achieving DPoA for LDCs: Bangladesh
The document says Bangladesh's concessional financing facilities from bilateral and multilateral development partners has shrunk slightly in the recent past as the country elevated itself into the lower middle income status.
The government has been pursuing a medium term deficit financing strategy to strike a balance between domestic and external source as interest rate of foreign loans is still cheaper than
that of domestic loans despite some foreign exchange risk.
Further, the document mentions, global interest rate is likely to remain reasonably low as the global economic recovery might be delayed due to the advent of new variants of COVID-19 amid supply shortage of vaccine doses across the globe.
Therefore, deciding on an appropriate borrowing mix between external and domestic source is critical to reduce overall financing cost and slowing down accumulation of debt stock.
As the government meets the major share of its financing requirements from domestic sources, appropriate borrowing mix between bank and non-bank financing is critical to reduce domestic
debt servicing cost, and hence the overall financing cost.
The official document says the government has been trying to reduce the share of nonbank financing in its domestic portfolio towards relatively cheaper bank financing by implementing several reform measures in the National Saving scheme, postal saving scheme, and the postal banking system.
For instance, it says, NID-based national database is being used to sell NSCs to ensure that any individual cannot cross his maximum allowable limit of investment in NSCs and the source tax on interest income from NSCs was raised to 10 per cent from 5 per cent since fiscal 2019-20.
Besides, the postal savings scheme and the postal banking system have also been automated to improve efficiency in government financing.
Also read: Bangladesh to enjoy DFQF market access to Australia in post-LDC period
To widen the scope for domestic financing the government has been taking various reform measures to increase the depth of the domestic bond market, the document adds.
The government has introduced a Shariah-compliant bond called 'Sukuk' in fiscal 2020-21.
The fund raised by the Sukuk will be invested in a large infrastructure project titled "Safe Water Supply for the Whole Country".
The Shukuk could be a new frontier for financing large infrastructure projects by the government and thus, could reduce government's dependence on foreign finance which is not always easily accessible.
It could also ease pressure on the domestic market as the government might reduce its dependence on traditional financing such as bank borrowing or nonbank borrowing by issuing NSC.
Tax corporates at par with region to face challenges of LDC graduation: DCCI
Dhaka Chamber of Commerce & Industry (DCCI) emphasized a smooth LDC graduation process, with the improvement of the country’s competitiveness, rational elimination of non-tariff barriers, and formulating a national way forward with strategies for local and export market competitiveness.
The DCCI said it in a press conference on the contemporary economic situation and to share their plan of action for the year 2022 held on Sunday.
DCCI President Rizwan Rahman presented the keynote paper on the contemporary economy. DCCI Senior Vice President Arman Haque and Vice President Monowar Hossain were also present on the occasion.
Regarding corporate tax rate he said that DCCI still advocates for reducing Corporate Tax rate to 5 percent and 7.5 percent respectively in 2022-23 and 2023-24 and it should be at par with the regional average tax rate.
Also read: DCCI urges NBR to simplify tax policy for business growth
DCCI President said that this year the Chamber will prioritize the CMSME sector, including export diversification, blue economy, economic diplomacy, infrastructure, private investment & FDI, export diversification, skills development, digital engagement, taxation, and LDC graduation.
He said the world is still suffering from the Covid outbreak, therefore strengthening CMSME sector should get priority, especially get priority, especially in terms of easy access to finance. To cope with the growing demand for a future skilled workforce, he urged for investing more in research and development, re-Skilling, and upskilling.
Terming blue economy as an emerging sector for Bangladesh he said Bangladesh’s ocean economy stands for 3.1 percent of the country’s overall GDP. Shipbuilding, tourism, sustainable fishing, gas, and mineral explorations are largely unutilized.
He, however urged creating a national blue economy development and implementation roadmap. To have a strong position in the economic diplomacy he suggested to develop negotiation skills on international trade, WTO matters and relevant International laws for win-win FTAs and PTAs.
“Our major export destinations are Europe and America covering almost 67 percent of our total export whereas Africa and Middle East are untapped. But after the LDC graduation export will face a challenge and for that, we have to formulate an export diversification strategy engaging all stakeholders,” he added.
Also read: Bangladesh economy suffered due to Covid pandemic: DCCI Webinar
Tariff rationalization, reduction of non-tariff barriers in cross-border trade, and minimizing anti-export bias is also important in this regard, he said. In 2020-21 private investment came down to 21.25 percent of GDP, but in 2021 FDI was USD 2.51 billion.
In order to revive private investment and FDI, he suggested for rationalizing the corporate tax structure, equipping economic zones and readiness, a national roadmap. He also stressed for automation of overall taxation, VAT, audit, arrears management, investigation and inquiry, appeal, revenue account management, taxpayer account management, and revenue information management.
He said a predictable and compliant tax culture would increase tax net and foreign investment and underscored the importance of a simplified VAT refund process.
EU assures continued trade benefits to Bangladesh after LDC graduation
The European Union (EU) on Tuesday assured to continue trade benefits for Bangladesh even after graduation from LDC.
The newly appointed EU ambassador to Dhaka Charles Whiteley assured this while meeting with Tapan Kanti Ghosh, Senior Secretary, Ministry of Commerce, at the secretariat office.
The meeting focused on bilateral interests of trade development and comprehensive cooperation, including expansion of trade and commerce between Bangladesh and the EU.
Read: BGMEA requests EU to continue duty benefit for 12 years after LDC graduation
They also discussed regarding next schedule of the European Union-Bangladesh business climate dialogue, diversification of Bangladesh's export products, extension of GSP benefits provided by EU for Bangladesh; foreign investment in Bangladesh's logistics sector; organizing programs on capacity building, e-commerce, environment, compliance, market access, continuing post-graduation cooperation from LDC, etc.
EU Officials, additional secretaries of the Commerce Ministry Md. Hafizur Rahman (Export), Nur Mohammad Mahbubul Haque (FTA), among others, were present.
UK with Bangladesh in achieving smooth graduation: Dickson
Describing the UK’s admiration for what had been achieved in Bangladesh over the past 50 years, British High Commissioner to Bangladesh Robert Chatterton Dickson on Wednesday said they will continue to work with Bangladesh in its efforts to achieve a smooth and successful graduation.
“Graduation is a milestone, not a finishing line. We’ll continue to work with Bangladesh to achieve a smooth and successful graduation,” he said, adding that they have also decided to provide continued duty-free, quota-free access to the UK market for three years after graduation, to 2029.
While speaking at “DCAAB Talk”, the envoy said he was delighted that Prime Minister Sheikh Hasina would be visiting London and Manchester to engage with British businesses during her visit to the UK.
Diplomatic Correspondents Association, Bangladesh (DCAB) hosted the event. DCAB President Pantho Rahaman and its General Secretary AKM Moinuddin also spoke at the event.
The High Commissioner reflected on the huge challenge ahead at COP26 and said the UK is looking forward to welcoming Prime Minister Sheikh Hasina and welcoming the Bangladesh delegation to Glasgow.
“This was just one sign of the way that the UK was working with an increasingly confident, prosperous and outward-looking Bangladesh on the world stage, as we headed into the next 50 years of partnership,” he said.
At the High Commission in Bangladesh, Dickson said his teams were engaged deeply in issues such as climate and biodiversity, maritime security and many other areas, including working with British businesses to build a trade and investment relationship as Bangladesh graduated from Least Developed to Middle Income Country status.
Read: COP26: Dickson says Bangladesh has particular role in 3 areas
Regional Security Challenges
The High Commissioner said the UK is working closely with the government of Bangladesh on regional security challenges.
A particular challenge is the Rohingya crisis that was created by the actions of the Myanmar army over four years ago, he said.
The UK was very clear that the shared objectives were for the Rohingya to go home to Rakhine state, as soon as it could happen in a way that was “voluntary, dignified and safe”.
“No one wanted to live in a refugee camp. Events in Myanmar were moving in a way that was worrying, so it seemed the Rohingya would likely remain in Bangladesh for some time to come,” said the High Commissioner.
The UK is working closely with the government of Bangladesh to ensure the extraordinary generosity in hosting the Rohingyas continued, and that the funding was there to provide the refugees with the healthcare, food, shelter, water and sanitation they needed until they could return to Myanmar.
The UK had contributed over £320m to the global response, working closely with allies on camp conditions and building resilience, including against Covid-19.
The High Commissioner was concerned about recent violence at the Rohingya camps in Cox’s Bazar.
Read: Election should be Bangladesh-led process: Dickson
He said the UK was exploring ways that refugees could be given more productive ways to spend their time, with the opportunity for them to volunteer, provide camp services and basic livelihoods, and for children to be educated.
On a global stage, he said, the UK also makes sure this crisis is not forgotten. “The UK is the penholder on the crisis in the UN Security Council and works hard to keep it on the agenda, despite not having full support from all UNSC members.”
Dickson said the UK is also using its new status as a Dialogue Partner to ASEAN and supporting the ASEAN Special Envoy to support better outcomes in Myanmar.
The High Commissioner said the solution was leadership – leaders needed to lead people away from exploiting division, towards healing it.
He said the UK was continuing to support the government of Bangladesh in its response to the Covid-19 pandemic.
On vaccines, the envoy said, the UK was providing all its support globally, including to Bangladesh, through the COVAX programme. “The UK was not on the front page but was a significant part of the effort.”
BGMEA seeks UN support for smooth, sustainable LDC graduation
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has sought all-out cooperation and support of the United Nations for a smooth and sustainable graduation of Bangladesh from LDC to a developing country.
UN Resident Coordinator in Bangladesh Mia Seppo on Tuesday met BGMEA President Faruque Hassan at BGMEA office and discussed the issues of mutual interest.
They had discussions on various issues including challenges of Bangladesh’s LDC graduation and the areas where the country needs to focus on for smooth graduation and sustainable development.
Read: BGMEA urges govt to speed up airport dev projects
They also discussed the importance of policy reforms and research to explore strategies to keep the RMG industry competitive in the post-LDC era.
Their talks covered how the RMG sector could make more contribution to achieving Sustainable Development Goals (SDGs) in Bangladesh.
Rebuilding Bangladesh: A resolute plan for resilient recovery
Building a resilient economic recovery to emerge stronger from the Covid pandemic would be Bangladesh's growth mantra for the next three years.
This inference can be drawn from a government document that looks at how the Covid second wave and the consequent economic slowdown have affected the growth momentum in Bangladesh and mulls measures to overcome the crisis.
Read: Post-pandemic economy: Bangladesh's blueprint for reviving investment atmosphere
According to the Finance Ministry document, economic recovery will be central to Sheikh Hasina government's forward-looking agenda for the next three years, which will focus on the effective implementation of a slew of state policies through agressive spending.
"In the medium term, the government will put emphasis on economic recovery from the fallout of Covid-19 and on implementing the Eighth Five-Year Plan, SDGs (sustainable development goals), Second Perspective Plan, Delta Plan 2100, and Blue Economy strategies," it states.
Over the past decade, Bangladesh has been achieving a steady and stable economic growth along with maintaining sound macroeconomic stability with stable inflation, low public debt, and greater resilience to external shocks.
In fact, in FY19, the growth rate reached a record 8.15 percent but due to the Covid-19 fallout, "the growth rate sharply declined to 5.2 percent in FY20", the document says.
"In the last fiscal, the gross domestic product (GDP) growth target was initially set at 8.2 percent, but the second wave of the pandemic in April 2021 forced a revision of the target to 6.1 percent."
On the demand side, private consumption, export-import and public investment have largely been affected by the pandemic. And on the supply side, farm output has been satisfactory so far "but manufacturing, construction and service sectors have been significantly affected", the document says.
Read:ADB pegs Bangladesh's GDP at 6.8% this fiscal
GDP is the total monetary or market value of all finished goods and services produced in a country within a specific time.
Alongside, Bangladesh also achieved praiseworthy improvement in social indicators, such as reducing poverty rate and infant mortality rate and increasing life expectancy and literacy rate.
As per the document, Bangladesh has already qualified for the least developed country (LDC) graduation. "It has met, for the second time, all the three eligibility criteria for LDC graduation involving income per capita, human assets, and economic and environmental vulnerability."
Capacity building needed for sustaining growth, tackling trade-related challenges
Dr. Ahmad Kaikaus, Principal Secretary to the Prime Minister, has emphasised on enhancing trade and business related knowledge to attain the “Vision 2041” of the government and tackling the LDC graduation related challenges.
Bangladesh as a country of opportunities is standing on the threshold of a formal graduation from the LDC status to a developing country, he said.
"As trade is considered to be the engine of growth, capacity development of the public and private sector officials on trade related issues is crucial to have an uninterrupted positive trend of economic growth on our country," said the Principal Secretary.
Read: Wealthier nations should provide more trade access to poorer countries: Shahriar
The Bangladesh Foreign Trade Institute (BFTI) is organizing a five-day-long comprehensive training program on “Rules and Procedures for Import & Export”.
Dr Kaikaus inaugurated the training program as the chief guest on Sunday at the BFTI conference room.
Dr. Md. Jafar Uddin, Chief Executive Officer of the BFTI and former Senior Secretary of the Ministry of Commerce chaired the inaugural ceremony of the training program while Maleka Khairunnesa, Additional Secretary of hte Ministry of Commerce delivered the welcome speech at the ceremony.
Dr Jafar Uddin said the BFTI has been working with dedication and commitment to develop the trade-related capacity since its inception and he also hoped that BFTI will expand its coverage of activities in future to develop knowledge based society.
Read:Bangladesh can sign FTA with Thailand to boost trade: Thai envoy
Bablu Kumar Saha, Director General, Directorate of National Consumer Rights Protection, Md. Alamgir, Chairman, Bangladesh Land Port Authority, Sheikh Shoebul Alam, Register, Office of the Joint Stock Companies, Khaled Mamun Chowdhury, Vice-Chairman (in-Charge), Export Promotion Bureau and Brigadier General Md. Ariful Hassan, Chairman, Trading Corporation of Bangladesh were present at the ceremony as guests.
This regular flagship training programme of the BFTI is designed to provide comprehensive understanding of sector specific import/export documentation, banking formalities, customs regulations, and procedures to the benefit of business and C& F agents/ Freight Forwarders.
Read: Bangladesh, Australia sign trade deal to boost economic ties
This flagship training programme of BFTI will continue till October 7.
Around 35 officials from the Ministries, its attached Department/Offices, Business Associations and Chambers, Financial Institutions, Importers & Exporters, C& F Agents, Foreign Missions based in Bangladesh are participating in this training program.
From the foreign embassies Yacine Hadji, Deputy Head of Mission, Algerian Embassy in Bangladesh and Siti Ayu Prameaswari, Staff of Economic Affairs, Indonesian Embassy in Bangladesh are participating.
Life after LDC graduation: BGMEA steps up economic diplomacy
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has underscored the need for constructive dialogues, research, economic diplomacy and engagement with governments and stakeholders at the international level so that Bangladesh's economic growth momentum continues when it graduates from the least developed countries (LDCs).
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said finding pragmatic ways for retaining the market access facilities is vital to remain competitive in export markets, while creating new market opportunities will be equally important to explore.
He emphasised efforts in securing the continuation of trade benefits for Bangladesh for 12 years after it graduates from the LDC category in 2026.
Faruque made the observations during a meeting with Foreign Secretary Masud Bin Momen and Ambassador Rabab Fatima, permanent representative of Bangladesh to the UN, at the Permanent Mission of Bangladesh to the UN in New York Tuesday. Director of Giant Group Sharmeen Hassan Tithi was also present.
Read:BGMEA discusses export, FDI opportunities with Bangladesh envoy
The discussion encompassed issues regarding Bangladesh's LDC graduation, possible changes in the tariff regime in export markets and how preferential market access can be continued in the post-LDC time.
The BGMEA chief apprised them of the research initiative of the apparel industry's apex body to explore market opportunities for ready-made garment (RMG) exports.
He also briefed them about the new Centre of Innovation, Efficiency and Occupational Safety and Health, which is being established at the BGMEA headquarters in Uttara to enhance the competitiveness of Bangladesh's RMG industry.
IMF keen to work closely for Bangladesh’s RMG sector’s development
Resident Representative (Asia and Pacific Department) of International Monetary Fund (IMF) Jayendu De has expressed the willingness of IMF to support the development activities in the apparel sector of Bangladesh .
The international financial institution is also interested to work closely for the betterment of the RMG industry, said the Bangladesh Garment industry and Exporters Association (BGMEA).
Read: BGMEA joins hands with Good Fashion Fund to finance SMEs in sustainability
The IMF official met BGMEA President Faruque Hassan on Sunday and discussed issues of mutual interest.
Issues pertaining to the RMG industry of Bangladesh were discussed at the meeting, which was also attended by BGMEA Vice President Shahidullah Azim, Vice President Miran Ali and Director Md. Mohiuddin Rubel at BGMEA office in Gulshan, Dhaka.
BGMEA President Furuque Hassan gave an overview of how the garment industry has been making immense contributions to the socio-economic development of Bangladesh, especially in terms of export earnings and employment generation.
The remarkable socio-economic development has made Bangladesh eligible for LDC graduation.
Read:BGMEA seeks Spanish investment in non-cotton, technical textiles
He also highlighted the industry’s achievements particularly in the areas of safety and sustainability.
A high-level delegation of IMF will visit BGMEA in December to hold discussions and explore avenues of how IMF, a specialized agency of the United Nations, can support the growth and development of Bangladesh’s RMG industry, he informed.