As Bangladesh is set to graduate from the least developed countries (LDCs) group in 2026, Foreign Secretary Ambassador Masud Bin Momen has said measures should be taken to navigate the losses of indirect taxation.
He has also recommended improving the tax collection mechanism.
"As we go for more preferential trading arrangements, our dependence on indirect taxes will decrease, and that is when the low tax to GDP ratio will be under serious strain," he told a webinar arranged by Youth Policy Forum on Sunday.
He recommended expanding the export basket and diversifying destinations for Bangladeshi products.
Speaking about technological advances and opportunities, he explained the regrettable circumstances of quality education and the inability to capitalise on Bangladeshi youth's talent due to the lack of institutional mechanism from industries or government agencies.
Momen also talked about remittance and how enabling workers to improve their skills would yield a positive correlational effect on their income.
Youth Policy Forum's new series titled "On Evidence with Dr Fahmida Khatun" was launched with an aim to promote evidence-based discourse in engaging youth with experts in different policy areas.
In the first episode arranged under the theme "LDC Graduation of Bangladesh: Opportunities and Challenges," the panelists included Momen, Youth Policy Forum Advisor Dr Fahmida Khatun, who is also the executive director of the Centre for Policy Dialogue, and its senior fellows Nakibur Rahman and Samiul Haque.
Fahmida said the economic diversification among thriving and underfunded sectors is very important so that Bangladesh does not become vulnerable to any crisis.
She said technological upgradation is crucial, especially at a time when productivity and competencies are keys to growth in a global environment, adding that labour productivity is one of the key drivers of an effective and efficient economy.
Momen mentioned Bangladesh's active role in the discussion of LDCs at the United Nations since the 1970s.
Bangladesh has daunting challenges ahead in spite of its economic strength, he said.
Answering to Fahmida's question on how the country could prepare to tackle those challenges, he mentioned the significance of the discussion on market access and the generalized system of preferences (GSP) facilities by diplomats in various countries.
"Performance should be rewarded, not punished," he remarked.
He also said if the proposal of the LDC Group for according the existing preferences for 12 more years was not accepted, industry leaders would have to adapt to the change using their past experiences.
Moreover, the country has to fully utilise its young population, he said.
"In 2020, amidst the pandemic, Bangladesh had a growth of 5.4%, although for its target to be a developed country by 2041, a 10% growth is expected each year. For that, infrastructural projects have to focus on domestic and regional connectivity and harness the full potential of the blue economy of the Bay of Bengal," he explained.
At the beginning of the webinar, Youth Policy Forum's research team showcased its findings in front of the panellists. The findings were presented by Raidah Morshed and Anuradha Biswas.
The LDCs are a set of 46 countries characterised by vulnerable economies and the lack of infrastructure among other indicators. The graduation criteria from LDCs include gross national income of $1,222 or above, human assets index value of 66 or above, and economic vulnerability index value of 32 or below.
While this graduation will bring Bangladesh global recognition with potential value-based trading relationships and attractive foreign investments, losing the lucrative benefits of the LDCs will increase competition and the cost of intellectual property in Bangladesh.
When asked by Fahmida how the existing advantages could be utilised in the pharmaceutical sector, Youth Policy Forum Senior Fellow Nakib Rahman said Bangladesh had taken full advantage of the facilities in meeting local and internal demands.
He shed some light on what the development graduation could mean for the healthcare industry. He hinted towards a possible healthcare crisis while dealing with chronic and difficult diseases, mentioning that drugs treating these diseases might become more expensive and unavailable.
As Bangladesh goes through a LDC graduation transitional phase, the advantages previously experienced, such as technological transfers, will inevitably come to an end too. When asked about this, Samiul Haque presented a strong case on how reforming the intellectual property (IP) standards would play a vital role in the future of Bangladesh.
The creation of IP awareness and laws across various spectrums is imperative to facilitate incentive-driven innovation, he said.
There needs to be a legislation in Bangladesh that will ensure that at least 5-10% of company profits are reinvested in research and development projects, he said.
"Governments can incentivise organisations by offering to provide subsidies and tax credits and the elements of research and development need to be incorporated in industrial loan disbursement as well."
Nakibur in his concluding remarks said it might not be possible to produce some of the medicines by research and development in Bangladesh.
"So, how do we make sure that our people have accessibility and affordability of those medicines? This question is directed more towards policymakers while support from economic and financial policy programmes may help us with these decisions."
Speaking about youth involvement in policy discussions and research, Momen said his office is always open to work.
He said inclusive collaboration and transparent communication with the stakeholders would enhance coordination and enable coherent actions among the multifaceted aspects of the government.
The key takeaway from the webinar was that Bangladesh had crossed one milestone but many are yet to be accomplished. As the country is enjoying LDC graduation and high economic growth, the important task is its equitable distribution.