Bangladesh should immediately make an LDC graduation strategy to overcome the negative outcomes of its elevation from the status of least developed country in terms of international trade and cooperation; ensuring inclusive, sustainable development should be the focus, instead of worrying over the loss, said distinguished fellow of the Centre for Policy Dialogue Debapriya Bhattacharya.
The elevation from the LDC status may give rise to curtailment of some benefits, but the positive image invoked of the country's ability on the global platform will open up new possibilities too.
"If these possibilities can be taken advantage of, foreign direct investments and loans at comparatively less interest rates will increase," Debapriya said at a discussion on the recent UN recommendation for Bangladesh's graduation from the LDC status.
The economist presented a keynote paper titled ""Bangladesh qualifies for LDC graduation: What next?"
Against the backdrop of the pandemic, Bangladesh has got five years, up from three years, for graduating to the status of a developing country. In the extended time, the government should make a strategy to cope with the graduation impacts.
Domestic financing should get priority to ensure smooth transition and sustainable development, and in doing so revenue collection has to be raised.
Debapriya also stressed the need for employment generation, rise in investments in healthcare, diversification of export basket and market and protection of the environment.
He pointed to the CPD's recommendation that the country should move away from coal-based power generation projects.
Trade disadvantages are getting all the attention
Referring to CPD's distinguished fellow Prof Mustafizur Rahman, Debapriya said export earnings would be reduced by 8-10% amounting to $2.5 billion a year after graduation. About 85% of the products that have access to the European Union and Canada with LDC benefits are from Bangladesh.
The graduation from the LDC status would stop the country's duty and quota free access to foreign markets but there will be impacts beyond trade as well.
Grants from development partners will stop coming in and concessional loans will be reduced.
Agriculture and new industries will come under pressure for reduced subsidy after graduation. There should be transparency and control in distribution of subsidies.
After the graduation, Bangladesh will lose the rebate from the intellectual property rights, which other LDC countries will enjoy until 2033. That will pull back the thriving pharmaceutical industry.
The country will also suffer because the government will have to take visible steps to stop the use of pirated software. It will also lose the benefits of technology transfer. Also, all innovations have to be patented, which is expensive.
"All these issues should be discussed and a workplan has to be chalked out."
Coordinated steps can overcome challenges
The government has to make a transition strategy consistent with the eighth five-year plan, second Perspective Plan, Climate Change Strategy and Action Plan, Delta Plan and Sustainable Development Goals.
Economic Relations Division, foreign ministry, Planning Commission, Bangladesh Bureau of Statistics and commerce ministry should work in coordination to formulate and implement the strategy.
Debapriya pointed out four major challenges facing Bangladesh on its path to the graduation; Rohingya problem, post-Covid economic recovery, inequality and the lack of good governance.
Inequality should be addressed to ensure sustainable development. Inequality is rising in income, expenditure and wealth. The marginalised population have endured deprivation due to Covid-19. The international community wants underprivileged people to get the benefits funded by it.
Bangladesh has witnessed a significant rise in per capita income from 2019 to 2021 and made good progress in human asset index.
But it did worse in the latest Economic and Environmental Vulnerability Index than what it did before. It scored 27 on a scale of 0 to 100 with 0 representing the best performance. Earlier, its score was 25.2. To graduate from the LDC status, a nation should not score above 32.