Preparations for post-LDC challenges must begin from next budget

Bangladesh needs to chart a post-LDC graduation action plan right from the next budget as part of preparations to cope with the loss of duty-free facilities after 2026 and the obligation to slash tariff protections to local industries, observed business experts. 

"Bangladesh has only four years and the next budget must lay out some steps to address post-graduation challenges," Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said at a seminar organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) on Saturday.

Syed Nasim Manzur, managing director of Apex Footwear Limited, said, "We have to reduce high tariffs on imports and we must prepare for this now."

The talks also focused on product diversification, increasing productivity to meet the challenges of post-graduation LDCs, and increasing private sector investment, coordinated engagement of the 26 ministries, Free Trade Agreements (FTA) and Preferential Trade Agreements (PTA).  

Syed Manzur also said that at present Bangladesh does not pay any duty on the export of goods to the European market and after 2026, Bangladesh will have to pay the tariff while Vietnam will not as it has an FTA with Europe.

He pointed out the issue of policy discrimination when it comes to product diversification.

"Policymaking is dominated by the readymade garment (RMG) industries as they have several lawmakers in the parliament while we [non-RMG] do not," said Manzur.

"They pay 12% tax on earning and 10% tax for green factories but we do not have the same facility," he observed and added that as long as the discrimination stays, there will be only talks, no actual product diversification.

The RMG industry also enjoys more facilities for raw material imports than other sectors other than the added benefit it was accorded during Covid-time stimulus packages.  

Ease of doing business: Dissatisfaction with NBR's progress

The speakers expressed dissatisfaction over the lack of automation of various customs-related activities of the NBR to facilitate business and reduce business expenses.

Dr Mozibur Rahman, former chairman of Bangladesh Trade and Tariff Commission, said, "The implementation of the National Single Window (NSW) of Customs began in 2009 and it is yet to be completed in 2022."

Another speaker said that since the start of Authorised Economic Operation (AEO) through three companies four years ago, the number has remained the same.

Principal secretary to the prime minister Dr Ahmad Kaikaus, who attended the event as the chief guest said as a market economy, it is our job to remove the existing barriers.

Possible extension of LDC graduation?

During the discussion, FBCCI adviser Manzur Ahmed emphasised extending the LDC-graduation time for another five years after 2026.

He said the time has been pushed back for two years due to Covid and Bangladesh can continue negotiations in this regard on the premise of the Russia-Ukraine war. Sharifa Khan, a member of the Agriculture, Water Resources and Rural Institute Division of the Planning Commission, also voiced her support for the argument.

Dr Mozibur Rahman said the issue is being discussed within the WTO.

However, Tapan Kanti Ghosh, a senior secretary in the commerce ministry, said it was unclear whether there would be any further extensions.

He pointed out that some countries are strongly objecting to this extension.

Sharifa Khan, a member of the Agriculture, Water Resources and Rural Institute Division of Planning Commission,

Md Sirazul Islam, executive chairman, BIDA, Zakia Sultana, secretary, ministry of industries spoke among others in the event, presided over by FBCCI President Md Jashim Uddin.

Dr Mostafa Abid Khan, a former member of the Bangladesh Trade and Tariff Commission presented the Keynote paper at the seminar.