Bangladesh will experience a new economic reality from 2026, as we are set to graduate from the Least Developed Countries (LDC) category that year. The economic and trading ecosystem will be vastly different owing to the preference erosion of Bangladeshi exports. New tariffs ranging from 8% to 15% will make exports from Bangladesh costlier and may cause the exporters to incur losses.
Bangladesh must adjust to the transition through expansion into new markets and quality, cost-efficient export basket development. Economic blocs like MERCOSUR, GCC etc. need to be explored to compensate for potential trade loss.
Furthermore, there is the issue of compliance with the standards of export markets like the EU and the US. A combined effort from both the government and the private sector is required to ensure compliance with these standards. The initiative by PMO to form a committee to address challenges (e.g. export market diversification) that Bangladesh will face as a result of its transition from a least developed country (LDCs) into a developing nation is a timely one.
The government and private sector should work together on developing new markets. To develop export markets, we should focus on economic diplomacy. Foreign missions of Bangladesh can play a vital role here by initiating G2G level discussion.
We must identify competitive advantages and devise time-bound action plans to develop new markets. We can take lessons from how other countries acted in similar situations. Instead of going for the same blanket strategy, the government can take different routes like Free Trade Agreements (FTA), Preferential Trade Arrangements (PTA), or Comprehensive Economic Partnership Agreements (CEPA) with different economies after conducting a proper market assessment.
Customised policy measures will also be needed for these new export markets. The government can modify industry infrastructure, trade regulations (including export, import, industry and foreign exchange regulations), tariffs, and income tax for an export-friendly atmosphere. Implementing the WTO Trade Facilitation Agreement for lower business costs is needed.
The National FTA Committee involving all relevant ministries and private sector representatives, led by the Ministry of Commerce, can guide FTA strategies. Weak global recovery from Covid-led recession and geo-economic unrest have affected all economies, including ours. These circumstances might make our transition into a developing nation more difficult. The Government can request the WTO to extend our transition period to a developing nation till 2029.
The UK and EU extended the Duty-Free Quota-Free (DFQF) market facility until 2029. Years 2026-2029 are critical to us for executing major trade negotiations with potential economic blocs and export market development action plans. By 2026, all assessments, research findings and strategies should be ready. CEPAs should be signed with countries with higher tariffs and export potential, and when it comes to African and Middle Eastern economies, we can go for FTAs.
FTAs should be signed with all potential countries gradually. Learnings from one FTA can help us perfect the others. Discussion with countries extending the DFQF facility until 2029 can continue for a new business model.
Bangladesh's economic performance has been remarkable worldwide, thanks to its ever-evolving private sector.
The private sector cannot make all the necessary investments to stay competitive; therefore, PPP initiatives in market development and country branding are required. Export-oriented industries have identified policy issues and their solutions through various discussions. The private sector looks for a predictable environment to perform well in an open world economy.
A robust and long-term policy roadmap addressing sectoral needs and a predictable tariff structure can be helpful. Linking SMEs with value chains needs to be given priority. The government can offer the private sector a competitive, regulatory environment to better handle the challenges that will arise post-LDC graduation.
Improving soft skills, including negotiation skills, technology adoption, market intelligence and dynamics will also be needed for winning trade negotiations. Because the private sector follows the ideal: "act locally and think globally". We endeavour to reach new markets through B2B meetings, exhibitions, summits and trade delegations with partners.
Once Bangladesh was known as a low-cost sourcing hub; we could turn it into an innovative and competitive hub. The private and public sectors must work hand in hand to lead the export market into this new era.
Rizwan Rahman is the Managing Director of ETBL Securities & Exchange Ltd, and the President of Dhaka Chamber of Commerce and Industry (DCCI)
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.