Bangladesh is confident that it can fend off the challenges stemming from the graduation from the grouping of least-developed countries (LDCs) as the government has taken measures.
The United Nations Committee for Development Policy (UN CDP) in its second triennial review assessed the economy of Bangladesh and found that the country met all of the three criteria comfortably to graduate for the group.
Bangladesh was well ahead in the gross national income (GNI) criteria: its per capita income was nearly $1,827 in 2020 against the threshold of $1,230.
In the Human Assets Index (HAI) criteria, the country's score stands at 75.3 points, well above the requirement of 66.
In the Economic Vulnerability Index (EVI), a country's score has to be less than 32. Bangladesh's score is 27.3 points.
Once Bangladesh is recommended to leave the LDC group to become a developing nation, the proposal will be sent to the United Nations Economic and Social Council (ECOSOC) for endorsement in June. The UN General Assembly is scheduled to approve the proposal in September this year.
Fatima Yasmin, secretary of the Economic Relations Division, submitted the country position paper to the UNCDP last month. The UNCDP Expert Group completed the assessment on Bangladesh between February 22 and 26.
An announcement on graduation is expected tomorrow.
The data for the 2021 triennial review indicates that Bangladesh meets the graduation thresholds in all the criteria again, and it is very likely that the country would be recommended for graduation in the triennial review.
Bangladesh expects the UN CDP would recommend Bangladesh for graduation in 2026.
In the paper, Bangladesh sought continuation of international support measures (ISMs) after graduation and the extension of the transition period for two more years.
Three main challenges and vulnerabilities, including the fallouts of Covid-19, the impacts of climate change and the loss of trade-related ISMs were identified for Bangladesh in the post-LDC period.
In order to meet natural disasters such as floods and cyclones, the government has already formulated strategies.
The government has drawn up Bangladesh Climate Change Strategy and Action Plan 2009, the Climate Change Trust Fund 2009, the National Sustainable Development Strategy 2010-2021, the National Environment Policy 2018, and the Bangladesh Delta Plan 2100.
The paper also talked about the government policies and measures taken in the Eighth Five-Year Plan (8FYP), including allocating more resources for green development, planning taxing industrial units for air and water pollution, reducing subsidies for fuel, and adopting green tax on fossil fuel consumption.
Bangladesh made the best use of ISMs among the LDCs: It is the highest user of the duty-free and quota-free (DFQF) facility among the LDCs. The average tariffs will increase by 8.9 per cent after graduation.
In the area of the Trade-Related Intellectual Property Rights (TRIPs) flexibilities, the paper said there was no need for a patent protection in medicine production as Bangladesh meets around 98 per cent of local demand and exports to more than 100 countries.
Only 25 per cent pharmaceutical products will require patent licences after graduation, it said.
The cost of official development assistance will increase due to the rise in per capita GNI, the paper said.
Bangladesh has sought two additional years along with the standard three-year preparatory period because of the uncertainty caused by the pandemic.
"The proposed extension will help recover from the pandemic, enable businesses to cope in post-graduation environment, and prepare the transition strategy engaging all stakeholders, including the private sector, development and trading partners and think-tanks," the paper said.
As part of medium and long-term measures, the implementation of the 8FYP, creation of new market access through signing of Preferential Trade Agreement, Free Trade Agreement, Comprehensive Economic Partnership Agreement, and taking preparations for EU's Generalised System of Preferences (GSP) Plus facility would be completed.
"Post-graduation, the continuation of ISMs is needed to move toward to achieve the SDGs by 2030 and graduate with momentum."
Bangladesh has also sought supports for managing climate change, enhanced access to development financing, and safe and speedy repatriation of 1.1 million forcibly-displaced Myanmar nationals.
Regarding the impacts of graduation, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said although graduation brings an immense national pride for the country, it would also bring about a number of challenges.
"The nation has to be united in responding to these challenges."
According to Huq, 73 per cent of Bangladesh's exports, worth $25 billion, enjoy duty-free access as an LDC, and this preferential access would come to an end after the transition period.
"In EU, we enjoy single transformation Rules of Origin under Everything but Arms (EBA) at this moment. With the graduation, Bangladesh will have two options – Generalised System of Preference (GSP) Plus or Standard GSP, and both of them require double transformation rules of origin, which is difficult for us."
"The criteria to comply with 7.4 per cent import threshold for being eligible to the EU's GSP Plus is also a non-qualifier for Bangladesh since we have already exceeded 20 per cent," Huq said.
Bangladesh's export competitiveness will also be affected since the current subsidy programmes may not continue in the post-LDC era in its current form, she said.
She said Bangladesh needs empathetic consideration from the European Union in particular to extending the existing scheme duty-free market access scheme by at least another 7-10 years on the ground of higher concentration of RMG in the EU market, and the possible implication on employment and poverty.
Discussion with the European Commission needs to be initiated with regard to 7.4 per cent import threshold criteria for GSP Plus scheme, the BGMEA chief said.
The EU is currently reviewing its GSP scheme for 2023 and it will be finalised soon.
"Such pride and prestige can't be quantified," said Finance Minister AHM Mustafa Kamal at a meeting on graduation with local stakeholders in Dhaka on February 6.
The finance minister also noted that Bangladesh has shown incredible resilience during all previous global crises.
"Likewise, we would be able to adjust very well with the upcoming dynamics that would usher with graduation from LDC status," the minister said in a statement after the workshop.
Commerce Minister Tipu Munshi said Bangladesh should start preparing for the gradual withdrawal of international support measures.
Sheikh Fazle Fahim, president of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI), called for effective involvement of the private sector in the formulation of transition strategy.