Extend LDC graduation timeline

A clarion call now comes from leaders of major trade bodies for deferring Bangladesh's LDC graduation by three to five years as businesses are rendered unprepared by last few years' economic volatility.

At a meet Thursday in Dhaka, they said the businesses were reeling from severe fallouts from Covid-19, the Russia -Ukraine war, higher global inflation, higher bank interest, the July-August political upheaval of last year, higher cost of production and last, but not the least, the higher US tariffs imposed by the Trump administration.

So, this is not the time for smooth graduation and the graduation should be deferred three to five years, the speakers said at the seminar on 'LDC Graduation: Some options for Bangladesh', arranged at a hotel by the International Chamber of Commerce -Bangladesh (ICC-B) in collaboration with Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Association of Pharmaceutical Industries (BAPI).

Private-sector entrepreneurs, traders, economists, exporters, importers, trade- body leaders, business-chamber leaders and researchers joined voice at the meet to make the call for extending the current graduation timeline that ends late next year.

The businesses also demanded a draft of application to be signed by different trade bodies and business chambers to submit to Chief Adviser of the interim government Prof Muhammad Yunus for deferring graduation of the country from the club of world's least-developed countries (LDCs).

The business magnates also urge the government to go for signing free-trade agreements (FTAs) and other trade deals with major trading partners soon to retain the preferential trade benefit even after the graduation.

Moderating discussions at the seminar, ICC-B President Mahbubur Rahman said graduation would mean loss of duty-free market access in the EU, the UK, and other destinations, with tariffs potentially rising to 12 per cent.

And the high incidence of tariffs would eat up 6-14 per cent of exports, unless GSP+ or similar arrangements are secured, he alerts.

Businesses are calling for a three-to five-year extension, the ICC-B president also said.

Mr Rahman also forewarns that LDC graduation means the end of WTO special benefits - from export subsidies to relaxed intellectual property rules for generics, stricter rules of origin, raising production costs in apparel and other sectors and reduced concessional finance, replaced by costlier loans on tighter terms.

"Today's question is not whether we graduate - that is settled. The challenge is how we graduate successfully," he told the meet. That means defending market access, building competitiveness and acting with urgency, not just planning.

In her keynote presentation, Sanya Reid Smith, legal adviser and senior researcher at The Third World Network (TWN), mentioned the possible  legal adviser and senior researcher at The Third World Network (TWN), mentioned the possible impacts of Bangladesh's LDC graduation. Once Bangladesh graduates, it must comply with the WTO's intellectual property (IP) rules (TRIPS), including 20-year patents on new medicines delaying market entry of generics.

"If it were a new medicine after Bangladesh graduates, insulin prices in Bangladesh could be 11 times more expensive so the poverty rate among households needing insulin could increase by between 15 and 200 percent." The patented version of medicines to treat AIDS cost US$15,000 per patient per year, but the generic version only costs US$61 per patient per year.

The patented medicines can be 1,044-percent more expensive than their generic equivalents in Malaysia, Smith also said.

Citing deferment instance, she said Angola should have graduated in 2018, but it delayed it then in 2024 and no longer met the graduation criteria so no date is currently set for its graduation.

Similarly, Timor-Leste should have graduated in 2021 but no date has been set for its graduation and Myanmar should have graduated in 2024, but no date has been set for its graduation.

Because of the graduation Bangladesh will also face reduction in preferential export-market access such as the EU, Bangladesh's largest export market (48 percent of Bangladesh's exports go to the EU) and for about 93 percent of Bangladesh's exports to the EU which currently enter the EU with zero-rated tariffs while Bangladesh is an LDC, she also said.

Syed Nasim Manzur, President of Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh (LFMEAB), said LDC graduation at this time will be a suicidal decision as the domestic economy witnessed an unprecedented shock. It would be "throwing away the advantage to other countries".

He also identified unusually higher shipping cost in Bangladesh, lower competitiveness, economic challenges following July revolution, and higher interest rates as some of the pressing challenges for the manufacturers in the country.

He thinks six more years after 2026 will be required for the country to get prepared for smooth graduation.

"Let's start now-there is no need to confuse national pride with national interest," he said.

ICC-B Vice-President AK Azad said gas reserve is depleting fast and Bangladesh will have to spend $4.0-$5.0 billion annually for importing gas in next few years to ensure energy security.

He called upon the businesses to get united soon and send a letter to Chief Adviser of interim government Professor Muhammad Yunus for deferment of the LDC graduation.

President of BAPI Abdul Muktadir said over the last six years business was affected by many things, such as Covid-19, capital flight, high bank interest rate. So Bangladesh needs another six years of deferment as far as graduation is concerned. "Let us have consensus and work together."

President of BGMEA Mahmud Hasan Khan said, "We are in mindset that we are graduated, but we need more time."

Because, he said, Bangladesh will have to compete with some other countries such as Vietnam, Cambodia and India.

Dr. Zaidi Sattar, Chairman, Policy Research Institute of Bangladesh, Mr. Naser Ezaz Bijoy, Vice President, ICC Bangladesh  and Chief Executive Officer, Standard Chartered Bank, Taskeen Ahmed,President, Dhaka Chamber of Commerce & Industry (DCCI),  Abdul Hai Sarker, President of Bangladesh Association of Banks, Fahmida Khatun, Executive Director of the Centre for Policy Dialogue, M. Masrur Reaz, Chairman of Policy Exchange, Bangladesh and  Selim Raihan, Executive Director of South Asian Network on Economic Modeling, also spoke.

ICCB Executive Board Members Ms. Simeen Rahman, CEO, Transcom Group & Director, Transcom Limited, Md. Fazlul Hoque, Managing Director, Plummy Fashions Limited, Syed Ershad Ahmed, President, American Chamber of Commerce in Bangladesh (AmCham), ICCB Secretary-General Ataur Rahman, Kaiser Kabir, CEO & Managing Director, RENETA PLC, Md. Rezwan Selim, Vice-President, BGMEA, Asif A. Chowdhury, Managing Director, Bay  Consolidation Ltd,  Rasheed  Mymunul Islam,  Managing Director, Monno Ceramic Ind. Ltd, Minhaj Ahmed, Ahmed Food Products (Pvt.) Ltd, Tanvir Ahmed , Managing Director,  Sheltech Ceramics Limited,  Mohd. Arshad Ali, Managing Director, The Merchants Limited, RafidulHaq, Managing Director &CEO,General Group, Mojibul Islam, Managing Director, Amic Pharma, M Mohibuz Zaman, Managing Director & CEO, ACI  Healthcare Ltd, and Sheikh Mohammad Maroof, Managing Director, Dhaka Bank PLC, were also among others present.

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