If everything goes as planned, Bangladesh is set to gain the developing country status by 2026. The United Nations reportedly has again recommended the graduation.
But the country has to deal with a few challenges during the five years it has got to reach the coveted status. One of the key challenges is to increase the local value addition level of its exports, at least, to 50 per cent. The threshold is necessary to claim a product as its own by a developing country and be eligible for duty benefits from an exporting country.
As a least developed country, Bangladesh now claims an export item as its product if the local value addition is at least 30 per cent and avails the duty benefits.
Will it be possible for the domestic industries to add another 20 per cent value to their export items in the next five years?
The track record of Bangladeshi exporters does not make one highly optimistic. It has taken decades to raise the value addition level to 30 per cent in the case of a limited number of items. A small export basket has been helping the country fetch most of the export revenues. Businesses have not been able to tap fully the duty concession facility as a LDC only because of the failure to meet the value addition threshold of export items and some other conditions.
The apparel sector has made some progress, but most other sectors have lagged. The RMG exporters, too, could not make the best use of the opportunity, as they remained more focused on low-end products and some selected markets.
The government is alive to the challenges the export sector will be facing following the country's graduation. Several committees are now engaged in devising ways to improve the value addition level of the export items and meet other requirements.
The relevant authorities will have to take a two-pronged approach. One relates to adding more value to products that have already met the threshold and the other to locate new products that have both export and greater local value addition potential.
Boosting the export volume of products and finding new markets is not very easy. Both the government and the businesses have to work hard to reach their goals. This is also true in the case of hiking value addition of export items. Then again, adding value is one part. Other factors determine a country's success in emerging as a major exporter. A country also needs to produce quality export products at competitive prices and explore markets in all ways.
Bangladesh's exports are confined to only a few items and a few destinations. Most of its exports go to North American and European markets. It has not yet tapped the potential markets on other continents. Following the entry of some new and efficient players, Bangladesh now faces the threat of losing some of its captive markets. One can say or write a volume about the tasks that lie ahead for the government and the private sector. Unless they are adequately geared to take up the responsibilities and do what is needed, all those would carry no meaning.
The country's graduation will be an achievement and add to the nation's self-esteem, no doubt. But that would come not without risks. All concerned will have to realise the ground realities and make all-out preparations to face the challenges. Attractive statements and well-crafted policies on the paper would bear no meaning unless they accomplish the challenging jobs at the ground level.