"Graduating to a developing country is an opportunity for Bangladesh, if we can create a proper enabling business environment in the country," said Salman F Rahman, private sector industry and investment adviser to the prime minister, at a webinar on Saturday.
The former business leader also put emphasis on establishing free trade agreement (FTA) with friendly countries to avail duty free market access after graduation.
He made the remarks while addressing a webinar titled "LDC Graduation by 2024 and Readiness of Bangladesh" jointly organized by the International Business Forum of Bangladesh (IBFB) and Bangladesh Enterprise Institute (BEI) on the day.
Humayun Rashid, president of the IBFB, chaired the webinar while Farooq Sobhan, distinguished fellow at the BEI, moderated the discussion.
“The impending LDC graduation is a matter of pride for Bangladesh. If we can create a proper enabling business environment in the country, then graduating to a developing country is really an opportunity for Bangladesh,” said Rahman.
"Graduation is going to give us a lot of opportunities and challenges. We have to take the full advantage of opportunities and face the challenges," he added.
However, the business people and economists, who participated in the webinar, called for signing FTA and appoint negotiator to retain the trade facilities after the graduation.
“We have to look for FTA to address the new challenges to be faced after graduation, '' said Mustafizur Rahman, distinguished fellow at Centre for Policy Dialogue (CPD).
On the other hand, Bangladesh has to strengthen negotiations to explore new windows of opportunity in bilateral trade, said Mustafiz.
"On top of that, if we can reduce the cost of doing business, it would be a key leverage for the business community, while the special economic zones can be a game changer," he added.
“There will be erosion of duty free market access after the graduation and we need to maintain this,” Syed Nasim Manjur, former president of Dhaka Metropolitan Chamber.
Citing the example of Vietnam’s FTA with the European Union, Nasim said Bangladesh needed to lower the cost of doing business, while FTA could be an option for maintaining duty free market access.
He also urged the government to appoint dedicated negotiators so that Bangladesh could extend trade facilities after the graduation.
Salman F Rahman said: "We really need to have as many FTA as possible."
In case of signing FTA, there is resistance from the business community as they want protection but we have to offer benefits to our counterpart in case of bilateral trade agreement, said Rahman.
He also said that the resistance from the National Board of Revenue (NBR) in case of customs duty is going to be settled as the government was taking steps to increase revenues from VAT, income and other sources.
"We welcome suggestions from the NGOs and private sector regarding the FTA," he adds.
"On top of that, we should definitely start serious negotiations with the WTO on how to extend duty free market access after the graduation," said Rahman.
“Loss of trade preferences is a key concern. After LDC graduation, tariffs on Bangladesh’s exports in major markets will rise. More than 90% of Bangladesh exports to the EU could see tariffs rising from zero to about 10%,” said MA Razzaque, a consultant of the Bangladesh Enterprise Institute, in his keynote presentation.
LDC graduation will have the greatest impact on the exports of Bangladesh, which is estimated to see exports decline by 14%, said Razzaque.
Excessive dependence on government revenue from trade means FTA negotiations with a major partner country may not be possible, said the economist.
He suggested developing a post-graduation export incentive regime that will be consistent with WTO rules and improving export competitiveness through other means.
In March 2018, the UN Committee for Development Policy (CDP) declared the country’s eligibility for graduating from the LDCs as it has fulfilled requirements for all three criteria such as gross national income per capita, human assets index, and economic vulnerability index to graduate in developing country.
In the triennial review meeting of CPD to be held in February 2021, Bangladesh is expected to get the nod to graduate in 2024.
After 2024, Bangladesh will enjoy a three-year period as grace and enjoy duty free market access, which will end by 2027.