Term Paper

of

Bangladesh Studies

Course Code: GED1102

Topic: Graduation from LDC: Policies that have already been taken and the Government’s
Plan

Submitted To:

Mujtaba Rafid Rafa

Lecturer

Department of Business Administration in Finance and Banking

Faculty of Business Studies

Bangladesh University of Professionals

Submitted By:

Group-02: Section B

Department of Business Administration in Finance and Banking

Faculty of Business Studies

Bangladesh University of Professionals

Submission Date: January 5, 2022

 Group Information

Name ID Batch Section Semester

Sayem Al Mahmud 2122151012

Mehrab Ahmed Nishan 2122151024

Tasfia Arif 2122151032

Md. Naymur Rahman 2122151066 2021 B 1st

Nabiha Tahseen 2122151112

Rafid Abrar 2122151128

Samiha Khan 2122151136

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 Table of Contents

Chapter 1: Abstract ................................................................................5

Chapter 2: Introduction .........................................................................6
Chapter 3: Literature Review ................................................................7
3.1 Policies that have already been taken ...........................................7
3.2 The Government’s Plan ................................................................8
Chapter 4: Findings and Discussions ..................................................10
Chapter 5: Conclusion and Recommendation .....................................12
References ...........................................................................................13

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 List of Figures

Figure 1: LDC Graduation Impact ......................................................10

Figure 2:Key Findings .........................................................................10

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 Chapter 1: Abstract

The concept of LDCs first originated in the late 1960s. Low-income or third world countries
are the countries which face structural handicaps to economic growth and development and
needs access to support beyond what is commonly available for all developing countries.
Bangladesh, the largest and least developed country in terms of population and economic size,
is ready to leave the LDC category by 2026, propelled by better health and education, lower
vulnerability and economic boom. However, this brings with it many benefits and challenges.
While on one hand, it will improve the confidence of the country in dealing with global lending
agencies, improve its credit rating and attract higher foreign direct investment flow. It will also
have more opportunities for taking commercial loans from the international market at a
competitive interest rate. But on the other hand, graduation will affect certain preferential
treatments in trade, subsidy to agriculture and infant industries and access to some LDC-
specific funds. Both of these facts are difficult to evaluate in a vacuum. Instead, the only way
to assess them both is by focusing and taking notes on the performance of earlier LDC
graduates, to see how they fared over the years following graduation. The lesson Bangladesh
can learn from earlier graduates is to diversify its economy by investing in as many industries
as possible. That is, Bangladesh should not only rely on the RMG sector for economic
development, but should also invest more in Blue Economy and some emerging industries like
the ceramic industry, ship-wrecking industry, cement industry, pharmaceutical industry etc.
Bangladesh should also focus on the proper implementation of some policies in order to make
its graduation momentum smooth. In this paper, we described how different policies can help
smooth graduation, which will help the country to cope up with the various challenges it
encounters on its way.

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 Chapter 2: Introduction

Though Bangladesh is currently a low-income country, it has officially gained the support of
the United Nations (UN) Committee for Development Policy (CDP) to graduate from the LDC
group by 2026. So, graduation from LDC to a developing nation is both a demonstration of
Bangladesh's excellent achievement as far as key socio-economic signs of improvement, and
furthermore a global acknowledgment of this achievement. Bangladesh's economy has denoted
a consistent development and this development has been joined by a critical decrease in
poverty, an expansion in business, more noteworthy admittance to wellbeing and education
just as worked on essential foundation. Progress in the agriculture and services areas has given
dependability and strength to the economy. After the graduation Bangladesh will get 3 more
years to prepare itself for a smooth transition. In this context like any other LDC, Bangladesh
will get 9 years to prepare itself to face the new challenges of international trade and commerce,
cooperation, technology and economy. Overall, Bangladesh’s government has shown an
uncanny capacity to react to early improvements in the economy with policy actions that set
off transformative change. Throughout the long term, the government worked with this change
through practical macroeconomic administration, suitable policy support and critical
investments in infrastructure and human development. In this regard, proper implementation
of suitable policies is key sustainable graduation.

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 Chapter 3: Literature Review

According to a triennial review held by the Committee for Development Policy of the United
Nations (UN-CDP) held during February 22-26, 2021, Bangladesh received the final
recommendation to graduate from the least developed country (LDC) category. This graduation
will bring both opportunities and challenges. In order to meet its post-LDC graduation
challenges, the government has already implemented some policies and has plan to ensure
smooth graduation to a developed country.

3.1 Policies that have already been taken

(Mustafa Kamal, 2021) discussed the policies taken to deal with the post-graduation situation
in national budget speech. Those policies are:

• The government has already made steps to establish 100 special economic zones, high-
tech parks for technical growth, and the implementation of other mega projects, to assist
create new jobs and boost national GDP.
• In light of the COVID-19 outbreak, the UNCDP has recommended that the transition
period be prolonged to five years rather than three, as requested by our government.
During this time, which runs through 2026, all foreign facilities will remain operational.
• To avail the advantage of GSP+ in EU countries after graduation, 27 international
conventions on labor rights, human rights, environmental protection and good
governance have begun to be ratified and implemented by the government.
• Initiatives have already been taken to sign preferential trade agreements with Bhutan
and sign similar agreements with 11 other countries.
• Training arrangements has been made for stakeholders to enhance their ability to deal
with post-graduation situations. To develop human resources, steps has been taken to
enhance efficiency as per the demand of the market at home and abroad.

(Kashem, 2021) reported that The LDC Group, which includes Bangladesh, has asked the sub-
committee on least developed countries a proposal to the WTO’s General Council for the
continuation of all support measures, including unilateral trade preferences, for another 12
years after graduation. This will enable us to face off the challenges immediately will bring
after graduation and cope up with it.

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To face the trade challenges, Governments has focused more on FTA and PTA. (Mirdha, 2020)
reported in Daily star that Bangladesh has inked its first Preferential Trade Agreement (PTA)
with Bhutan in order to enhance bilateral trade and maintain duty benefits. (The Financial
Express, 2021b)) reported that the government has started negotiations aiming to sign a
preferential trade agreement (PTA) between Bangladesh and Sri Lanka by July, in a bid to
increase bilateral trade volume between the friendly nations. After losing ldc status, this
agreement will help us cope up with the rising tariff challenges.

In Daily Star, (kashem, 2021) mentioned that Bangladesh has decided to join the Regional
Comprehensive Economic Partnership (RCEP), the world's largest trading bloc.Upon its
graduation to a developing country, in order to continue to be eligible for duty-free trade in the
markets of about one-third of the world's economies, and to increase its trade and economy.

(The Financial Express, 2021a) reported that Bangladesh takes a step forward in ASEAN
market by doing a bilateral FTA with Singapore which will provide Bangladesh preferential
access to the entire Southeast Asian and Asia Pacific regions. Export diversification is a
necessary step to overcome the trade challenges and competitiveness graduation would bring

(Byron, Ak and Jahid, 2021) mentioned that Bangladesh joins new development Bank to which
will bring a boost to the country’s infrastructure and urban development to face the graduation
challenges. After ldc graduation, Bangladesh will lose much of its ISM measures which helps
her to get low interest rate loan. By joining NDB by BRICS, it will helps immensely to its
current several mega projects.

(Irfanullah, 2021) mentions after the graduation from LDC, Bangladesh will lose eligibility in
getting LDC fund of UNFCC. But Bangladesh already has established a ‘Climate Trust Fund’
from its own resources to face the climate change which honorable Prime Minister has been
awarded ‘Champions of the Earth’.

3.2 The Government’s Plan

Currently, Bangladesh is following a number of planning and strategy methods for smooth and
sustainable graduation from LDC, which are

• Perspective Plan 2021-2041 (PP 2021-41, 2021)

• 8th FYP (Planning Commission, 2020)
• Support to Sustainable Graduation Project (SSGP, 2018-2024)

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Those two plans heavily focus on infrastructure development, human resource development,
climate change, trade policies, education sector which will be key sectors for sustainable
graduation. As it implies, the government has taken a step to formulate a "National
Smooth Transition Strategy", aiming to make smooth graduation of Bangladesh from
Least Developed Country (LDC) group to a developing one (Daily Star, 2022). All kinds
of directives will be incorporated in the strategy to face the future challenges . (Mirdha,
2021) reported that Commerce Secretary Tapan Kanti Ghosh told the media Bangladesh
is gearing up to sign free trade agreements (FTAs) and amend labour laws to continue
to avail duty benefits on merchandise export once it comes out of the ldc status . FTAs
and preferential trade agreements (PTAs) with major trading partners are considered to
be the major tool for future market access once the country graduates from a least
developed to a developing nation in 2026.There is a huge importance of Bangladesh
delivering in the 2030 Agenda for Sustainable Development. Following its success on the
implementation of the UN Millennium Development Goals (MDGs), Bangladesh integrated
the SDGs into its national development plans which will have a direct relation with sustainable
graduation.

The goals of SDG 2030, especially SDG 14, i.e., Life Below Water, is being implemented with
various maritime development agenda in Bangladesh. Bangladesh has taken steps to grow its
Blue Economy in order to utilize its new marine resources. Since 2015, the Government of
Bangladesh (GoB) has started a number of conferences and workshops on Blue Economy. In
addition, the Seventh-Five Year Plan (7FYP) of Bangladesh has mentioned twelve actions for
maintaining a prosperous and sustainable Blue Economy, which include fisheries, renewable
energy, human resources, transshipment, tourism and climate change among others. Moreover,
in 2017, the "Blue Economy Cell' under Ministry of Foreign Affairs (MoFA), has been
established with the order to coordinate Blue Economy initiatives across sectoral ministries.

(The Financial Express, 2021c) reported on the Delta Plan 2100 and how Bangladesh's
government has created the Bangladesh Delta Plan (BDP 2100), a comprehensive development
plan that focuses on economic growth, environmental protection, and increased climate
resilience. The plan lays out the comprehensive and cross-sectoral actions that will be required
to boost productivity and reduce disaster risks.

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 Chapter 4: Findings and Discussions

Figure 1: LDC Graduation Impact

Figure 2:Key Findings

Analyzing the literature review, we can see all the government’s policies to cope up the
challenges are inclined towards one thing – Smooth and sustainable graduation. To achieve
this, government is focusing on mainly four things- improving productive capacity, human
resource development, increasing reginal and global connectivity and diversification of
economy.

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Improving productive capacity is important to avoid the middle-income trap and boosting self-
reliance. There are some countries that have experienced rapid growth and thus quickly reached
middle-income status, but then failed to overcome that income range to further catch up to the
developed countries because they couldn’t transition from the lower-level industry to high level
industry. To avoid that, government already implemented economic zones to build high tech
industry and attracting foreign direct investment,

As Bangladesh will lose much of its ISM and tariff related benefits, its natural that we have to
go all out signing free or partial trade agreements or going into various regional block. This
regional and international connectivity will help export diversification and help us to spread
our products widely which will improve our export income.

Population is one of the greatest assets Bangladesh could utilize. To ensure a sustainable
graduation, skilled manpower is mandatory for this new era. Government’s policies will help
them to grow more technically skilled which will cope up with rapidly changing world.

Therefore, by analyzing the policies the government has taken so far, and also by reviewing
the current plan, we can see Bangladesh building the blocks for a smooth graduation from LDC
to the status of a middle-income country with sustainable growth. But it’s still not effectively
implemented as we can see the covid pandemic severely affected the graduation process. In
order to meet its post-LDC graduation challenges, the government must implement policies to
ensure quality education, eliminate infrastructural bottlenecks, going for FTA and PTA,
rationalize tariff rules, and attract FDI by easing the business environment of the country.

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 Chapter 5: Conclusion and Recommendation

Graduating to a higher level of development is the dream of all LDCs in the world. Bangladesh
is no exception. In fact, the government of Bangladesh has diligently been preparing the people
to embrace the country’s new status. However, the country will require continued economic,
technical and technological support from partners for some time in the near future. As the
largest LDC in terms of the size of economy, Bangladesh is likely to face challenges compared
to other LDCs in the past. To avoid middle income trap, it must become self-reliant and
diversify the economy. Bangladesh must learn to be independent, reducing its dependency on
foreign aid. Sooner or later, it is bound to experience tough competition in exports and must
follow a stricter IP regime. However, Bangladesh will need some policy space as it prepares
itself to tackle these challenges on its own. It can hope that the international community,
particularly the WTO membership, would realize this necessity and support the extension of
LDC-specific ISMs to Bangladesh and to other graduated LDCs for some time, as proposed in
the submission.

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 References

Reference list

Byron, R.K., Ak and Jahid, a M. (2021). Bangladesh joins New Dev Bank. [online] The Daily
Star. Available at: https://www.thedailystar.net/business/economy/banks/news/bangladesh-
joins-new-dev-bank-2184341 [Accessed 3 Jan. 2022].

Daily Star (2022). Graduation from ldc: Framing a strategy for smooth shift. [online] The
Daily Star. Available at: https://www.thedailystar.net/news/bangladesh/news/graduation-ldc-
framing-strategy-smooth-shift-2930906 [Accessed 3 Jan. 2022].

Irfanullah (2021). Using our climate funds right. [online] The Daily Star. Available at:
https://www.thedailystar.net/views/opinion/news/using-our-climate-funds-right-2169201
[Accessed 3 Jan. 2022].

Kashem, A. (2021). LDC Group lobbies for trade facilities for 12 years post-graduation.
[online] The Business Standard. Available at: https://www.tbsnews.net/dropped/trade/ldc-
group-lobbies-trade-facilities-12-years-post-graduation-314641 [Accessed 3 Jan. 2022].

kashem, A. (2021). Bangladesh decides to join largest trade bloc. [online] The Business
Standard. Available at: https://www.tbsnews.net/economy/bangladesh-decides-join-largest-
trade-bloc-299347.

Mirdha, R.U. (2020). Bangladesh signs trade deal with Bhutan today. [online] The Daily
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Mirdha, R.U. (2021). Govt goes all out to sign FTAs. [online] The Daily Star. Available at:
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Mustafa Kamal, A. (2021). Bangladesh Towards a Resilient Future Protecting Lives And
Livelihoods A H M Mustafa Kamal FCA, MP Minister Ministry of Finance Government of
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https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/b29661b6_927f_401
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Mustafizur, R. (2020). TRIPS extension: A window of opportunity for Bangladesh. [online]

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Planning Commission (2020). 8th FYP. [online] http. Available at:

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The Financial Express (2021a). Bangladesh’s FTA with Singapore: A stepping stone towards
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The Financial Express (2021b). Dhaka to start negotiations with Colombo to sign PTA.
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