Look beyond dev figures for LDC graduation: CPD

Staff Correspondent

5 March, 2021 12:00 AM printer

Bangladesh has to look beyond average development indicators in light of SDGs and its long-term vision for smooth and sustainable LDC graduation with momentum, the Centre for Policy Dialogue (CPD) said on Thursday.  

“Inequalities lie in average development indicators. So, the country has to go beyond the average development figures for sake of inclusive and sustainable graduation from LDC group,” CPD’s Distinguished Fellow Prof Mustafizur Rahman said at a discussion.

The independent think tank held a discussion on ‘Moving out from the LDC group: Strategies for graduation with momentum’ in a bid to put forward a set of suggestions to facilitate Bangladesh’s formal exit from LDC group in 2026.

Graduation criteria like HAI and EVI and associated sub-indices do not include many key elements of competitiveness which will be required for sustainable graduation, Prof Rahman said.

“For example, it includes literacy rate and school enrolment but does not include structural impediments like human resource quality and skills level of the labour force,” he explained. 

CPD said impacts of LDC graduation will be felt in four areas. Market access one-sided dealings with trade partners and policy freedom will shrink while the government has to strictly address compliance issues.  

Citing WTO secretariat estimates, it said almost 90 per cent of all export losses of 12 graduating LDCs will be on account of Bangladesh.

Bangladesh's export loss may equivalent to about 14.3 per cent of its global export as its 70 per cent exports enjoy the market privilege. 

A transition from preferential market access-driven competitive strengths to productivity and skills-driven competitive strengths will be required for being competitive after graduation, CPD suggests.

The graduation will end the era of non-reciprocal trade dealings with external partners and Bangladesh has to increase its negotiation capacity to retain or get more trade benefits.

Local exporters can raise their price competitiveness through a reduction in the cost of production where the government can help with the exchange rate and improving the business climate.

Prof Mustafizur Rahman said Bangladesh has to go for economic partnership agreement, bilaterally or as a group, with some countries like Canada, China, India and Japan.

He gave the example of Samoa that managed to get preferential trade facilities from China after LDC graduation.

Besides, the government has to play a very proactive role in the upcoming inter-ministerial meeting of WTO to retain some trade benefits, especially for the continuation of TRIPS for the local pharmaceutical industry, export credit subsidy.

“Bangladesh has to give a fight in November’s WTO’s minister-level meeting in Geneva to create a package for the LDC graduating countries,” Prof Rahman pointed out.

State Minister for Foreign Affairs Shahriar Alam said the UN CDP’s recommendation for LDC graduation is an outcome of government efforts for many years. He said the present government has heavily invested in human development.

He added that the country’s competitiveness will increase once the ongoing mega projects are complete.

The government has given utmost priority to market, industry and export diversification, improving technology, skills and infrastructure, he said, adding that the 8th five-year plan has also set specific strategies for LDC graduation.

Noted economist Prof Rehman Sobhan repented that the issues of diversification, improving technology and skills are on the discussion table for the last 15 years but little has been done to address those.

He also repented that the Active Pharmaceutical Ingredient (API) project has been limping for over 12 years, which is not a good sign for the thriving pharmaceutical industry.

Apparel sector leaders like former BTMA president Matin Chowdhury and BGMEA president Rubana Huq called for generously allowing FDI in the apparel sector to pull in investment in man-made fibre making textile industries.

Rubana also called for carrying out an international campaign so that Bangladeshi apparels are not treated as very cheap clothes and their price increase globally.

Standard Chartered Bank CEO Naser Ezaz suggested that structures of incentives should be changed as the apparel buyers consider these while negotiating apparel price with local suppliers.

The Country Director of the International Labour Organization (ILO) emphasized improving education quality and skills of local youth for capitalizing on the demographic dividend.

He also stressed firing up EPZs and special economic zones alongside expanding social protection to offset the graduation shocks.

Lawmaker Kazi Nabil Ahmed observed that Bangladesh’s growth is to a large extent inclusive as its development was not resource led.

He also suggested opening up FDI and aligning LDC graduation challenges with SDGs implementation process.