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Experts and businesspeople emphasized the importance of focusing attention on product diversification, the use of cutting-edge technology, innovation, and bilateral partnerships with major export destinations to address the challenges that will arise as a result of Bangladesh’s graduation from the least-developed country (LDC) status.
They also suggested skill development, higher productivity, and design development to cope with the changing market behaviour efficiently.
With the graduation from the LDC in 2026, the Bangladeshi-made products may face a 10%-12% duty to enter its export destination, though the duty preference from the European Union market will stay up to 2029 as a grace period, they also said.
Experts were speaking at the plenary session titled “Bangladesh’s LDC Graduation-Impediments and Way Forward” at Dhaka Apparel Summit, a concurrent event of the ongoing week-long “Made in Bangladesh Week 2022” held at International Convention City Bashundhara on Wednesday.
Asif Ashraf, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) moderated the session.
At the plenary session, the prime minister’s principal secretary Dr Ahmad Kaikaus said that there are challenges after the post-graduation period but Bangladesh can overcome those.
“Of course, we have a lot of challenges but we have the capability to overcome them. We have the capacity for diversification. We need to grow institutional, technical expertise, advanced infrastructure and also need political stability to face the challenge,” he added.
It is a natural process to be a middle-income country with gradual progress, he added.
“Rising competitiveness, proactive role in regional, bilateral and global initiatives like Bay of Bengal Initiative and various comprehensive partnerships like ASIAN have largely contributed to the economic development,” he added.
He also said that Bangladesh should keep in touch with its trade partners even after a transition to a middle-income country for export facilities, he said noting that economic diplomacy should be strengthened to achieve the goal.
The local ready-made garment (RMG) industry has proved that the sector can grow and sustain without basic raw materials and tariff benefits, especially from the US, he added.
Sharifa Khan, secretary of the Economic Relations Division, said that though the LDC graduation period was set for 2024, Bangladesh got another three years of extension to 2026 to take preparation.
“We will ask other countries to urge WTO to continue providing GSP facilities for Bangladesh for the next six years,” she said.
She said the condition might be a little bit tough now but the country showed its resilience during many economic crises and the Covid-19 period.
In his speech, Bangladesh Ambassador to the Netherlands Riaz Hamidullah urged the industry to maintain four principles – dignity rights, shared prosperity rights, transparency and responsibility rights, and harmonious industrial relations.
“This is the key to becoming a middle-income country,” he said, adding that the EU green deal, circular economy and net zero world are going to transform the industry.
He also stressed the importance of technology, innovation and design to face the challenges.
BGMEA Director Asif Ibrahim said LDC graduation has challenges as the country loses duty benefits in major markets, especially in the EU.
“We enjoy duty-free access to 38 countries under GSP, including the UK and 27 EU countries,” he stated.
Bangladesh has to improve its overall capability of the economy, diversify, upgrade technology, develop skills and prioritize institutional strengthening, he added.
UNDP Country Economist Nazneen Ahmed stressed better planning to avoid the middle-income trap and hoped that Bangladesh would not fall in the middle-income trap as it had a strong manufacturing base.
She also said that productivity, competitiveness and manufacturing base were important for sustainable graduation.
H&M reveals big announcement
In the panel discussion, Ziaur Rahman, regional country manager for production at H&M for Bangladesh, Pakistan and Ethiopia, said Bangladesh is the safest among H&M’s 19 sourcing countries and they practice ethical sourcing.
He said that after becoming a developing nation, Bangladesh will lose its preferential market access and face a 10%-12% duty on its exports and also noted that 18%-20% of products that his company sources from Bangladesh would be affected by the duty imposition after graduation.
“However, we will be staying here,” he added, saying that they source 20% of its products from the country.
He also assured that if the wages of garment workers in Bangladesh go up, H&M would also pay increased prices for the products they sourced from the country.
He also suggested improving product diversity.
(DT)
