Bangladesh is set to graduate from Least Developed Country (LDC) status in November 2026, a milestone reflecting progress in income, human assets, and economic resilience. However, business leaders urge a delay of three to five years, citing risks from losing duty-free trade benefits, WTO privileges, and concessional loans. The most vulnerable sectors are pharmaceuticals—facing steep rises in drug costs—and the RMG industry, which contributes over 80% of exports. While graduation may attract foreign investment and expand borrowing capacity, experts argue that postponement offers limited advantages. Bangladesh must instead prioritize competitiveness, productivity, and technology to ensure sustainable development.
The International Chamber of Commerce (ICC) Bangladesh, along with FBCCI, DCCI, MCCI, BGMEA, BKMEA, BTMA, and other trade groups, organized a conference on “LDC Graduation: Challenges Ahead.” Business leaders urged the government to extend the graduation timeline from Least Developed Country (LDC) status by three to five years. They argued that extra time is needed to manage the loss of duty-free trade, address challenges in the pharmaceutical and RMG sectors, and prepare for wider economic pressures.
Bangladesh is set to graduate from LDC status in November 2026 after fulfilling the UN criteria: per capita income, human assets index, and economic vulnerability index. While this is a national achievement, it comes with risks. After graduation, markets like the EU and UK may withdraw duty-free access, cutting exports by 6–14 percent. WTO privileges, such as export subsidies and TRIPS exemptions, will also end. In addition, concessional loans will be replaced with market-based borrowing, raising debt pressure.
The pharmaceutical industry, which meets 98 percent of local demand and exports to over 150 countries, is at risk. Losing TRIPS exemptions could increase drug prices sharply. For example, the cancer drug Imatinib may rise from USD 30–40 per month to USD 2,000–3,000. The RMG sector, which earns 81 percent of export revenue, also faces threats. Losing duty-free benefits, facing stricter compliance, and rising costs will challenge its global competitiveness.
Bangladesh’s graduation journey began in 2018. Originally planned for 2024, the deadline was extended to 2026 due to COVID-19. Business leaders are now lobbying for another extension. On August 24, 16 trade organizations requested a three- to five-year delay. However, the interim government has confirmed that the official graduation date remains November 24, 2026. A Smooth Transition Strategy (STS) Committee is already working on the process, and no delay has been planned.
Securing an extension from the UN will not be easy. Despite global competition and tariff pressures, Bangladesh has sustained nearly 4 percent economic growth, with exports and remittances rising. This makes it harder to justify postponement. According to UN rules, Bangladesh has a moral obligation to graduate once the criteria are met. Even if delay is possible, experts question whether it would be wise.
Graduation may bring new opportunities. It could increase borrowing capacity and attract foreign investment due to an improved economic image. While no formal steps have been taken to delay graduation, some insiders believe the UN’s Committee for Development Policy (CDP) might reconsider if Bangladesh makes a strong case. Yet, there are no signs of such a move at the policy level.
The final decision rests with the United Nations General Assembly, which approved Bangladesh’s graduation in 2021 after CDP recommendations. To seek a delay, Bangladesh would need strong justifications, proving it is unprepared for sustainable graduation. Some experts argue that faster graduation could help Bangladesh boost development capacity sooner. Delay may not offer lasting advantages, since the country must eventually build competitiveness.
Bangladesh’s focus should now be on building capacity, improving productivity, and advancing technology. Strong policies and action plans, supported by both domestic and international partners, are essential. The country has already overcome some trade challenges, such as counter-tariffs in the US market. If it can raise efficiency and competitiveness now, Bangladesh can not only manage graduation but also turn it into a success.
Writer:
Dr. Mihir Kumar Roy, Researcher, Economic Analyst, Professor and Former Dean, Faculty of Business Administration, City University, Dhaka. Mobile: 01700662932