Bangladesh’s major trade bodies have called on the government to seek a three- to five-year postponement of the country’s graduation from Least Developed Country (LDC) status, warning that a hasty transition could jeopardise key sectors such as readymade garments and pharmaceuticals.

At a joint press conference titled ‘LDC Graduation: Challenges Ahead’, organised by the International Chamber of Commerce (ICC) Bangladesh alongside 15 leading trade bodies, business leaders said that while graduation was a matter of national pride, careful preparation was essential to safeguard exports, investment, and economic stability.

ICC Bangladesh President Md Mahbubur Rahman said that while businesses, trade bodies, and chambers strongly supported graduation, they emphasised the need for an extension of three to five years.

He said that Bangladesh was scheduled to graduate from LDC status in November 2026, having met the three UN criteria — Gross National Income, Human Assets Index, and Economic Vulnerability Index — through two consecutive reviews.

He described the milestone as a matter of national pride but stressed that the transition needed to be carefully managed.

Citing international examples, Mahbubur Rahman said that the Maldives had deferred its graduation by eight years, Botswana by 20 years, and that countries such as Vanuatu, Angola, Myanmar, and Bhutan had also postponed their transitions.

He suggested that Bangladesh could draw lessons from these cases to ensure a smoother graduation process.

Mahbub said that businesses were seeking more time to secure trade deals with the European Union, the United Kingdom, ASEAN, and Gulf countries to offset tariff shocks from the US.

He also highlighted that the economy faced multiple challenges, including external debt stress, financial strain, declining inflows of foreign direct investment, global trade tensions, climate pressures, electricity and gas constraints, logistics bottlenecks, local currency devaluation, and economic pressures following the July 2024 uprising, all of which needed to be addressed before graduation.

Mahbub warned that the loss of preferential trade terms could significantly impact exports, with the EU, UK, and other key markets potentially imposing tariffs of up to 12 per cent, which could result in a possible decline of 6 to 14 per cent in exports unless Bangladesh secured GSP+ or free trade agreements.

He said that the readymade garment sector would be particularly vulnerable due to stricter Rules of Origin, higher compliance costs, and rising competition.

Mahbub further emphasised the importance of diversifying beyond garments, noting that sectors such as pharmaceuticals, IT, leather, agro-processing, and light engineering would be crucial.

He also stated that the shift would affect financing and multilateral trade privileges, as concessional loans would be replaced by market-based borrowing, raising debt-servicing pressures.

ICC Bangladesh President pointed out that Bangladesh would also lose access to International Development Association soft loan facilities from the World Bank and special WTO benefits, including export subsidies and relaxed patent rules under the TRIPS agreement.

Regarding the pharmaceutical sector, which meets 98 per cent of domestic demand and exports to more than 150 countries, he explained that the industry currently relies on a TRIPS waiver allowing generic production of patented medicines until 2033 or until graduation.

Without an extension, he warned that the sector could lose competitiveness and drug prices for patients could rise significantly.

On questions about further discussions, Mahbub indicated that businesses would sit down again with the government on the matter, but that discussions with the Committee for Development Policy (CDP) were the government’s responsibility.

He added that businesses expected to be fully prepared within three to five years, in line with the timeframe previously discussed among trade groups.

Naser Ezaz Bijoy, CEO of Standard Chartered Bank, also said that while graduation was inevitable, its success would depend on how urgently and collectively the country prepared, and that a clear timeframe was necessary to execute the transition properly.

The trade bodies highlighted that a successful graduation would require focused attention on areas such as smart trade diplomacy, technological advancement, branding Bangladesh, reforms, ease of doing business, diversification, logistics, connectivity, exchange rate stability, and proper debt management.

Leaders from the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka Chamber of Commerce and Industry (DCCI), and the Foreign Investors’ Chamber of Commerce and Industry (FICCI), along with other major trade organisations, jointly called for the proposed delay.