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Rising in developing countries

Bangladesh has qualified for the transition from a least developed country or LDC to a developing country. In order to cross the least developed countries, certain conditions have to be fulfilled. These are per capita income, human resources and economic and climate fragility.

 In their first round of review in 2016, the UN Committee for Development Policy (CDP) stated that Bangladesh has qualified for the exit from the LDC. To get out of the LDC, the CDP has to get recognition in two consecutive triennial reviews. Accordingly, on 28 February this year, the CDP reviewed their latest triennial and made a final recommendation to Bangladesh to move out of the LDCs. Bangladesh is considered worthy of all the three criteria. This is undoubtedly a milestone in the development process of Bangladesh.

After independence, it took a lot of ups and downs to reach today's position from a war-torn country. Bangladesh has consistently performed well in many indicators of the economy. Poverty, infant and maternal mortality have declined significantly. It has also made great strides in the empowerment of women. Although there are questions about quality, there has been considerable improvement in education. Bangladesh has consistently done well in many more such indices. Today's Bangladesh is in this place of transition from LDC in its continuity. The passage will brighten the image of the country. Opportunities will be created to attract investment on a large scale.

With the abolition of the Multi-Fiber Agreement in 2005, it was thought that our garment industry would be threatened. But it did not happen. Bangladesh has the signature to overcome such a crisis. Even in Corona, our economy has been able to recover more easily than other countries in the world. However, the challenges of transitioning from LDCs are different. This transition can be a stepping stone to increasing their own abilities.

The flow of foreign development assistance (ODA) is not likely to decrease significantly after the transition to developing countries. Since 2015, Bangladesh has been paying slightly higher interest rates for concessional loans than in the past, which in some cases is only 1-2 percent. This, of course, is not due to the transition from LDCs, but to the promotion of low-income countries to low-middle-income countries as defined by the World Bank. However, Bangladesh has to pay a much higher interest rate for raising loans from domestic sources.

Five years will be available for transit preparation till 2026. This time is very important. Covid came and changed the whole world. World trade was slow before the epidemic.

The government has so far announced 23 incentive packages to tackle the corona crisis, which is commendable. While large industries have benefited from this incentive, it is not yet known to what extent its benefits have benefited the severely affected people. Although Bangladesh has significantly reduced the poverty rate in the past decades, it has increased again in recent times due to the corona. Despite success in poverty alleviation, income inequality continues to rise. According to analysts, income inequality has increased by 10 to 16 percent in the last 10 years. Despite the high growth in Bangladesh, few people have benefited from it.

Development does not just mean GDP growth. We have to move forward with everyone in the path of development. Disadvantaged people need to be brought out of misery as soon as possible through development activities. Income inequality must be reduced. Internal resources need to be greatly increased by increasing the tax net through necessary structural reforms, although the contribution of taxes to Bangladesh's GDP is very small (about 10 percent). Ensure civil rights, institutional development, transparency, accountability and good governance. Now we have to prepare for capacity building keeping in mind the various international, regional and domestic regulators.

Transition strategy

The government has formed a national task force in 2016 to implement the roadmap for the passage of the LDC. Steps need to be taken to build capacity in a coordinated manner under the leadership of this preparatory task force. The government has a specific action plan, monitoring and evaluation framework for the implementation of the SDGs. Similarly, a well-coordinated action plan for the five years of this preparation can be formulated and appropriate implementation steps can be taken accordingly. In this way, the concerned institutions and the designated organs of the government will be responsible. BBS should be used to formulate appropriate policy framework through data and researched analysis. The Planning Commission and all concerned government and non-government stakeholders must come forward for speedy implementation. The transition action plan needs to be integrated with other national development plans, including the Eighth Five-Year Plan, the Perspective Plan, the SDG Plan.

Adopt strategic approach to reduce export risk

Adopt strategic approach to reduce export risk

If Bangladesh is included in the list of developing countries, it will have a negative impact on the export of goods to the top markets. This is because 80 per cent of Bangladesh's total exports are currently in the top 12 markets under trade facilitation. Studies have shown that if export risks are managed, the impact of this transition will be limited. For that, all the significant trading partners will have to negotiate with the country and take advantage of it.

Bangladesh has recently signed trade agreements with Bhutan and is negotiating free trade agreements with about 11 other countries. We have to be very careful about the trade agreement. Separate strategies can be adopted for economies such as China, the United States, India, the European Union, the United Kingdom, Canada, and Japan to ensure trade facilitation. The highest priority should be given to how we can extend existing trade facilities in the European Union even after the transition from LDCs. In the United Kingdom, Canada, Japan, and Australia, trade must be facilitated for at least three years after transit. Periodic increase in tariffs can be discussed without increasing tariffs all at once.

China has facilitated trade with the Polynesian island of Samoa even after it withdrew from the LDC. Following Article 12 of the SAFTA agreement, the Maldives has secured trade benefits from India. Using these two examples, there is still room for trade in post-transit India and China. It should not be missed. It should be noted that each country will look after their geopolitical and geo-economic interests. We therefore need to place more emphasis on trade negotiations. In this case, the missions stationed abroad should also be made efficient.

Bangladesh now provides about ০০ 500 million in cash as export subsidies. Once out of the LDC, it will not be possible to provide export subsidies as per WTO rules. Therefore, we need to use the experience of other countries on how to provide assistance to export-oriented entrepreneurs through a system that is in line with WTO regulations.

We are still dependent on the export of readymade garments. In this case, we still do not export high value added products. One of the reasons behind this is lack of skills. This deficiency exists in almost all industries. As a result, attempts to diversify exports have repeatedly stumbled. Working to increase sector-wise manpower efficiency can therefore be an effective strategy for export expansion and diversification. In this case, the efficiency must be increased in line with the Fourth Industrial Revolution and the changing market demand.

Apart from garment industry, special attention should be paid to leather and leather products, jute, light engineering etc. There is an opportunity for export earnings by exporting high value added products in leather and leather products. Apart from this, the country's pharmaceutical industry has now achieved significant growth in the export sector by meeting the demand of the country. Even if Bangladesh leaves the Least Developed Countries (LDCs), urgent steps will have to be taken to ensure that the WTO, like other LDCs, is exempted from the obligation to comply with the WTO Trade Agreement (TRIPS) by 2033. At the same time, we need to increase the institutional and manpower skills of intellectual property.

Investment friendly environment and capacity building

Sector-based strategies can also be used to attract foreign investment. In this case, let me remind you of the example of Vietnam. Even a decade ago today, Vietnam did not get such a reputation as a smartphone maker. Vietnam is currently the world's second largest smartphone exporter. Vietnam produces 40 percent of Samsung's global mobile phones, and Vietnam accounts for about 35 percent of the company's global workforce. Vietnam's stable investment situation, abundance of cheap manpower, geographical proximity with importing partner countries, etc. are seen as the driving force behind Vietnam's success.

Samsung's largest smartphone factory is now in Vietnam. There are many more ancillary institutions including research, development activities. Vietnam's own manpower has benefited from Samsung's presence. Besides Samsung, there are also LG, Canon, Panasonic and contract manufacturers Foxconn and Jabil.

In addition, companies such as Microsoft and Intel now exist in Vietnam. Tax rebates and other incentives have played a significant role in attracting foreign investment to help these companies expand their business in Vietnam. Attracting famous multinational companies will increase the efficiency of our manpower and at the same time accelerate the technology transfer activities. In addition, the possibility of adding new products to the global value chain through multinational companies will also be unveiled.

Bangladesh has recently undertaken several reforms to attract foreign investment. We need to carry out more comprehensive reforms centering on the economic zones of our country. We need to improve our position in Easy Business Index or Ease of Doing Business. Corporate tax rate in Bangladesh is higher than other competing countries. There are infrastructural weaknesses. All in all, the tax structure needs to be restructured and the infrastructure needs to be improved keeping in mind the overall investment situation. We have to create business friendly situation, reduce business expenses. In formulating effective strategies in transition, it must ensure that institutional development and manpower productivity and efficiency increase and that we can acquire appropriate capabilities in the use of new information technology.

The international community is increasingly emphasizing a work-friendly work environment. The risks of global climate change are huge. With the pressure of environmentally friendly industrialization. Inclusive development will be possible only when everyone from low-income workers to the underprivileged gets the benefits of development. Considering the overall situation, our strategy in this transition should be to actively pursue discussions to ensure trade facilitation, institutional development, increase manpower skills and capacity, and strive for environment and worker-friendly industrialization. Our strength in the run-up to the preparations will determine how strongly we emerge as a developing country. Of course, this requires innovative and strategic steps during the transition and its successful implementation.

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