Highlights:
- Business groups urge 3–5 year delay in LDC graduation
- Graduation planned for November 2026 after meeting UN criteria
- Export tariffs may rise, risking 6–14% export decline
- Loss of LDC benefits threatens pharma patents, apparel industry
- Concessional loans replaced with costlier market-based borrowing post-graduation
- Leaders stress export diversification, collective action for smooth transition
Bangladesh’s leading business groups on Sunday urged the government to seek a three to five year delay in the country’s planned graduation from the United Nations’ list of Least Developed Countries (LDCs), warning that a premature transition could hurt exports, raise borrowing costs and strain key industries.
“Our entrepreneurs and business chambers strongly support graduation. However, we stress the need for a 3–5 year extension,” said Md Mahbubur Rahman, president of ICC Bangladesh, in a written statement at a joint press briefing on “LDC Graduation: Challenges Ahead” held in Dhaka.
Keep updated, follow The Business Standard’s Google news channelBangladesh is due to graduate in November 2026 after meeting all three UN criteria — Gross National Income, Human Assets Index and Economic Vulnerability Index — through two consecutive reviews. Business leaders described the milestone as a “matter of national pride” but cautioned that the transition must be carefully managed.
Tariff and trade risks
Rahman warned that the loss of preferential trade terms could hit exports hard. “EU, UK, and other key export destinations may impose tariffs of up to 12%, risking a 6–14% drop in exports unless Bangladesh secures GSP+ or free trade agreements,” he said.
The ready-made garment (RMG) industry, which makes up more than 81% of Bangladesh’s export earnings, would be particularly exposed due to stricter Rules of Origin requirements, higher compliance costs and rising competition. Business chambers said diversification into sectors such as pharmaceuticals, IT, leather, agro-processing and light engineering would be crucial to reduce overdependence on garments.
End of concessional finance and WTO exemptions
Business leaders also warned that the shift will affect financing and multilateral trade privileges. “Concessional loans will be replaced by market-based borrowing, raising debt-servicing pressures. Consequently, Bangladesh will lose access to International Development Association (IDA) soft loan facilities from the World Bank,” Rahman said.
They noted that Bangladesh would also lose special World Trade Organization (WTO) benefits, including export subsidies and relaxed patent rules under the TRIPS agreement.
Pharmaceutical industry at risk
The pharmaceutical sector, which supplies 98% of domestic demand and exports to more than 150 countries, relies on a TRIPS waiver that currently allows generic production of patented medicines until 2033, or until graduation. Business leaders said that without an extension, the industry could lose competitiveness and patients could face sharply higher drug prices.
“Blockbuster medicines such as those for cancer and viral infections could skyrocket in cost,” Rahman said. Monthly treatment with the cancer drug Imatinib could rise from $30–40 to $2,000–3,000, while HIV antiretrovirals could climb from $100–150 annually to as much as $10,000–12,000. Biotech drugs such as Trastuzumab could also rise more than tenfold, he added.
Wider economic pressures
Speakers at the briefing said Bangladesh faces additional headwinds, including rising external debt, a depreciating currency and energy shortages.
The taka has weakened about 45% since 2021, raising import costs and inflation. Net foreign direct investment fell 13% in 2024 to $1.27 billion, far below Vietnam’s $38 billion. Distressed loans reached Tk 7.56 trillion, reflecting stress in the financial sector.
“Financial sector fragility could severely restrict credit flow, stifle business growth, and undermine investor confidence,” the organisers said.
Frequent power cuts, gas shortages and rising energy costs are disrupting industrial production, while congested roads, customs delays and port bottlenecks have pushed logistics costs to about 16% of GDP, well above the global average.
Comparisons and lessons
Business leaders said Bangladesh could draw lessons from other LDCs. Botswana’s graduation in 1994 was cushioned by diamond revenues and strong institutions, while Maldives and Vanuatu faced shocks due to dependence on tourism and climate vulnerability. Bhutan, which graduated in 2023, focused on hydropower and regional trade to ensure stability.
They noted that several countries, including Vanuatu, Nepal and the Solomon Islands, secured extensions to delay graduation in order to strengthen their economies.
Call for an extension
A total of 15 associations, including 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) and the Foreign Investors’ Chamber of Commerce and Industry (FICCI), joined the call for a delay.
They urged the government to use any additional time to negotiate trade deals, strengthen infrastructure, diversify exports, and build climate resilience.
“The debate is not if we graduate, but how we graduate,” the organisers said in a joint statement. “Graduation is certain. Success is not guaranteed. It depends on how urgently and collectively we act.”
