Dr Anu Mahmud :
Bangladesh entered the graduation process of earning the official title of ‘developing country’ from a ‘least developed country (LDC)’ country. Information posted on the UN website said Bangladesh, which has been on the UN Least Developing Countries (LDC) list since 1975, met the requirements to enter the graduation process of being a developing country in March, 2018.
The final graduation and the eventual earning of the title of ‘developing country’ depend on meeting eligibility criteria scores in Gross National Income (GNI) per capita, the Human Assets Index (HAI) and the Economic Vulnerability index (EVI) and other country-specified information.
The scores required for graduation from the LDC category are, a per capita GNI of US$ 1.230 or above, an HVI of 66 or above and an EVI of 32 or below. Bangladesh’s current GNI per capita is US$ 1,724, HAI is US$ 72 and EVI US$ 25.2.
‘This has been made possible by the strong development strategy of Bangladesh, led by Prime Minister Sheikh Hasina,’ said Masud Bin Momen, permanent representative at UN while receiving the official letter. We are moving forward towards peace, prosperity and development following our motto: nobody lags behind. Digital Bangladesh is not only a slogan for us, but our people are getting its benefit. Bangladesh is trying to gain the status of developed country by 2041.
The UN Committee for Developing Policy (CDP) secretariat chief, Ronald Moiierus, said- the increase of GNI and development of social sectors, including health and education, has made it easier for the committee to recommend Bangladesh’s graduation.
High Representative for Least Developed, Landlocked, Small Island States, Fekitamoeloa Katoa Utoikamanu, said, Bangladesh had created a strong foundation for developing and poverty reduction.
Noted economist Mirza Azizul Islam said Bangladesh was considered for graduation because it had passed the threshold in HAI and EVI. The third threshold is expected to be conquered by the time of time of the 2024 review, he strongly believes and mentioned, so, we have to adopt a strategy for smooth graduation during this period. And all, including government, private sector and civil society, have important roles in this respect. He suggested product and market diversification, and increasing regional cooperation for market access. But there are challenges, citing the end of preferential market access for Bangladesh’s products and increased cost of foreign loans as examples.
At present, Bangladesh enjoys preferential access of varying degrees to markets of more than 40 countries. The country’s exports will face an additional 6.7 per cent tariff once it graduates from the LDC status. Export may fall by 5.5 to 7.5 per cent as a result of withdrawal of preferential access, as per projection made by the think-tank, Center for Policy Dialogue (CPD).
About overcoming that challenge, Mirza Azizul said, time has come for Bangladesh to selectively venture into bilateral and regional trade and investment agreements, keeping the development of supply and value chains in the purview. Because, once Bangladesh graduates, there will be no going back.
Former Bangladesh Bank Governor Dr Atiur Rahman termed the recognition a unique milestone for the country as it has met all the three criteria, unlike other nations which are also in the queue to graduate from the LDC status. The amazing transformation of Bangladesh in the area of economy and the socio-economic dimensions is simply mind-boggling. My own interpretation of this transformation boils down to the fact that it has been possible due to the aspirations of inclusive development we all shared in 1971. He also stressed the need for ensuring good governance and technological transformation to sustain the growth momentum to complete the graduation into a developing country within the next six years. We will have to be focused on good governance and technological transformation in the coming days. Bangladesh has reached a new height through attaining the graduation criteria. Let’s try to make the progress sustainable. We hope that Bangladesh will continue to grow into a developed country mainly because of its strong base of inclusive economy and society.
Zahid Bakht, Chairman of Agrani Bank, said Bangladesh has been moving forward despite many drawbacks. So we should focus on sustaining the growth. Once the country gets out of the LDC bloc in 2024, it will lose access to some trade privileges and foreign aids. The government must strengthen domestic economy and socio-economic development. We have already proven our capacity in RMG exports to the US without the GSP facility. There are some challenges in other markets. The authorities should ensure equity in society as the development funds are expected to be shifted to the African countries.
Earlier in 2016, Bangladesh’s status was upgraded from low-income country (LDC) to lower-middle income country (LMIC) as per the World Bank’s classification.
Finance Minister A M A Muhith warned all of some impending challenges, including losing concessional loan facility and increase in debt as the country has earned eligibility, preliminary, for graduating to a middle-income country. From now on loan will be available, everything will be debt. When we take debt, we have to be careful, so that we do not sink into quicksand. We have to change our mentality. The facilities we avail from various sources have to sacrifice. We have to keep in mind that we are no longer a least developed country. These will have to be reflected in outlook and policies of the country. We have already started taking steps in this regard. We are taking scale-up facility (high interest loan) from Japan during the last couple of years as part of our adjustment process. We will enjoy equal benefits that the other countries get as developing nations. So, it is not correct that we will be deprived of facilities. We will feel a psychological boost that we are no longer beggar. We are globally known as a poor country. I am the worst sufferer of the stigma, as I have to go from door to door for money. But the situation is now totally reverse. Personally I feel proud. We are deliberately taking scale-up facility of World Bank to show that we can achieve. We were at the lower end, but now have claimed up. We will go further up.
The government deserves credit for taking steps to better the country’s prospects to graduate from the least developed countries’ category within the foreseeable future. The main challenges lie in addressing income criteria, HAI and EVI. What we need to remember is that a LDC must meet at least two of these three criteria to remain on track. Hence, it is up to the government to smoothen the journey by keeping focus on reducing the percentage of undernourished population if we want to meet the HAI index. Similarly, extra emphasis needs to be put on rehabilitation efforts for the homeless in an age of climate-induced natural disasters – a scenario that is not new to this country. Policymakers will have to come up with ways to increase agro-production in a country where increasingly, farmlands are being grabbed and turned into industry and real estate.
We have to remember that once we graduate from LDC, the country will not continue to enjoy certain priviledges that only LDCs enjoy, particularly the low interest rate credit available from major multilateral financial institutions like the World Bank and ADB. In that case Bangladesh may not be getting preferential access to the major export destinations. Indeed, according to the government’s own estimates, Bangladesh is likely to lose around US$ 2.7 billion in export earnings once it is no longer a LDC. These are serious issues that will have to be addressed so that the economy and the people can adjust to the likely upshots when we graduate in 2024.
That is why the news of fulfilling the criteria in per capita income, human resources development as well as economic vulnerability is certainly celebratory, but this should not make the economic policy makers in Bangladesh complacent in any way.
There is a general perception among the people here is that Bangladesh could have performed even better it it could maintain political stability and overcome the all-pervasive corruption. There is truth in this and politicians ought to be mindful about it and work for achieving the much-needed peace and fight corruption by showing zero tolerance. The mindset that malfeasance in the functioning of the government can be tolerated at certain levels is wrong. Still, perilously misleading is terming bribe as ‘speed money’ and the state should be okey with it.
Not at all, for balanced economic development, it is fundamentally necessary to ensure equitable distribution of wealth in society, not allowing some people to become filthy rich encouraging corruption in society at a ‘tolerable’ limit. Apart from these, economic policy makers also need to work hard for expanding local as well as foreign direct investment to make Bangladesh’s economy more vibrant and fruitful.
For investment, it is as much necessary to overcome the country’s notoriously slothful bureaucracy as it is to develop the vital infrastructure for spurting economic activities. Moreover, there is also the crucial need to keep thriving sectors such as the RMG, manpower as well as agriculture. Bangladesh has overcome its economic frustration; now it is time to consolidate its economic base to secure the future of its coming generation.
Notably, Bangladesh continues to march forward to fulfill the dream of the Father of the Nation, Bagabandhu Sheikh Mujibur Rahman, for building the poverty and hunger-free ‘Sonar Bangla’. It is empowered by the ‘mantra’ of inclusive development that was shared as a common source of aspiration during the Liberation War in 1972. As a result, Bangladesh has been witnessing socio-economic progress and, in recognition of the advancement, it achieved the status of a lower-middle income country in 2016.
It is worth mentioning here that the country has been witnessing notable progress in communications, power and ICT sectors. It has been going through a major transformation in addressing poverty, under-nutrition and women empowerment. The healthcare sector is advancing fast. The result of these development endeavours must reach the grass-root levels in society to accelerate the growth pace. Economists have identified good governance and adoption of the time-befitting technology to sustain this growth momentum.
It has been learnt that the premier has directed the authorities concerned to identify the challenges and find optimum ways out for ensuring sustainable economic growth for graduation to the higher economic status. This is how Bangladesh will achieve its goal to be a developing country in time.
For the millions of people who make Bangladesh, this rise in status is a vindication of their relentless effort in agriculture, maternal health, literacy, natural disaster tackling, sport and entrepreneurship. Bangladesh, which once had a rickety economy with high inflation plus acute unemployment, is now an example for others with a steady GDP vacillating between 6 and 7 per cent.
In addition, remarkable strides have been made in reducing maternal deaths, improving education and literacy rate with the Digital Bangladesh motto now reaching remote parts of he country. While the rise in position is hope including. Bangladesh will still enjoy preferential export facility as an LDC, country until the UN gives the formal recognition as a developing nation in 2024. As a member of the developing nation club, we will then have to pay an added 6.7 per cent tariff in exports.
This loss of a special facility will actually be a blessing in disguise because Bangladesh will then reach out to new far away markets. Export diversification can only come when there is competition. Today there is a thriving for local industry manufacturing motor cycles, industrial machines, ships, electronic home appliances and phones. These items are already world class with many local companies showcasing their products as far as Africa.
For this country to reach the developed country position, overseas markets need to be explored with the setting up of more Export Processing Zones to attract foreign investment. Foreign Direct Investment is still not satisfactory since there is a perception outside of a volatile political scenario. Therefore, the more we tilt towards accountable democratic governance, more investors will feel interested to come here to vest to boost of our economy.
(Anu Mahmud : Economic analyst, Researchers and Columnist, can be reach at [email protected])
