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Bangladesh must respond to the graduation

Published : Wednesday, 1 December, 2021 at 12:00 AM  Count : 669

Bangladesh must respond to the graduation

Bangladesh must respond to the graduation

The United Nations General Assembly (UNGA) on November 24, 2021, adopted a historic resolution, at its 76th session, to graduate Bangladesh, the Lao People's Democratic Republic and Nepal, from the least developed country (LDC) category to the developing country grouping, a major milestone demonstrating the countries' significant development progress.

Bangladesh, Laos and Nepal are now scheduled to officially become developing countries in five years, instead of three, to prepare for the transition due to the impact of the Covid-19 on its economy. With then approval for the graduation of Bangladesh, the ruling party leaders and the government ministers are upbeat while the traders are wary of future business challenges to be faced by the country as the graduation is likely to stop generalized system of preferences (GSP) for Bangladesh products. This means Bangladesh exporters would pay more taxes to sell products to the global markets and will have to pay more in procuring essentials from abroad.

However, optimists say that Bangladesh would be able to face challenges with its improved and quality products, but the traders are little depressed apprehending future challenges. The optimists section of the nation, feel the graduation as a matter of great honour and recognition of the world community to the toil of Bangladeshi traders, manufacturers and the people, who laboured for decades to salvage the country from the basket case to economic prosperity. The incumbent government has trumpeted it as a great, success it has initiated the process years back to make Bangladesh a rich country by 2041 through phases. Economists and experts however, have reiterated their advices to the stakeholders to take concrete preparation to take the future challenges as developing country.

After the approval achieved by the aforesaid three countries, there are 43 more LDCs still struggling to upgrade their positions,  according to the UN Committee for Development Policy (CDP). The CDP is a subsidiary body of the United Nations Economic and Social Council (ECOSOC). The task of the CDP is to provide independent advice to the Council on development policy issues. The Committee is also responsible for deciding which countries can be considered least developed countries (LDCs).

In South Asia, Afghanistan and Bhutan are yet to be graduated from the LDC category, while Maldives was graduated in 2011 and India, Pakistan and Sri Lanka were never listed as the LDCs by the CDP. Besides Maldives, four other countries have been upgraded between 1994 and 2017 and the countries are Botswana (1994), Cape Verde (2007), Samoa (2014) and Equatorial Guinea (2017). Bangladesh's neighbor Myanmar still has been a LDC.

The three criteria (human assets, economic vulnerability and gross national income per capita) are assessed by the CDP every three years. Countries must meet two of the three criteria at two consecutive triennial reviews to be considered for graduation.

According to the United Nations, LDCs are low-income countries facing severe structural setbacks to sustainable development. LDCs have low levels of human assets and are highly vulnerable to economic and environmental shocks. Every three years, the CDP reviews the list of LDCs and assesses the three criteria: human assets, economic vulnerability, and gross national income per capita.

Developing countries are, in general, countries that have not achieved a significant degree of industrialization relative to their populations, and have, in most cases, a medium to low standard of living. There is an association between low income and high population growth. A developing country is a sovereign state with a less developed industrial base and a low Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreement on which countries fit this category.

Following the approval by the UNGA, a UN statement said: "The three countries will graduate from the LDC category after an exceptionally extended preparatory period of five years (the standard period is of three years) to enable them to prepare for graduation while planning for a post-COVID-19 recovery and implementing policies and strategies to reverse the economic and social damage incurred by the COVID-19 shock."

When LDCs meet certain criteria, they are reviewed by the CDP and may be recommended for "graduation" or leaving the LDC category. Graduation is an important milestone in a country's development. It also means the country will no longer have access to certain international support measures that are exclusive to LDCs. It is therefore important to understand the consequences of graduation and prepare accordingly, by developing and implementing smooth transition strategies.

Various UN entities provide specific support to the graduation processes of LDCs, in the form of training, workshops, studies and support for the development of smooth transition strategies. The UN also provides background information and tailored analysis on graduation, disseminated through the Gradjet website.

Gradjet helps government officials in LDCs understand what it means to leave the LDC category and to plot a course for future action.  The site covers the countries closest to graduation or that have recently graduated. In 2018 Bangladesh met the criteria for graduation for the first time at a Triennial Review of the CDP. During triennial reviews from 2018-21 UNCTAD prepared vulnerability profile and UN Dep. of Economic and Social Affairs (UNDESA) prepared ex ante impact assessment. Bangladesh presented its view on graduation at the CDP expert group meeting preceding the second Triennial Review. Bangladesh may consider establishing a consultative mechanism, starting preparations for a smooth transition.

Bangladesh, Lao and Nepal were recommended for graduation having met all three graduation thresholds. Ahead of the Twelfth WTO (World Trade Organisation) Ministerial Conference, Chad, held on October 18, 2021, on behalf of the LDC Group, submitted a communication to the WTO General Council on "A Smooth Transition Package in Favour of Members Graduating from the LDC Category." It proposes a package of support measures for graduated LDCs and that members granting unilateral trade preferences to LDCs extend and gradually phase out these preferences over a period of six to nine years.

According to the CDP, per capita income of $1,230 is one of the requirements for transitioning into a developing nation. According to Bangladesh Bureau of Statistics the per capita income in 147,570 sqkm Bangladesh with 167 million people has increased by $327 to $2,554 ($1 = Tk 86) as of November 4, 2921. Per capita income in 235,800 sqkm Laos of only 7.30  million people is expected to reach $1875 by the end of 2021, according to Trading Economics global macro models and analysts expectations. The per capita income in 147,516 sqkm Nepal of 29.15 million fell 3.33 per cent to $1,155 in 2020 and it is expected to cover up and advance further in 2022. However, Nepal possesses rich human assets and strong economic base that help her to win CDP approval for graduation.

In the wake of the graduation the government along with all the stakeholders will have to take strong preparations to face future challenges including trade, GSP, export and capacity building so that the graduation does not turn in to farce.
The writer is business editor,
The Daily Observer








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