Bangladesh now has three additional years to prepare for graduation from least developed country status after the United Nations General Assembly on 29 October extended its preparatory period until 24 November 2029.
The extension, however, comes with a clear expectation that the additional time will be used to address structural vulnerabilities through substantive domestic reforms and make graduation smooth, sustainable and irreversible. The Group of 77 and China, while introducing the resolution, also stressed that graduation should preserve development gains and that Bangladesh should make significant progress on domestic reforms during the extended period.
That makes the priorities for Bangladesh even clearer.
We should secure alternative market access to cushion the eventual loss of duty-free, quota-free privileges. The three additional years should not reduce the urgency of preparing for that loss.
We should take cues from other Asia-Pacific economies, such as Vietnam, which proactively leveraged regional trade pacts to integrate into global value chains.
Bangladesh should also align its domestic policies, intellectual property rights and labour laws with World Trade Organisation rules.
Nepal offers another relevant example. It is undertaking substantial trade reforms and strengthening regional infrastructure for its own graduation. Bangladesh must similarly design and implement a smooth transition strategy that includes substantial institutional reforms to ensure that the transition is sustainable and irreversible.
The additional three years should therefore be used to implement, rather than postpone, those reforms.
Over-reliance on the readymade garments sector is a critical vulnerability. To achieve meaningful structural transformation, Bangladesh has to channel investments into technology, innovation and productive capacity.
At the same time, the country needs a long-term strategy to upskill its workforce for specific, high-value global markets. This is necessary to diversify both the export base and overseas employment opportunities.
The challenge goes beyond trade.
With concessional development financing expected to shrink after graduation, urgent steps are required to boost domestic revenue mobilisation.
Bangladesh needs to enhance fiscal transparency, improve public debt-risk assessments and widen the tax net. These measures are imperative to insulate the economy from external shocks.
The deferment therefore gives Bangladesh additional preparation time, but it does not change the direction of reform required.
The country still needs alternative market access, substantial institutional reform, diversification beyond garments, greater investment in technology and productive capacity, a workforce prepared for high-value global markets and a stronger domestic revenue base.
The task now is to use the additional three years to make those changes so that, when Bangladesh graduates in 2029, the transition is sustainable and irreversible.
The author is Executive Director, Centre for Policy Dialogue.
