Major challenges ahead of Bangladesh's LDC graduation: ICCB editorial

Upon graduation, Bangladesh will gradually lose the duty-free and quota-free market access it currently enjoys in major destinations like the European Union, Canada and Australia.

For the readymade garment (RMG) industry—which accounts for over 80 per cent of export earnings—tariffs of 10-12 per cent could sharply reduce competitiveness, an editorial in the July-September 2025 issue of ICCB News Bulletin said.

Unless productivity improves and the country diversifies into new markets and higher-value apparel categories, its edge may weaken, it noted.

“Graduation will end concessional loans and grants, forcing Bangladesh to rely on costly commercial borrowing. With over $100 billion in external debt, rising global interest rates could strain repayment capacity. Stronger debt management, higher reserves, and export diversification are crucial to maintain fiscal discipline and ensure long-term macroeconomic stability,” said the editorial.

Global trade trends compound this challenge. Rising protectionism, complex supply-chain standards and non-tariff barriers such as carbon border taxes and due-diligence laws threaten traditional export models. As the global apparel market increasingly prioritises sustainability, traceability and labour compliance, Bangladesh must reposition itself as a responsible and innovative manufacturing hub, suggests the editorial.

At the same time, weaknesses in education, healthcare, and social protection must be addressed to ensure inclusive growth. A post-LDC Bangladesh cannot afford to leave its human capital behind. Skill development, vocational training, and greater female participation in the workforce will determine how equitably prosperity is shared.

Graduation also presents an opportunity to diversify beyond garments into IT, pharmaceuticals, leather agro-processing, service sector and shipbuilding—sectors critical for long-term competitiveness, it observed.

The privileges of the past will fade and the discipline of the future will demand more reform, more innovation and greater resilience, the editorial added.

ALCHEMPro News Desk (DS)