Bangladesh needs to explore alternative global financing sources to tackle the looming challenges as it graduates from the Least Developing Country (LDC) in years, experts argued on Thursday.
They underlined the need for more investments to reduce the infrastructure gap and nurturing the youth population to harness the demographic dividend, which can accelerate the nation's journey towards an upper middle-income country.
They also stressed homework to manage the transition smoothly.
The views came at a session titled "LDC Transition: Turning Challenges into Opportunities" held on the sidelines of Bangladesh Development Forum at a city hotel.
Mashiur Rahman, economic affairs adviser to the Prime Minister, moderated the discussion that dwelt on the future challenges and possible opportunities as the country transitions to a middle-income country from an LDC.
Lead economist of the World Bank Zahid Hussain said that the history does not provide "comfortable scenario" as only five countries have so far graduated from the LDCs, four of which have population fewer than Dhaka.
Putting importance on two things-external finance and trade preferences at various forms, he said the country had not received foreign direct investment at the expected level and getting out of LDCs could affect the perception of investors because "it is a kind of certification that Bangladesh is a good investment destination."
"Beyond that if the fundamentals are not right you can't expect any monetary impact-either positive or negative," he said.
Citing various studies, Mr. Hussain said that some 5.5 to 7.5 per cent of exports will be imperiled in the post-LDC period.
If the last fiscal's exports performance is put into context, this means roughly $2.0-$4.0 billion of annual shipment is at risk, he estimated.
"But there is a hope because some non-LDCs are getting benefits of LDCs while some LDCs are not enjoying the benefits that are entitled," Mr Hussain said.
" … There are other factors working and we've to consider those," he said without elaborating.
Citing the example of Vietnam, Execute Director of Policy Research Institute, Bangladesh (PRI) Ahsan H. Mansur said it was an ASEAN (Association of Southeast Asian Nations) member and the regional grouping negotiated market access with its partners like the European Union (EU), Japan, China and India. On the top of that, as a country, Vietnam negotiates market access and signed 8 to 10 bilateral free trade agreements (FTAs) as well.
"We need to pay our attention to this kind of market access," he said.
Suggesting stronger internal domestic efficiency, he said despite enjoying no trade preferences, China became the number one of all types of products because of such strength. "We've to enhance our efficiency at every level, starting with the government and then the private sector and the society as a whole," he said.
Turning to the financing issue, the economist said economic resilience was certainly much stronger to secure credit from bilateral non-concessional and international capital market non-concessional sources.
"We can't be an exporter of finance to the rest of the world. We've to borrow from the rest of the world to finance our domestic requirements," he added.
Speaking on the occasion, Mr Rahman said that no one ever prepares full transition from the basket of LDCs. Problems would come on the way to graduate from a lower income country.
He said Bangladesh had the advantage of demographic dividend but the country needed to enhance its efficiency to meet the demand of the time.
"They (youths) have to be employed so that they can acquire efficiency and can update the efficiency more and more in the competitive world," he said.
He said many of the country's entrepreneurs started borrowing outside because of lower interest rate, while some of them asked settlement permission to invest abroad, indicating that the domestic market is no longer large for the capacity that the entrepreneurs have.
On the financial front, Mr. Rahman said it takes much longer time for the settlement of insurance claim for industrial damage. "If we don't get insurance claim settled within a short time, it will hamper the industrial growth."
Terming the country's policy-making process segmented, he stressed the importance of a centralised wing, which will bring together and contribute to the issue of governance in a comprehensive way.
Talking about Bangladesh's preparedness to cope with the post-LDC transition period, Commerce Secretary Shubhashish Bose said the government was working hard to enhance its capacity to successfully deal with the possible challenges.
"We're going to sign FTAs with Sri Lanka, Malaysia, Turkey and China," he added.
Earlier, Economic Relations Division secretary Kazi Shofiqul Azam presented a keynote where he outlined the challenges and opportunities Bangladesh might face as it transitions from an LDC.
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