Businesses call for a halt to LDC graduation bid

Business leaders have called for the interim government to stop Bangladesh's LDC graduation process, citing the current downturn in the business climate.

They also highlighted priorities like reducing the cost of doing business, improving law and order, ensuring energy security, maintaining uninterrupted industrial production, promoting good governance, automating and optimising revenue management, and implementing supportive trade policies.

The business leaders made the observations at a conference styled 'Private Sector Outlook: Expectations and Priorities' hosted by the Dhaka Chamber of Commerce and Industry (DCCI) at a city hotel on Saturday.

At the event, both finance and commerce advisers said the government was proceeding cautiously, carefully evaluating whether the country should graduate from its least-developed country (LDC) status in 2026.

Speaking as the chief guest, finance adviser Dr Salehuddin Ahmed said, "We are examining the smooth transition strategy to ensure a soft landing."

He emphasised the need to address challenges like enhancing competitiveness, improving efficiency, fostering institutional development, embracing automation, ensuring a decent work environment, optimising resource usage, strengthening global linkages, and promoting both FDI and local investment.

Additionally, the adviser said efforts were being directed towards improving the ease of doing business.

He dismissed concerns that the garment sector and other industries would collapse during the post-graduation period, asserting that such claims were unfounded.

Dr Ahmed said seven countries, including Bangladesh, were slated for LDC graduation, with Bhutan being the only one to announce its plans thus far.

"Other countries are closely observing Bangladesh's approach. A UN rapporteur mentioned that if Bangladesh successfully graduates, it would inspire the remaining countries."

Dr Ahmed clarified that Bangladesh was not rushing the process and considering whether additional time might be required to meet the timeline.

The economy is showing signs of stability despite earlier challenges, with foreign currency reserves experiencing positive growth, according to him.

The adviser discussed recent interventions like an allocation of Tk 220 billion to cash-strapped banks.

Meanwhile, commerce adviser Sheikh Bashir Uddin emphasised the necessity of enhancing Bangladesh's capacity to expand trade in the international market, particularly during the post-LDC transition period.

He suggested a series of dialogues to determine the most strategic and logical timeline for graduation. "While the timing must be carefully considered, graduation is inevitable at some point."

The adviser acknowledged that the post-graduation Bangladesh would lose several incentives and advantages currently enjoyed under the LDC status.

To address this, he stressed the importance of trade liberalisation and the development of supportive policies for various business sub-sectors.

"To improve the quality of life for the people, government spending must increase. For this spending to be sustainable, we need to prioritize tax collection."

In his welcome speech, DCCI president Ashraf Ahmed highlighted the need to reduce government expenditure, improve market management and increase the vigilance of law-enforcement agencies to prevent extortion in the management of goods.

He also called for gradually reducing the policy interest rate at the beginning of the next year to curb inflation.

To keep the currency market stable, Mr Ashraf suggested keeping the exchange rate of US dollar close to the prevailing market rate. He also recommended ensuring low-cost credit flow to small businesses.

Mr Ashraf stressed effective automation in the business registration and renewal process along with reforming the overall customs system to make the business process easier.

About LDC graduation, former DCCI president Rizwan Rahman called for a pause and revisiting the process, suggesting that LDC graduation was part of the then government's 2018 election agenda.

He also called for auditing trade bodies and associations to curb the unchecked proliferation of such organisations.

FICCI president Javed Akhtar and BKMEA president Mohammad Hatem also touched on the same LDC transition issue, calling for a halt to the process.

Mr Hatem further said that zero-tolerance policy should be adopted by the government to improve the law-and-order situation in industrial areas.

Incepta Pharmaceuticals managing director and chairman Abdul Muktadir said Bangladesh went through a difficult time recently, adding that instability in industries was not desirable in any way.

PRAN RFL managing director and CEO Ahsan Khan Chowdhury said, "Business grows in sync with the improved law-and-order situation."

"Both production and employment will be disrupted if LCs are not opened according to the needs of the businessmen."

Association of Bankers, Bangladesh president Selim RF Hossain also spoke about the law-and-order situation, urging the government to take effective initiatives to this end.

He, however, said, "...Contractionary monetary policy alone is not enough to control inflation, but strict vigilance must be ensured in market management, including stopping extortion in the supply chain ecosystem."

Bangladesh Association of Banks president Abdul Hai Sarkar also called for improving the law-and-order situation in industrial zones as well as ensuring the safety of entrepreneurs.

"We all have to work together to bring the country back on track," he said, adding that industrial development was not possible without ensuring the supply of electricity.

BTMA president Showkat Aziz Russell stressed the need to fight corruption and explore domestic gas exploration.

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