Bangladesh is standing at a turning point. In just a year’s time, the country is set to leave behind its “Least Developed Country” (LDC) status — a label it has carried for more than 50 years. For many, this is a proud moment, proof of how far Bangladesh has come through hard work, remittance, and the power of its garment workers.
But for exporters — the lifeblood of the economy — the excitement is mixed with worry. Graduation means global recognition, yes, but it also means losing the trade privileges that helped Bangladesh’s rise. Can the nation’s industries stand strong once those supports are gone? Or should Bangladesh ask for more time before taking the final leap?
The graduation deadline has already been deferred once, moving from 2024 to 2026, with the aim of giving Bangladesh breathing space to cushion its industries. The possibility of seeking another deferment remains, but such a move has both benefits and drawbacks. On the one hand, a further delay could extend preferential trade benefits, especially duty-free and quota-free access to major export markets such as the European Union, Canada, and Australia. This would buy exporters critical time to diversify markets, upgrade product sophistication, and prepare for the stricter post-graduation trade environment.
For a country where readymade garments (RMG) alone account for over 80% of export earnings, the breathing room could provide a buffer against sudden cost escalations and price competition. However, seeking another deferment also carries reputational risks. It could signal to global investors and development partners that Bangladesh lacks the readiness or confidence to move forward, potentially affecting foreign direct investment (FDI) inflows.
Moreover, remaining an LDC longer could prevent Bangladesh from fully tapping into the opportunities of middle-income status—such as attracting higher-value investments and gaining better credit ratings for international borrowing.The choice between deferment and graduation is, therefore, a balancing act between safeguarding short-term export competitiveness and committing to long-term economic maturity.
For Bangladesh’s exporters, graduation from LDC status is a double-edged sword. The immediate concern is the erosion of preferential market access. Currently, Bangladesh enjoys duty-free and quota-free benefits in the EU under the “Everything but Arms” (EBA) scheme, which has been critical for the RMG sector. After graduation, these preferences will phase out, meaning exporters could face tariffs averaging 9–12% on apparel products. In fiercely competitive markets, such margins can make or break price negotiations.
This cost pressure will likely hit small and medium-sized exporters hardest, especially those dependent on a few markets. Larger firms with stronger buyer relationships and capacity to absorb additional costs may survive, but many smaller businesses could be squeezed out. On the brighter side, graduation will also open up opportunities. Exporters could leverage Bangladesh’s new status to rebrand themselves as part of a resilient, fast-growing economy with improved global credibility.
International buyers and investors often prefer to work with economies that have moved past LDC status, perceiving them as more stable. Graduation could, therefore, push exporters to move up the value chain—investing in design, technology, and sustainability to maintain competitiveness.
Exporters must also keep in mind that Bangladesh will remain eligible for the EU’s GSP+ scheme, provided it fulfills strict governance and environmental compliance standards.
This shift could actually serve as a wake-up call for exporters to accelerate compliance, embrace greener production, and align with global sustainability goals—factors that are increasingly central to international sourcing decisions.
While the transition will inevitably be challenging, Bangladesh cannot postpone graduation indefinitely. The global economy is evolving, and staying in the LDC bracket too long may hurt the country’s reputation as a serious trade partner. Over time, the impact of graduation will depend on how effectively Bangladesh diversifies its exports beyond RMG.
Currently, jute, leather, and ICT services remain underdeveloped relative to their potential. Graduation could be the push needed for policymakers and entrepreneurs to prioritize diversification, innovation, and new markets such as Asia, Latin America, and Africa. Graduation may also bring intangible benefits. Global credit agencies could view Bangladesh more favorably, potentially lowering borrowing costs for exporters investing in technology or expansion.
Moreover, development financing—though concessional loans may shrink—could shift toward larger-scale, higher-value projects that align with the country’s middle-income ambitions. However, the risks are real. Exporters will not only face tariffs but also tougher competition from countries like Vietnam, Cambodia, and even African economies that continue to enjoy LDC preferences. Unless Bangladesh strengthens its ease of doing business, cuts logistics bottlenecks, and upgrades port infrastructure, exporters could lose their competitive edge in global supply chains.
Bangladesh is not the first to cross this threshold. Several countries have already moved up from LDC status, offering valuable lessons.
Take the Maldives, which graduated in 2011.Initially, the loss of trade preferences posed challenges for its fish exports, but the country successfully repositioned itself by strengthening its tourism sector and upgrading infrastructure. Similarly, Samoa, which graduated in 2014, faced difficulties with its small manufacturing base but managed to cushion the blow by focusing on remittances, services, and niche exports.
Perhaps the most relevant example for Bangladesh is Vietnam—though it was never an LDC, it demonstrates how aggressive investment in trade agreements, infrastructure, and value-added industries can help a country outgrow preference dependency. Cambodia, still an LDC but preparing for graduation, has already begun negotiating FTAs to ensure continuity of access to key markets. The lesson is clear: graduation is not a death sentence for exports, but countries that failed to adapt quickly saw short-term trade disruptions, while those that diversified and upgraded found longer-term resilience.
The million-dollar question remains: is Bangladesh ready for LDC graduation at this moment? From a strictly exporter-focused perspective, the timing feels uneasy. Global demand is sluggish, with inflation and geopolitical tensions disrupting supply chains. Bangladesh’s exporters are already facing narrowing profit margins due to energy shortages, wage hikes, and compliance costs. Adding the loss of duty-free benefits in 2026 could worsen these vulnerabilities.
Yet, graduation is not merely an economic classification—it is a statement of confidence. For a nation that has lifted millions out of poverty and become the world’s second-largest garment exporter, embracing graduation signals readiness to take on bigger challenges. Rather than resisting, Bangladesh could turn this transition into an opportunity for reinvention. The real question is not whether graduation should happen, but how Bangladesh prepares for it. Exporters must aggressively pursue market diversification, compliance upgrades, and investment in higher-value segments. The government, on its part, must negotiate favorable trade agreements, accelerate free trade agreements (FTAs) with the EU, UK, and emerging economies, and support exporters with policy incentives.
Bangladesh’s LDC graduation is both a crossroads and a catalyst. For exporters, it represents the loss of old privileges but also the dawn of new opportunities. Seeking another deferment may soften the landing but risks delaying inevitable reforms. The exporters who will thrive in the post-graduation era are those who treat it not as a threat, but as a challenge to evolve. The garment industry, which has carried Bangladesh this far, cannot alone secure the future. Exporters must lead the charge in building a diversified, technology-driven, and sustainable export base.
Graduation is not the end of privilege—it is the beginning of competitiveness. And for Bangladesh, that competitiveness will define its place in the global economy.
The writer is journalist & columnist and Member, National Press Club of Washington. He can be reached at sahinhowladar@gmail.com
