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Bangladesh has now three more years to ensure its graduation from the United Nations’ least developed country (LDC) status. The UN General Assembly extended the preparatory period to 24 November 2029 on 29 October 2026. This provides some reassurance to businesses and policy makers in times of economic uncertainty. It also imposes a challenge on government, to convince people that more time will lead to a more sustainable improvement in economic governance.

The decision needs to be understood in the context of the history of Bangladesh's development. The Economic Relations Division said Bangladesh had been classified as an LDC since 1975, and had fulfilled all three graduation criteria in the UN reviews of 2018 and 2021. Income per person, human assets (health and education), economic and environmental vulnerability. Two consecutive reviews earned indicated a significant improvement that took many years. This extension does not mean that previous achievements are canceled.

The UN General Assembly in November 2021 granted Bangladesh graduation with an exceptional 5 year preparation period to help it bounce back from the impact of COVID-19 as it prepares for the transition. The additional extension comes as the world and the country grapples with more uncertainty and challenges. The history shows a significant loop hole, which is just achieving the development thresholds does not guarantee that institutions and industries can handle the end of special support. The gap needs to be addressed properly and this should be the guiding principle of government policy.

There are enough valid reasons for additional time. Besides Bangladesh's structural vulnerability, the UN Committee for Development Policy identified risks associated with external shocks of international trade, energy supply and other external risks. But for its backing of an extension, it was on the domestic reform agenda. The government needs to listen to that message. Part of the problem may be due to external uncertainty, but the issues with public institutions need to be addressed at home.

The first advantage is that it will maintain the eligibility of LDCs for individual market preferences on trade. This can assist exporters to keep their prices competitive and make production planning with greater confidence. This stability is clearly in the interest of the garment industry and its labor. But the overall extension is primarily to maintain opportunities. The decisions to be made in the next three years will determine whether or not these opportunities translate to new investment, improved jobs and exports.

An accurate expectation as in the European Union's Everything But Arms scheme. It offers duty and quota free access on all products (except arms and ammunition), followed by a transition period after graduation from LDC status. However, in November 2026 Bangladesh was not losing all the European preferences. The government should provide new export market schedules and inform the public about which benefits remain, when and for how long.

Pharmaceutical manufacturers also gain some time. The WTO provides for LDCs to postpone some of the pharmaceutical-related obligations under patent rights until January 2033 or graduation, whichever is earlier. In line with the current regulations, it extends Bangladesh's access to these provisions. This opportunity should help to improve production, research and licensing agreements. Planning the industry for future commitments must also involve safeguarding the availability of affordable medicines for patients.

Other advantages must not be discounted. Concessional financing by institutions like the World Bank is not based on LDC status but on income, creditworthiness and other criteria. The extension is unable to ensure the availability of cheap loans from all sources. To help the business and the citizens understand that economic reform is still needed even after a successful diplomatic result, it is important to communicate about the effective limits of diplomacy.

The first priority should be given on preparing someone who will be accountable. The Smooth Transition Strategy of Bangladesh should be backed up with annual targets, concrete budgets, and specific agencies to implement the strategy. Reports to progress should be made publicly and understandably. They should be given opportunities to be considered by parliamentary committees, researchers, and by representatives of business and workers. When a goal is missed, then explain and correct, don't set another date.

The second objective is to make the daily economic life more reliable. Exporters require reliable energy, efficient customs clearance and certain laws. Banking reform should enhance the discipline of banking and decrease the possibilities of political influence. Tax reform should expand the tax base and look at tax exemptions that are not necessary. All this would help to pay for public services and infrastructure, and it would also make competition more level for businesses that don't have "privileged access.

In addition, export diversification needs to be accompanied by the provision of fair access to support. Small companies in agro-processing, pharmaceuticals, leather, light engineering and digital services require testing facilities, training and market information. Support should be based on clear principles and on concrete outcomes. Otherwise, the additional preparation period might help old businesses to reinforce their dominance without providing new businesses with a similar advantage. The best way to guide future trade negotiations should be to rely on published cost-benefit and adjustment impacts assessments.

These decisions must include consultation with the workers. Training and workplace safety and social protection needs should follow industry and trade changes. Any preparations for the potential access to EU GSP+ should take into account the eligibility criteria, including commitments towards rights and governance. These reforms not only improve market access but can also boost confidence in markets.

Bangladesh should be able to show progressive institutions, improved services and more competitive businesses by November 2029. This would make the extension have a lasting value.

 Kazi Nishat Aunjum (Semonti),  Research Officer- Knowledge, Evaluation & Communication, GRMCS

Views in this article are author’s own and do not necessarily reflect CGS policy.