LDC Graduation of Bangladesh- In Search of Coping Strategies for the Bangladeshi RMG Industry

This paper set out to assess the implication of graduation on the RMG sector of Bangladesh and propose coping strategies for smooth transition. It has been identified that Bangladesh has a RMG export concertation (80%) in the EU and North American market, a product concentration of 73% in 5 basic products, a dependence on cotton for 74% of RMG exports and a very poor global competitiveness index rank (105th out of 141 countries). Graduation from LDC category will mean that Bangladesh will be subject to standard Generalized System of Preferences. Bangladesh would also lose Duty-Free and Quota Free access to EU, Canada and other developed countries. Furthermore, RMG exports from Bangladesh will be subject to normal Rules of Origins, entailing the erosion of the “single transformation” charge they were once entitled to. Hence, to ease transition and to take full advantage of graduation, Bangladesh should expand its international market for RMG exports by targeting markets it has condoned till date. These include China, India, Indonesia etc. To widen its portfolio and reduce its dependence on cotton, Bangladesh should invest in Man-Made Fabric (MMF) and high-tech products. To this end Bangladesh should attract FDI to utilize the potential of backward linkage in MMF. Attracting FDI will prove to be easier if Bangladesh can improve its competitive indicators by investing more in infrastructure, industrial upgradation, administrative hurdles etc.