Bangladesh : Knowledge Support for LDC Graduation and Improving Investment Climate

Sovereign Project | 57341-001

The TA will create innovative and operationally relevant upstream knowledge solutions with a particular focus on improving the investment climate by streamlining business regulations, investment promotion, and institutional strengthening of key investment promotion agencies. The TA will also produce knowledge products (KPs) to foster private sector development and diversify the economy, enhance macroeconomic management, and facilitate climate-resilient sustainable development as the country graduates from least developed country (LDC) status in 2026. KPs will also be developed on strategic issues to help Bangladesh achieve its economic aspirations to become an upper middle-income country by 2031 and will focus on core sectors relevant to ADB's operations. The knowledge solutions will include preparing the background documents and inputs for overall policymaking, development plans, sector development, and potential project development.

Project Details

  • Project Officer
    Dey, Barun Kumar
    South Asia Department
    Request for information
  • Country/Economy
    Bangladesh
  • Sector
    • Industry and trade
Project Name
Knowledge Support for LDC Graduation and Improving Investment Climate
Project Number
57341-001
Country / Economy
  • Bangladesh
Project Status
Active
Project Type / Modality of Assistance
  • Technical Assistance
Source of Funding / Amount
TA 10291-BAN: Knowledge Support for LDC Graduation and Improving Investment Climate
Source Amount
Technical Assistance Special Fund US$ 1.00 million
Operational Priorities
  • OP6: Strengthening governance and institutional capacity
Sector / Subsector
  • Industry and trade / Large and medium industries - Trade and services

  • Public sector management / Economic affairs management

Gender
Some gender elements
Description
The TA will create innovative and operationally relevant upstream knowledge solutions with a particular focus on improving the investment climate by streamlining business regulations, investment promotion, and institutional strengthening of key investment promotion agencies. The TA will also produce knowledge products (KPs) to foster private sector development and diversify the economy, enhance macroeconomic management, and facilitate climate-resilient sustainable development as the country graduates from least developed country (LDC) status in 2026. KPs will also be developed on strategic issues to help Bangladesh achieve its economic aspirations to become an upper middle-income country by 2031 and will focus on core sectors relevant to ADB's operations. The knowledge solutions will include preparing the background documents and inputs for overall policymaking, development plans, sector development, and potential project development.
Project Rationale and Linkage to Country/Regional Strategy

Bangladesh became a lower middle-income country in 2015 and is on track to graduate LDC status in 2026. Bangladesh aspires to become an upper middle-income country by 2031 and a high-income country by 2041. To achieve these aspirations, Bangladesh needs to attract substantial foreign direct investment (FDI) and domestic investment. The government's 8th Five-Year Plan for FY2021FY2025 targets an FDI inflow of 3% of GDP by FY2025. However, the recent FDI inflow has remained below 1% of GDP. Improving the investment climate is a prerequisite for Bangladesh to attract a higher level of investment. Streamlining business processes, regulations and certifications is critically necessary for improving investment climate. In addition, developing effective and efficient investment promotion mechanisms, and strengthening the institutional capacity of investment promotion agencies are urgently needed. Under TA 9602-BAN, ADB is supporting the Bangladesh Investment Development Authority (BIDA) in reviewing investment-related policies of Bangladesh and in developing an investment policy.

Following LDC graduation, Bangladesh will lose preferential access to its export products to most developed countries unless bilateral free or preferential trade agreements are signed with respective countries. Trade-related impacts will include the loss of LDC-specific market access provisions, LDC-specific special and differential treatment and flexibility under World Trade Organization (WTO) rules and regional agreements, and certain training and capacity-building mechanisms. Bangladesh would also lose access to duty free quota free (DFQF) arrangements for LDCs and to the least restrictive rules of origin reserved for LDCs, with significant impacts on the ready-made garments exports. A recent analysis reveals that the share of exports that use LDC-specific preferences is 70% for Bangladesh and a possible aggregate export decline of 14.3% for Bangladesh due to LDC graduation. In 2021, about USD 17.3 billion of textile and textile articles of HS classification section XI were exported to the EU. Out of this amount, 16.5 billion were entered under the Everything but Arms scheme for LDCs, which corresponds to a utilization rate of 96%. In other words, thanks to the preferential treatment granted by the EU these 17 billion entered the EU duty-free. Upon graduation, Bangladesh has the option to apply for the EU's GSP+ (Special Incentive Arrangement for Sustainable Development and Good Governance). Attaining GSP+ would provide Bangladesh with duty-free market access for textile and clothing products, but not the lenient rules of origin that have made their recent success story possible. Falling back to normal GSP status would see clothing exports levied with tariffs of 8% to 9.3%, or even with higher MFN rates which can significantly affect competitiveness. Other trade policy options should be explored, such as entering or negotiating bilateral, regional, or multilateral/plurilateral trade deals.

As requested by the Bangladesh government, ADB is supporting the government in preparing for smooth LDC graduation including improving investment climate and developing strategies for export diversification. One critical area of knowledge solutions under this TA will be developing strategies and reforms to deal with the impacts of graduation from LDC status with a strong focus on improving the investment climate and diversifying exports. This TA will also focus on developing knowledge solutions to support private sector development and strengthening macroeconomic management.

The Proposed TA will be closely aligned to the ADB's Strategy 2030. The TA is included in ADB's current country pipeline, and consistent with ADB's Country Partnership Strategy (CPS) for Bangladesh, 20212025. The CPS prioritizes the knowledge support for economic and sector analysis to facilitate the rapid structural transformation of the Bangladesh economy. ADB's Country Knowledge Plan 20212025 for Bangladesh envisions that upstream and strategic economic, sectoral, and thematic analyses will inform sector policy reforms and drive transformative investments to address complex development challenges.

Impact

Policy environment to support rapid, inclusive, and sustainable development in Bangladesh improved

Project Outcome

Description of Outcome

Well-informed evidence-based policies on economic management and rapid economic development adopted.

Progress Toward Outcome

Implementation Progress

Description of Project Outputs

Knowledge products developed for improving investment climate of Bangladesh

Knowledge products supporting sustainable economic growth and smooth LDC graduation produced

Institutional capacity and knowledge enhanced

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Nation-wide

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples

Stakeholder Communication, Participation, and Consultation

During Project Design
During Project Implementation

Contact

Responsible ADB Officer
Dey, Barun Kumar
Responsible ADB Department
South Asia Department
Responsible ADB Division
Bangladesh Resident Mission (BRM)
Executing Agencies
Bangladesh Investment Development Authority

Timetable

Concept Clearance
10 Jan 2024
Fact Finding
29 Jan 2024 to 15 Feb 2024
MRM
-
Approval
21 Mar 2024
Last Review Mission
-
Last PDS Update
21 Mar 2024

Funding

TA 10291-BAN

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
21 Mar 2024 28 Mar 2024 28 Mar 2024 28 Feb 2027 - -
Financing Plan/TA Utilization
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
1,000,000.00 0.00 0.00 0.00 0.00 0.00 1,000,000.00
Cumulative Disbursements
Date Amount
09 May 2024 815.60

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

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In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Knowledge Support for LDC Graduation and Improving Investment Climate: Technical Assistance Report Technical Assistance Reports Mar 2024

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

Tender Title Type Status Posting Date Deadline
Senior Project Coordinator Individual - Consulting Closed
Research Analyst Individual - Consulting Closed

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.