Implications of Bangladesh’s Graduation from Least Developed Countries Status on Japanese Companies

Abstract

In 2026, Bangladesh is expected to graduate from the Least Developed Countries status, which is reviewed by the Committee for Development Policy of the United Nations. While graduation has some advantages, such as improvement of the country’s external image, it also has some disadvantages, such as the inability to use the special preferential measures that are granted to countries with that status by the international community. This study discusses the implications and impacts of such changes in business environment of Bangladesh on Japanese companies through a questionnaire-based survey. As a result, the study demonstrates that Japanese companies that operate in Bangladesh and that benefit from special preferential tariffs have already begun to gather information and are even considering transferring their production bases. In order to avoid losing such foreign direct investment, Bangladesh is looking into free trade agreements (FTAs), however, in addition, authors believe it is necessary for Bangladesh to develop a friendly business environment that is comparable to that of neighboring Southeast Asian countries, to strengthen its industrial competitiveness, and to improve the level of trade diversification. The Japanese government also needs to make further efforts to deepen bilateral economic relations. This study intends to contribute to the debate regarding the graduation status of Bangladesh, and to the policies and strategies of governments and businesses.