Home ›› 11 Feb 2022 ›› Editorial
It is soothing to note that apparel exports from Bangladesh reclaimed their second position in the global market, beating their rival Vietnam, and lagging behind mighty China by a long distance. Earning more than $3 billion to the $35.81 billion Vietnam earned in 2021 is nonetheless a reassuring piece of news for both exporters and the government. Vietnam, which surpassed Bangladesh in 2020, may reemerge and grab our position again if a string of policy decisions by our government were not undertaken promptly. We have to understand the inner strength of Vietnam as a global manufacturing hub for apparel products, although their minimum wage of workers is more than double that of Bangladesh. Why providing less than half wage than Vietnam alone cannot ensure the sustainability of Bangladesh’s current spot for a long period needs to be analysed thoroughly.
The duty preference and enhanced productivity of Vietnam have been giving the country an edge over several countries including Bangladesh in grabbing the world fashion market. The preference the country has been getting is mainly through Free Trade Area (FTA) agreements it forged with European economies. In 2019, Vietnam signed an FTA with the EU. This agreement came into effect in August 2020. In addition, Vietnam signed the Comprehensive and Progressive Agreement for Trans-Pacific (CPTPP) with 10 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, and Singapore. Additionally, due to its membership in the Association of Southeast Asian Nations (ASEAN), Vietnam is benefitting its economy.
Besides the FTAs, the productivity of Vietnam is much better than countries like Bangladesh. According to a report of the Asian Productivity Organization in 2018, Bangladesh’s per-worker productivity is lower than all other competing countries except Cambodia. Per hour labour productivity of each worker employed in Bangladesh is only $3.45, whereas the close competitors of Bangladesh, i.e., Vietnam, India, Hong Kong, Indonesia have per hour labour productivity per worker of US$ 4.09, US$ 6.41, US$ 44.27 and US$ 9.98 respectively. And consequently, the lower labour productivity of Bangladesh hinders the optimal growth in industrial manufacturing. Thus, there are scopes to work with the skill set of workers employed in the RMG sector to improve labour productivity. In this era of intensely competitive markets, the world is striving for achieving higher productivity. The biggest challenge and burning issue for the companies is how to get value for the money invested in the workforce and infrastructure in terms of productivity. Productivity is the simultaneous implementation and application of efficiency and effectiveness. In textile manufacturing units, this is of special concern as a skilled workforce and advanced machinery exist side by side and play a synergistic role in production. For potential business growth and holding a sustainable position in the global apparel market, productivity and efficiency are the important and core parts now.
In the US market last year, Bangladesh’s apparel exports grew by 36.79 per cent to $7.14 billion while Vietnam’s increased by 14.33 per cent to $14.37 billion. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice-President Shahidullah Azim noted that it was difficult to predict future exports direction in 2022 amid the ongoing pandemic but said he was optimistic that the local apparel industry would reach a new height over the next five years.
To retain our position, we have to attract Chinese investment as well as buyers who are relocating their purchase destinations. Besides, the government has to prioritise the FTAs it has long been in negotiations with a number of countries and trade blocs. The bilateral or regional FTAs are going to be a real game-changer in the future trade landscape for developing countries like Bangladesh. We have cheap labour here, but Vietnam has the advantage of close proximity to China, the largest raw material hub for industrial products of the country. Vietnam has duty preferences for having FTAs with different countries, and trade blocs, whereas Bangladesh has duty-free market access facilities to the EU and other developed countries for being a least developed country.
The LDC preference will no longer be in place for Bangladesh after our graduation in 2026, but competition with Vietnam is likely to become stiffer in the coming days.
