Published in The Business Standard on Sunday 16 August 2020
Can Bangladesh regain its second position in RMG export?
Vietnam surpassed Bangladesh as the second-largest apparel exporter in 2019-20 fiscal year. During this period, between July 2019 and June 2020, Vietnamese apparels earned $30.94 billion, whereas Bangladesh raked in $28.82 billion, according to the General Statistics Office of Vietnam and the Export Promotion Bureau (EPB) of Bangladesh.
Now, the question is whether Bangladesh can regain its second position. The Business Standard talked to an economist and industry leaders to know if this is going to happen anytime soon.
Professor Mustafizur Rahman, Distinguished Fellow, CPD
Vietnam has outdone Bangladesh after fetching $2.12 billion more, thus becoming the second-largest apparel exporter in the fiscal year 2019-2020.
Vietnam is exploring new markets in the US, and has also signed the free trade agreement (FTA) with the EU, which is going to be implemented this year. Though Bangladesh will get duty benefits till 2027, after we entirely graduate from the LDC bracket that year, these benefits will be withdrawn. When our duty benefits would be withdrawn, Vietnam will continue to export at zero duty. This is a major concern for Bangladesh as the EU is the largest apparel market for us.
Vietnam is also ahead of Bangladesh in terms of exchange rate, business environment, lead time, export facilities, foreign investment and technology. This has played a significant role for them in overtaking Bangladesh.
Another aspect is that Vietnam is amongst the top five countries that have dealt with the Covid-19 situation efficiently. For this reason, the demand and supply sides in Vietnam were not heavily disrupted as they were in Bangladesh. Though we have opened up, it has obviously constrained our business.
Apart from cotton-made products, Bangladesh is doing good in knitwear and denim clothing, but it is not enough. We need to explore more. Man-made fibre (MMF) products are gaining momentum now. If we can concentrate more on the MMF products, we will be able to offer these at a competitive price as well. This will certainly add benefit to the industry. Also, as we will have to import the fibres, it is possible to provide import subsidies as well.
To regain Bangladesh’s spot as the second-largest apparel exporter, we need to give importance to a few aspects – business package, exchange rate policy, early release of stimulus packages, ease of doing business, bringing down the lead time and making the market more competitive. We also need to encourage more foreign investors to invest in the RMG sector of Bangladesh, which played a significant role in Vietnam’s rise.
However, I am hopeful that with our strength in the RMG sector, we will regain our position in 2020-21 fiscal year.