Vietnam beats Bangladesh in textile, clothing export

Image collected
Apparel exporters of Bangladesh blamed Covid-19 pandemic for falling behind Vietnam

Vietnam surpassed Bangladesh in exporting textile and clothing products in the first six months of 2020.

In line with the General Statistics Office of Vietnam data, during the January-June period of 2020, Vietnam, the closest competitor of Bangladesh, earned $13.18 billion from exporting textile and sewing products.

Alternatively, Bangladesh fetched $11.92 billion by exporting readymade garment (RMG) products through the same period, data from Export Promotion Bureau (EPB) showed.

In line with the World Trade Organisation (WTO) data, Bangladesh was the next major apparel exporter in the world with a 6.8% market share worth $34 billion in 2019.

In 2019, Vietnam's market share was 6.20% to $31 billion.

Why the slip in export position 

“First, we have to clarify the export figure of Vietnam. Vietnam exports data include both textile and RMG products, while our products are just apparel and textile products, and that too counted in various categories,” BGMEA Senior Vice President Faisal Samad told Dhaka Tribune.

However, the gap in terms of export earnings isn't very big and if the earnings from textile products of Bangladesh are added with that from the garments, it'll be very near Vietnam, claimed Samad.

Bangladesh's total exports earnings from textile and apparel goods stood at $12.32, which is $864 million less compared to Vietnams’ $13.18 billion during January-June of 2020. 

Secondly, production in the country’s apparel sector and other manufacturing factories were closed during March-April. In a way, exports were almost stalled, while Vietnam did not stop operation, Samad explained.

"This is why we lagged behind and exports’ earnings declined sharply through the March-May period," he added.  

Vietnam handled the pandemic successfully as it took measures such as shutting its borders, increased testing, and enforced lockdowns to prevent the spread of the novel virus, whereas Bangladesh did not react up to people hoped.

The country with a population of 96 million had only 288 Covid-19 cases and one death.

What experts say

Economists do not want to draw conclusions with today's data, and also want to take the global pandemic situation - which disrupted trade and commerce - under consideration before commenting on the decline.

“It is a unique situation, when the global trade and offer chain has gone through disruption aswell ups and downs in demand, this situation ought to be treated differently,” Khondaker Golam Moazzem, research director, Centre for Policy Dialogue (CPD) told Dhaka Tribune.   

However, there are known reasons for Vietnam’s better performance in exports amid pandemic since it had been able to face the Covid-19 pandemic and reopen factories first, said the senior CPD official.

Alternatively, Bangladesh suffered production disruption due to countrywide shutdown and in April the export earnings saw a steep decline, said the economist.

In addition, Vietnam includes a diversified product basket, which helped to fully capture work orders shifting from China during and prior to the Covid-19 pandemic, said the researcher.

In addition, the Free Trade Agreement with europe could be another reason behind the country's better export performance, he added.

Exports performance during pandemic   

In April, Bangladesh apparel exports witnessed the sharpest ever decline to $375 million, within the same period Vietnam earned $1.61 billion.  

This is an 85.25% drop,  the best fall ever sold, from the same month this past year.

Bangladesh, the second largest exporter of apparel goods after China, saw a 20.14% decline to $2.25 billion in March.

Alternatively, in-may the exports earnings improved and stood at $1.23 billion, still a 62% fall from last year's figure.

Later, in June, exports showed signs of recovery and posted a 6.63% negative growth to $2.24 billion.

Meanwhile, in July Bangladesh apparel exports stood at $3.24 billion with a 1.98% decline when compared to same period last year.

Will Bangladesh rebound?

As per today's export data, Bangladesh lost its second position to Vietnam. But trade leaders in addition to the economist opined that with the unusual situation, it really is too early to touch upon the issue.

“Whether the present difference in export between Bangladesh and Vietnam will sustain or not will rely upon the performance of the countries during regular situations, excluding emergencies,” said Moazzem.

With the unusual situation, it really is tough to comment on whether Bangladesh would lose its position to Vietnam as the second greatest exporter or not. But you will see competition between two countries in today's year, he explained.

If normalcy returns to global trade and the problem in Bangladesh’s trade and manufacturing becomes stable, it could regain the position, he added. 

“Before end of the entire year, we cannot draw conclusions or cannot determine the performance. However, I am hopeful that by the finish of this year, Bangladesh should be able to regain the position,” said Samad.

"For this, we have to be cautious and cautious to ensure that Vietnam cannot eliminate our orders rather we are able to grab more from the China shifting. Furthermore, the federal government offered stimulus packages ought to be utilized in an efficient manner to increase competitiveness in the global markets," he added.       

Things to consider for revival

As said by the sector people, the exchange rate is quite crucial for the exporters to stay competitive in the global exports markets.

The exporters are demanding Tk5 against a US dollar on the quantity of export retention.

Alternatively, the economists also supported the depreciation of Taka. 

“Bangladeshi currency has been overvalued against the USD for years, hurting the country’s exporters. But, the policy makers are not paying heed to the,” said the South Asian Network on Economic Modeling (Sanem)'s Executive Director Prof Selim Raihan.

It is true that the marketplace driven exchange rate can increase import value and the regulator is controlling the rate to keep stability, adds Selim.

But considering the exporters, especially the tiny sectors' interest, there exists a need for an acceptable depreciation of Taka against the USD. This could be very close to the real effective exchange rate to ensure that it could not remain overvalued, the economist says further.

He also urged manufacturers to diversify products and improve efficiency for vying with competitors.    

 
Source: https://www.dhakatribune.com

Tags :

Share this news on:

Previous Story

Trending Topics

Archive