Close competitors as they are, Bangladesh and Vietnam have been battling it out for some time to maintain their supremacy in the apparel export front. As per the World Trade Organisation (WTO), in 2019, Bangladesh was the second largest apparel exporter across the globe.
Bangladesh exported apparel items worth US $ 33.63 billion with a share of 6.83 per cent of the world market in 2019, followed by Vietnam with US $ 30.56 billion worth exports or 6.21 per cent share of the global market.
The see-saw battle between the two recently reached an interesting point after Vietnam reportedly overtook Bangladesh in terms of exports during the first 5 months of the current calendar year.
According to the General Statistics Office of Vietnam data, during the January-June period of 2020, Vietnam earned US $ 13.18 billion from exporting textile and sewing products, while on the other hand, Bangladesh fetched US $ 11.92 billion by exporting readymade garment (RMG) products during the same period, which is as per data from Bangladesh’s Export Promotion Bureau (EPB).
Meanwhile, as per reports, Bangladesh’s total exports earnings from textile and apparel goods reportedly stood at US $ 12.32 billion, in the period in question as compared to Vietnams’ US $ 13.18 billion during January-June of 2020.
This recent turn of events has once again rekindled the debate – who would reign supreme?
“I’m not a strong believer in rankings. As you might have seen in cricket, individual rankings keep on changing, but what really matters is the overall team performance, and Bangladesh’s performance has been good in 2019, as is underlined in the WTO report,” Md. Fazlul Hoque, former President of Bangladesh Knitwear and Exporters Association (BKMEA), and Managing Director of Plummy Fashions Limited, told Apparel Resources, adding the comparison we are talking about here is of January-June period, which would not be a fair assessment considering factories in Bangladesh had to keep shut for one whole month due to COVID-19, unlike Vietnam, which effectively means we are comparing four months of Bangladesh’s export performance with that of Vietnam’s five.
“Vietnam exports data include both textile and RMG products, while our products are only apparel, and that too counted in different categories,” explained Faisal Samad, the equation Senior Vice President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) while speaking to the media, adding the gap between the two would not be that big if earnings from textile products are added with that from the garments, which of course is a fact that cannot be overlooked.
“Though Bangladesh’s apparel industry earned more than Vietnam during December and January, the negative growth due to the COVID-19 outbreak since March has accentuated the difference between the two countries,” underlined Professor Mustafizur Rahman, Distinguished Fellow of the Centre for Policy Dialogue (CPD), while interacting with the media. He added that Vietnam is amongst the top five countries that have dealt with the COVID-19 situation efficiently, and for this reason, the demand and supply sides in Vietnam were not heavily disrupted as they were in Bangladesh.
That unlike Vietnam, RMG units in Bangladesh had to stop production during March-April, is another aspect that too needs to be taken into consideration, felt industry insiders strongly.
“That is why we lagged behind and exports’ earnings declined sharply during the March-May period,” Samad added, while agreeing with Professor Mustafizur that Vietnam handled the pandemic successfully, unlike Bangladesh, to a great extent.
“It is an unusual situation, when the global trade and supply chain have gone through disruption, and there have been ups and downs in demand; this situation should be treated differently,” maintained Research Director of CPD, Khondaker Golam Moazzem, who added that there are reasons for Vietnam’s better performance in exports amid the pandemic, as it had been able to face the pandemic and reopen factories first, while on other hand, Bangladesh suffered production disruption due to countrywide shutdown and in April the export earnings saw a steep decline.
In addition, Vietnam has a diversified product basket, which helped to capture work orders shifting from China during and before the pandemic, Khondaker added.
To regain Bangladesh’s spot as the second-largest apparel exporter, the country needs to give importance to issues such as business package, early release of stimulus packages, ease of doing business, bringing down the lead time and making the market more competitive, and most importantly, regulate the exchange rate policy, Mustafizur explained.
“Bangladeshi currency has been overvalued against the USD for a long time, hurting the country’s exporters. But the policy makers are not paying heed to this,” said Professor Selim Raihan, Executive Director, South Asian Network on Economic Modeling (SANEM).
It may be mentioned here that the exporters are demanding Taka 5 against a US dollar on the amount of export retention.
Meanwhile, garment makers in general did not want to read much into Vietnam overtaking Bangladesh with many apparel exporters expressing hope that exports will rebound by December, buoyed by demand in the Western world ahead of Christmas.
“We are operating at 60-70 per cent of our capacity at present. We’re getting work orders, but not enough. Only the basic items are exported now. Big fashion houses haven’t opened yet,” said Anwar-ul-Alam Chowdhury Parvez, former President of BGMEA, adding, “We’re not worried at all that Vietnam surpassed us in garment exports. It is not the absolute number of exports but the growth that matters. The question is, if we can reach our target or if we are making enough growth.”
As the coronavirus pandemic has upended the global economy, it affected the exports too as people stopped buying clothes, and under the present circumstances, there will be a downward trend in the garment exports in August and September. But exports will get a boost from Christmas sales in December, the exporters felt.
Coronavirus, in particular, has hit the exports from China the most, as clothing shipments declined at least 49 per cent between January and June this year. For Bangladesh, the decrease was 18 per cent. Vietnam, which superseded Bangladesh in garment exports, lost 11.7 per cent of exports in the 6 months.
China has been reducing its garment exports to the US gradually after the trade war began, but it nosedived after the coronavirus epidemic broke out in Wuhan in December, according to the US Department of Commerce Office of Textile and Apparel.
Last year, China exported readymade garment worth US $ 24.88 billion to the US market and had a 9 per cent reduction in export that time. The Chinese export decreased 36 per cent in January this year due to COVID-19 with China exporting garments worth US $ 3.89 billion to the US in the first 4 months of the current year, which is 46 per cent less than the last year. Vietnam, on the other hand, exported garments worth US $ 4.18 billion to the US in the first 4 months of the year. Though their exports declined 1.31 per cent, Vietnam’s exports were US $ 290 million more than that of China. Therefore, Vietnam tops the list of garment exporters to the US.
As Vietnam topped the list surpassing China in exporting garments to the US, Bangladesh still holds the third spot on the list. While China and Vietnam lost their exports, Bangladesh had a slight increase in its shipments.
Bangladesh exported readymade garments worth US $ 2.07 billion to the US market in January-April, which is 2.13 per cent higher than last year’s exports.
“China has been engaged in a trade war with the US for quite a long time, which intensified during the coronavirus pandemic. If the US stops or reduces buying garment from China, Bangladesh may have a bigger market there,” underlined Anwar-ul-Alam Chowdhury Parvez, adding, “This will be a ‘golden chance’ for Bangladesh to grab a share of the Chinese garment market in the US.”
Now if such an order shift would benefit Bangladesh to help it further its cause towards beating arch rival Vietnam is yet to be seen. Experts and economists suggest a ‘wait and watch’ policy till the end of the year, by when they think things will get clearer.
“Until the end of the year, we cannot draw conclusions or cannot assess the performance. However, I am hopeful that by the end of this year, Bangladesh will be able to regain the position,” Samad concluded the debate on who would reign supreme, on a positive note.