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‘ knowledge and skills embodied in individuals that enable them to create economic value’ through education metrics, and by this measurement, Vietnam’ s human capital eclipses even that of China.
On the other hand, Bangladesh faces a shortage of skilled labour, which is again reflected in its product offerings. Of Bangladesh’ s total exports, a major percentage is concentrated in five basic products – trousers, T-shirts, sweaters, shirts and jackets. Without enough skilled labour, Bangladesh struggles to diversify production and manufacture more high-end garments. In contrast Vietnam, thanks to its skilled workforce, has found a market in diversification by producing lower volumes of higher quality and more technical garments that offset its comparatively higher labour costs with respect to Bangladesh.
An analysis of Bangladesh and Vietnam’ s main exports to USA( a major market for both the countries) is an indicator of the same, besides also hinting at how the latter is now catching up with Bangladesh even in basic products. Vietnam’ s main exports to USA in 2017 were
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jackets and blazers( US $ 1.3 billion approximately), undergarments( US $ 555 million approximately with growth rate of 1.12 per cent Y-O-Y) and foundation garments( US $ 321.5 million with growth rate of 113.67 per cent Y-O-Y) while Bangladesh’ s principal exports have been trousers( US $ 2.37 billion), T-shirts( US $ 578.5 million) and shirts( US $ 588 million). What’ s more, Vietnam has now overtaken Bangladesh in these product categories( T-shirts and trousers) too in which it earlier held supremacy in the US market. As per US custom data, Vietnam’ s export to USA in trousers was almost US $ 3 billion compared to Bangladesh’ s US $ 2.37 billion in 2017 whereas in t-shirts, Vietnam shipped products worth US $ 3.33 billion to USA compared to Bangladesh’ s US $ 578.5 million, during this period.
CPTPP: the game changer?
Despite challenges and pressures from the abandonment of the Trans- Pacific Partnership( TPP) trade deal, Vietnam has been able to maintain its growth curve going. A report from Textiles Intelligence shows that the production capacity of the industry
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FACT SHEET
Of Bangladesh’ s total exports, a major percentage is concentrated in five basic products – trousers, T-shirts, sweaters, shirts, and jackets. Without enough skilled labour, Bangladesh struggles to diversify production and manufacture more highend garments. In contrast Vietnam, thanks to its skilled workforce, has found a market in diversification by producing lower volumes of higher quality and more technical garments that offset its comparatively higher labour costs with respect to Bangladesh.
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is predicted to rise by 12-14 per cent per annum from 2016-2020 with export potential forecasted to rise by 15 per cent per annum during this period.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership( CPTPP), also known as TPP11( Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) officially signed in Chile on March 9 that will open new playgrounds with market size accounting for about 13.5 per cent of global GDP, according to experts, will be a great opportunity for Vietnam to boost its exports to the member countries.
Although CPTPP does not have the US market( accounting for 48 per cent of exports in 2017 for Vietnam), there are still other potential markets such as Australia, Canada, Japan( considered highly-developed with immense business opportunities), which are sure to play to Vietnam’ s advantage.
As per World Bank estimates, CPTPP would help Vietnam’ s gross domestic product increase by 1.1 per cent more by 2030, while export turnover to CPTPP countries may increase to US $ 80 billion, or 25 per cent of Vietnam’ s total export turnover. Of this, the important business fields of Vietnam, including food and beverage, footwear and textile and garment would see an export turnover increase by US $ 10.1 billion, US $ 6.9 billion and US $ 0.5 billion, respectively.
Also to be considered in this aspect is the Vietnam-EU Bilateral Trade Agreement( expected to get finalised in 2018), which to a great extent would neutralise the advantage Bangladesh would enjoy once it qualifies for the GSP Plus status from the European Union bloc.
Keeping all these factors in mind, Bangladesh may not find it easy to maintain its dominance, more so when Vietnam is leveraging on a number of trade deals making it one of the potent candidates in the China Plus One scheme of things.
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