Bangladesh unlikely to lose out to India, Vietnam in garment trade

Tofail Ahmed, commerce minister; Shahriar Alam, state minister for foreign affairs; and Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, attend a seminar on the impact of EU-India and EU-Vietnam free trade agreements on Bangladesh, at the BGMEA office in Dhaka yesterday. Photo: Star

The proposed signing of the EU-India free trade agreement and Vietnam's joining the Trans Pacific Partnership are unlikely to have any negative impact on Bangladesh's garment exports, trade analysts said yesterday.

At present, India and Vietnam are no challengers to Bangladesh in garment trade, Zillul Hye Razi, trade adviser of the European Union, said.

The two countries operate close to the high-end segment of the market, while Bangladesh mostly occupies the low end of the spectrum. Besides, they are shifting their focus from textiles and clothing and are now more interested in other products.

Razi's comments came at a seminar on the possible implication of the EU-India FTA and EU-Vietnam FTA on Bangladesh's exports, jointly organised by Bangladesh Foreign Trade Institute and Bangladesh Garment Manufacturers and Exporters Association.

Standard Chartered in a report said Vietnam's joining the TPP, a US-led pact involving 12 Pacific Rim nations that account for 40 percent of world GDP, will make its apparel exports to the US more competitive at the expense of Bangladesh and Sri Lanka.

The extent of the impact will depend on how sourcing requirements are structured, the report said, adding that flexible sourcing rules could enable Vietnam to overtake Bangladesh in apparel trade by 2024.

Razi said: “Every time Bangladesh's garment sector has been affected, it is due to internal factors like poor safety and labour rights. I have never considered external factors as threats.”

He said the country's garment exports will continue to grow to two major destinations -- the EU and the US -- if issues such as adequate supply of gas and power, enhanced worker productivity improvement and political stability could be ensured.

Echoing the views of Razi, Ahsan H Mansur, executive director of Policy Research Institute, said he is rather worried about the threats from Myanmar and Cambodia, the two emerging countries in the low-end segment that Bangladesh occupies.

“The competition has been rising, so we have to raise our game. We have to improve our capacity, environment and infrastructure,” said Nazneen Ahmed, senior research fellow of Bangladesh Institute of Development Studies.

Vietnam's major products are sportswear, shoes and electronic goods, said Shahriar Alam, state minister for foreign affairs.

Currently, the garment sector has been facing three problems: the non-approval of new building designs, non-allocation of gas lines to factories and hassles in renewal of trade licences, said BGMEA President Atiqul Islam.

Commerce Minister Tofail Ahmed said the government has already fixed pharmaceuticals, IT leather and shipbuilding as thrust sectors for export diversification.