For the last two years, Bangladesh ruled as the world’s second largest apparel exporter. However, in 2020, the scenario changed as Vietnam outstepped Bangladesh in apparel export earnings. Recent WTO Trade Statistical Review 2021 shows, Vietnam’s share in the global apparel market grew from 6.2 in 2019 to 6.4 in 2020, while Bangladesh's share declined to 6.3 per cent in 2020 from 6.8 percent in 2019.

Diversification helped

Since 2010, Vietnam has been steadily strengthening its position in the global apparel market. As per a Daily Star report, in the last 10 years, Vietnam focused on product and market diversification to move up the apparel value chain. It also emphasized on enhancing productivity and skills, and reducing dependence on the apparel sector. In 2020, Vietnam earned around one-fourth of its total export earnings of $281.4 billion from the apparel sector while Bangladesh, earned about four-fifths of its $42 billion revenues from apparel exports. Vietnam was also able to pass on the benefits of higher productivity and better prices to laborers by paying them almost 1.5 times more wages.

In 2020, export earnings of both Bangladesh and Vietnam declined 15 per cent and 7 per cent respectively. Apparel companies in Bangladesh experienced frequent production breakdowns from April to June, 2020. They also faced several order cancellations that resulted in huge loss of export earnings. The situation slowly improved by 2020-end as Bangladesh received orders from major brands and buyers. The resurgence of COVID-19 in Vietnam also helped Bangladesh regain a few lost orders and its position in the global apparel market.

Industrials parks with improved services

To sustain growth momentum, Bangladesh needs to build more industrial parks and RMG clusters with common services and required infrastructure. Also new policies to encourage adoption of new and advanced technologies at the enterprise level are in order. Other areas that need attention include improving management capacities and enhancing skills and production capacities. Improving financial services and digital platform-based services is another way Bangladesh can increase competitiveness. It can also shift to other fast growing non-cotton segment by changing incentive structure and attracting new investors.

SEZs for more FDIs

Bangladesh apparel sector is primarily driven by its domestic enterprises. It needs to attract more FDIs by developing new special economic zones across the country. It also needs to sign more FTAs and Closer Economic Partnership Agreements (CEPAs) with important trading partners. Production networks and value chains with regional partners and other important trading partners such as Canada, Japan and others bilaterally, and also possibly with RCEP need to be developed.. These networks will enable Bangladesh diversify its operations in the global RMG market.

Bangladesh can definitely regain lost position in the global apparel market if it adopts the above mentioned measures.