Bangladesh can become no. 1 apparel exporter in a decade
Bangladesh could become the world's top exporter of garments in a decade as China is gradually moving away from its long-held supremacy over the manufacture of low-end apparel, analysts said yesterday.
Farooq Sobhan, president of Bangladesh Enterprise Institute, a think-tank, said the Chinese are now planning to relocate a number of their industries, particularly garments and textiles, to Bangladesh by setting up factories in a special economic zone that the government is planning to award to Beijing.
“China itself could play a major role in making Bangladesh the number 1 readymade garment exporter in the world.”
“And I see that happening within the next 10 years, if not sooner, if we can play our cards correctly,” he told a discussion at The Daily Star Centre in Dhaka.
The English daily organised the roundtable -- Bangladesh-China Relations: Connecting the Two Economies -- ahead of Chinese President Xi Jinping's upcoming visit to Bangladesh.
The global consumption of apparel products stood at $445 billion in 2015, according to data from the World Trade Organisation.
China, the number one exporter, accounted for 39.26 percent global market share while Bangladesh's share was 5.9 percent.
Bangladesh's apparel export last fiscal year was $28 billion. The country has set a target to raise it to $50 billion by 2021.
Meanwhile, China is losing its market share mainly due to higher costs of production and shortage of a skilled workforce.
Bangladesh's apparel export is on the rise as the global retail giants are also increasing the volume of work orders for quality garments at competitive prices. Sobhan said a lot is going to depend on Bangladesh's ability to implement.
“There are several issues that need to be addressed, such as terms and conditions of Chinese loans and Bangladesh's own ability to provide facilities to fast-track the implementation.”
The former ambassador said Bangladesh could soar, riding on the wings of two regional superpowers -- China and India.
It will be a measure of the country's diplomacy; if Bangladesh can achieve that and play a role in removing some of the roadblocks and mistrust that exist in moving forward, it could be a game-changer for the whole of South Asia, he said.
Munshi Faiz Ahmad, a former ambassador of Bangladesh to China, said Bangladesh should not worry too much about the trade deficit with China.
“Whatever we purchase from China, whether capital goods or consumer goods, we buy them because we need them.”
However, China has been sensitive about the gap as it does not look good and is trying to reduce it as much as possible, he said, adding that Beijing is offering duty-free access to more than 5,700 products.
“We are hoping China will be forthcoming on the other items as well.”
Ahmad, chairman of Bangladesh Institute of International and Strategic Studies (BIISS), said China is becoming more and more costly as the production base and labour are becoming pricey.
“We hope Bangladesh will be able to send workforce to China in the near future.”
Ahmad said Bangladesh also needs to work with its friends to explore its maritime potential. China is one of the top countries in terms of marine technology and experience in working at sea.
Bangladesh needs zero-tariff access for most of its items, including apparel, to expand its footprint in China, said Mahfuz Kabir, acting research director of the BIISS, in his presentation.
He said 17 products, including apparel, synthetic fibre and tobacco, are expected to get duty-free market access, which would significantly help reduce the gigantic trade deficit, and bilateral trade would be much bigger in the foreseeable future.
Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue, said the country should start negotiations with China to relax the rules of origin (RoO), as Bangladesh will not enjoy the duty benefit after it becomes a developing country, which is likely in the next seven-eight years.
“We need to negotiate for flexible RoO that China can give us. Bangladesh should start bilateral negotiations with China if the country is not ready to offer the same kind of duty benefit that it is currently providing.”
The RoO are the criteria used to determine the national source of a product, and they vary from country to country. Its importance is derived from the fact that duties and restrictions in several cases depend on the source of import.
Naser Ezaz Bijoy, acting chief executive of Standard Chartered Bangladesh, said the country should start with identifying what the Chinese requirements are.
Ainun Nishat, professor emeritus of Brac University, said if the BCIM Economic Corridor concept works genuinely, energy cooperation would be one of the major beneficiaries.
“We are worried about the planned special economic zones, as Bangladesh did not pay any attention to environmental concerns when the export processing zones were set up.”
“They (EPZs) don't have effluent treatment plants and this is wrong. I hope the SEZs would be fully compliant with the national law on environment.”
He said the meeting between top leaders of China and Bangladesh would result in the implementation of decisions within the stipulated time.
Tapan Chowdhury, president of Bangladesh Textile Mills Association, said the garments industry is one of the most regulated industries in the world because of the Accord and the Alliance.
“All the remediation work that has been done is fantastic.”
The Chinese garment makers are going for value added products, creating an opportunity for Bangladesh, he said. “To tap the opportunity, we need electricity.”
Makshudul AM Mondal, senior research associate of the Institute for Policy, Advocacy, and Governance (IPAG), a think-tank, said Bangladesh is strategically important for China.
For example, he said if some of the southern landlocked provinces of China, such as Yunnan, want to have an easy access to the seaports, their option is the seaport at Guangzhou which is 1,700 kilometres away. But the distance between Yunnan and Chittagong port is about 1,000 kilometres.
“If Beijing helps build infrastructure in Bangladesh, it will give them a lot of dividends in terms of connectivity, trade and access to markets and people-to-people contact.”
Avia Nahreen, a researcher at IPAG, said Bangladesh should diversify its exports basket to narrow the trade gap with China. Bangladesh should also tap into the foreign direct investment flowing out of China, added Nahreen.
M Nurul Islam, a former professor of chemical engineering at Bangladesh University of Engineering and Technology, said attention should be given to technology transfer.
Lailufar Yasmin, a professor of international relations at Dhaka University, said China has learnt from the Cold War that it would not be enough to have military or economic might if one has to project oneself as a power.
So, by investing billions of dollars in infrastructure, China is projecting itself as infrastructure superpower, Yasmin said.
Humayun Rashid, acting president of Dhaka Chamber of Commerce and Industry, said establishment of the Bangladesh, China, India and Myanmar economic corridor from Kolkata to Kunming would also help Bangladesh by bringing in investment and encouraging businesses.