Bangladesh-Vietnam Relations / Reject competition, embrace collaboration

If we take a small step back from our usual negative understanding of competition between countries which are targeting a similar market, we can find a point where competition can be churned into something positive, benefiting both countries equally. 

For instance, what if Bangladesh and Vietnam—two close competitors in the current global manufacturing landscape—looked for a path towards mutual prosperity through strategic collaborations instead of competition alone? There is indeed untapped potential for Bangladesh to leverage Vietnam's strengths and accelerate its economic development.

As Bangladesh and Vietnam edge towards celebrating 51 years of diplomatic relations, the two countries can benefit from strategic partnerships that transcend competition, thus leveraging each other's strengths for the prosperity of both.

The economic landscapes of Bangladesh and Vietnam at the moment reflect contrasting trajectories against a global backdrop of economic uncertainty post Covid and recovery from the pandemic's impacts.

Here, Bangladesh's economic growth on paper and in figures remains strong. For instance, Bangladesh's poverty rate dropped as low as 12.9 percent in 2021 from 80 percent in 1971; the annual gross domestic product (GDP) growth rate has been, on average, 6.4 percent between 2016 and 2021. On the other hand, Vietnam's economic growth on paper is also decent. For example, poverty has declined significantly from 14 percent in 2010 to 3.8 percent in 2020; and GDP grew by eight percent in 2022 alone.

Bangladesh's GDP for 2023 was $1.131 trillion, whereas Vietnam's was $426 billion. Regarding per capita income (PCI) in 2022, Bangladesh counted $1,853, while Vietnam saw a PCI of $4,164. Despite having a larger GDP, Bangladesh's low PCI is best explained by its higher population. In 2022, Bangladesh had a population of 165.16 million, whereas Vietnam had 99.5 million people.

For a nuanced understanding of these statistics and figures, it should be noted that they are not always representative of the whole picture, as they do not account for inequality, commodity price hikes, environmental well-being, and so on—although in many cases, these numbers help to understand the overall size and potential capacity of a country's economy.

Both Bangladesh and Vietnam share some similarities and have some differences in terms of their respective major industries. For Bangladesh, the major industries are ready-made garments (RMG), textiles, agriculture, and pharmaceuticals, whereas for Vietnam they are RMG, agriculture, manufacturing (electronics and automobiles), and tourism. Against this backdrop, then, there are a few nuances that are inferable.

RMG reigns supreme in both countries, serving as their economic crown jewels. Both countries are close competitors and have been in the top five positions globally for many years. However, key differences lie in their approaches. Bangladesh focuses on cost-effectiveness, attracting buyers thanks to competitive wages and high production volumes. Conversely, Vietnam is increasingly shifting towards higher-value garments, capitalising on its skilled workforce and embracing technological integration in the RMG industry.

Although both countries have a robust agricultural backbone, the focus for each is different. Bangladesh shines when it comes to rice and jute production, while Vietnam excels in cultivating coffee, fruits, and aquaculture. These variations reflect their contrasting geographies—Bangladesh's fertile plains versus Vietnam's diverse topography. But both countries are actively pursuing agricultural modernisation and diversification to ensure future sustainability.

In manufacturing, Vietnam boasts burgeoning electronics and automobile industries, attracting substantial foreign investment. Its focus on high-tech goods signifies Vietnam's aspirations to climb the value chain and diversify its export basket. In contrast, Bangladesh's manufacturing sector remains nascent, primarily concentrated in light engineering and essential goods. This gap reflects varying levels of infrastructure development, technological know-how, and foreign investment attraction.

The economic landscapes of Bangladesh and Vietnam present a promising avenue for collaboration, especially considering the significant milestone both countries aim to achieve: a bilateral trade target of $2 billion in 2023, after achieving $1.5 billion the year prior.

The optimism surrounding this target is based on the healthy economic relations which have already seen the bilateral trade turnover increase, reaching $1.1 billion in the first nine months of 2022 alone. Therefore, the shared ambition for economic expansion has pushed both of these countries to aim to achieve upper-middle-income status by 2030, followed by a transition to developed, high-income status in the early 2040s.

The potential free trade agreement (FTA) between Bangladesh and Vietnam strategically leverages their synergistic strengths for mutual benefit. The proposed areas of consideration include areas of collaboration that span beyond mere trade, such as investments in special economic zones, ICT sector cooperation, textile and garment industry collaboration, and more. Both countries have young, sizable populations (with Bangladesh having an edge with a much larger population) and geographical advantages that facilitate trade, with Bangladesh positioned strategically between China, India, and Vietnam on a long coastline along the East Asian trade corridor.

The major export items from Vietnam to Bangladesh include clinker, cement, mobile phones, and steel billet, whereas Bangladesh exports textiles, leather, medicine, shoe materials, and sesame to Vietnam. Vietnam's investment in Bangladesh further bolstered this dynamic trade relationship, highlighting a diversified and mutually beneficial economic engagement.

Strategic initiatives and high-level engagements are crucial for achieving the full potential of a Bangladesh-Vietnam collaboration. As it stands, both countries are keen on exploring a free trade agreement to improve their economic ties, with discussions focusing on areas relating to trade and commerce, investment, energy, halal trade, tourism, culture, education, health, defence, and security.

In particular, the proposal for a bilateral FTA is vital to ensuring competitive advantages in the global market, especially as Bangladesh prepares to graduate from its least developed country status in 2026. This also extends to Vietnam, which officially achieved lower middle-income status in 2011 but is now cutting it close in the timeline of achieving its aim of gaining upper middle-income status by 2030.

The path forward for Bangladesh and Vietnam is clear—collaboration, not competition. By focusing on strategic partnerships, leveraging comparative advantages, and addressing common challenges, these two nations can set a precedent for how developing countries can achieve mutual prosperity. The journey requires commitment, flexibility, and a willingness to explore new avenues for cooperation.

The rewards—economic diversification, innovation, and sustainable development—are immense and worth the effort. As Bangladesh and Vietnam continue to explore the possibilities of their partnership, the international community will undoubtedly watch with interest, perhaps seeing in their example a template for future cooperation among nations.

Source:Banginews