Good news. Bangladesh’s share in global apparel market grew by over 50 percent in the last eight years.
Bad news. Its main competitor Vietnam is also breathing down the neck as its market share grew twice as fast and they are closing the rank on Bangladesh.
And India, the fourth largest apparel exporter, is finding it a hard journey. On the heels of its competitors, its share grew by a piffling 3 percent in the last eight years.
A clear advantage that both India and Vietnam along with the other major competitors – except China and Cambodia – have enjoyed is that they had all devalued their currencies significantly over Bangladesh.
Actually Bangladesh devalued the least, if China and Cambodia are excluded.
This has eroded Bangladesh's competitiveness on the single factor of exchange rate, necessitating the government to announce 1 percent cash incentive on export earnings from the segment of apparels that were previously not eligible for such benefits.
And all these apparel exporters in the race had made the gains at the cost of China's slip on the global pie.
Significant currency depreciation in competitor countries is eroding our competitiveness as we are competing in the same global market, said Rubana Huq, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
“We believe that a devaluation of Tk5 per dollar would give an extra margin to the whole export sector of the country at least by around 5 to 6 percent,” she said.
China’s market share erosion may look slight in percentage terms but it commands such a big share of the global apparel market – about 31 percent or $158 billion – that even the small retreat is too lucrative for the others racing at a far lower level to jostle for.
And it is thought that China will lose more of its global market share because of rising labour cost, and of late, for the trade war with the US.
It is on such presumptions that global management consulting company Mckinsey & Company had forecast Bangladesh’s apparel export will spiral to $50 billion by 2030, from today’s $34 billion.
However, it has one big problem and that is Vietnam.
With its high productivity at the level of 70, almost double of Bangladesh’s, Vietnam is revving up fast.
Vietnam has already cached Bangladesh in clothing export market, becoming a darling for buyers.
And so economists now say a taka devaluation would make a big difference to Bangladesh to keep up its pace.
They argue, with reasonable evidence, that cash incentives are often abused with fake exports.
Rather, the market should dictate the exchange rate and save the day.