Recently, the Bangladesh-Vietnam Friendship Society has been established with the former ambassadors of Bangladesh to Vietnam, members of the Bangladesh-Vietnam Chamber of Commerce and many other elites celebrating the occasion of the 50 year anniversary of diplomatic relations between the two countries.
It was in 1973 that diplomatic relations between Vietnam and Bangladesh were established. Vietnam was among the first countries to acknowledge Bangladesh’s independence. It is clear that the 50 years of friendly relations between Bangladesh and Vietnam have been of great significance to both countries, as evidenced by the narratives of the Bangladeshi and Vietnamese governments. Recently, the Vietnamese Ambassador to Bangladesh Pham Viet Chien expressed his country’s commitment to a stronger trade and investment relationship with Bangladesh.
There has been remarkable growth in bilateral trade between the two countries over the past decade and by 2023, the value of trade between the two nations is projected to reach $2 billion. Such a strong trade relationship has proven to be conceivable because the two countries prioritize each other in their regional engagements. Bangladesh’s second largest trading partner in South Asia is Vietnam. Similarly, Vietnam also has contributed to Bangladesh’s foreign investments in different emerging sectors such as ICT, garments, agriculture, and tourism.
Although Bangladesh and Vietnam are well-known worldwide for their textile industries and are sometimes seen as competitors in the global apparel market, both countries recognize the value of a diligent cooperation. There can be more to their bilateral relationship, given that both are emerging economies in Asia. The Vietnamese Ambassador, Pham Viet Chien previously showed enthusiasm in this regard stating, “I think there is a lot of potential to further boost the economic relations between the two countries – from manufacturing industry to agriculture.”
Vietnam has shown resilience like that of Bangladesh in the post-pandemic period as its economy recovered rather quickly from the impacts of the worldwide lockdown during the pandemic. This reflects the sign of an inherently strong economy. Also, the US-China trade war over Asia has significantly favored Vietnam’s economy and it will continue to do so. If it wants to become a high-income country by 2040, Vietnam must diversify its market further raking in all its opportunities.
Vietnam may be able to get access to South Asia through Bangladesh if the two countries develop closer ties. Trade ties with Bangladesh have shown that Southeast Asia has the potential to become a sizable market for Vietnamese exports. Via Bangladesh, Vietnam may reach Nepal and Bhutan, markets with considerable demand for Vietnamese exports including cell phones, electronics, and industrial goods.
Through a bolstered relationship with Bangladesh, Vietnam can also avail itself a seat in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) for furthering its blue economy in the Bay of Bengal and Indo-Pacific region. Vietnam can also invest in the global halal food market, anticipated to reach $15 trillion in 2050, by capitalizing Bangladesh’s halal food market by investing in halal cattle meats. Bangladesh can also be a rice export hub for the country since it just signed an agreement to import 200,000 tons of parboiled rice and 30,000 tons of white rice from Vietnam to meet domestic demand and rising rice prices.
Although bilateral trade is on the rise, Bangladesh is running a trade deficit with Vietnam since as it imports $678.6 million worth of goods whereas its exports amount to only $61.29 million. Bangladesh has also struggled to attract significant investment from the country, with Vietnam only investing in one project worth $27,900. To attract Vietnamese investment, Bangladesh might provide easier ways to invest in its economic zones related to technology or tourism, where it may give country-specific services to Vietnam. Bangladesh already has a low minimum salary of US$ 95, making it a desirable location for Vietnamese investors to transfer their operations.
Bangladesh competes with Vietnam for the global apparel market, but there are lessons in Vietnam’s journey that can help it in the future. Bangladesh’s export basket is standing on the apparel industry as 81.82 percent of its export income comes from the RMG sector. Bangladesh is heavily depended on cotton which is exported from China and India while Vietnam uses both man-made fibers and cotton.
Due to this, the recent US ban on Chinese cotton can heavily impact Bangladesh’s apparel industry. However, the RMG sector is a strong backbone of the country’s economy. Therefore, to lessen the dependency on other countries, Bangladesh can try using mean-made fibers and cottons at a limited scale initially. Later, if it is economically viable, the country can switch to man-made materials. So, this is one of various sectors in which Bangladesh and Vietnam can share their knowledge and information to further each other’s growth in the market.
Given its economic growth, Bangladesh may soon face the consequences of losing its LDC status, such as losing duty-free garment exports to the EU. As experts have said for decades, Bangladesh must diversify its export products as well as its export markets. The country’s developing pharmaceutical sector may potentially find its way to Vietnam, where imports have increased in the last decade to suit the country’s pharmaceutical demands.
In February, Vietnam extended its market authorization of EU pharmaceutical exports which will ease the EU’s access Vietnam’s pharmaceutical sector. If Bangladesh can gain the same privilege, it can have an accelerating effect on the existing pharmaceutical trade among the countries-reducing trade deficit of Bangladesh.
Recently, Jong Won Kim, the Director General of the Green Growth Department at the Korea Trade-Investment Promotion Agency said that the countries that missed the boat to invest in Vietnam should look forward to Bangladesh for venture opportunities which indicates that Vietnam and Bangladesh are parallel to each other’s success in the current world. If the countries continue to collaborate smartly, they can be each other’s most trusted allies in the region. Bangladesh, focusing on its “look east policy”, can find a strong partner in the support of the ASEAN member Vietnam. It can also position itself in the intersection of South Asia and Southeast Asia.
*The writer is a student of Peace and Conflict Studies (MSS) at Dhaka University, Bangladesh.
April 11, 2023
The viewpoints expressed by the authors do not necessarily reflect the opinions, viewpoints and editorial policies of Aequitas Review.
