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Vietnam Briefing explores the Vietnam – Bangladesh commerce relationship and examines key strengths powering each these export-led nations. We additional spotlight commerce between each nations, their rising relations, and the way they’ve benefitted from the US-China commerce warfare.
Vietnam and Bangladesh are each financial powerhouses which have been rising their GDP considerably due to an export-led progress mannequin. Bangladesh has had one of many fastest-growing economies in Asia for years. The nation averaged near 7 p.c progress over the previous decade, reaching an 8.1 p.c progress charge in 2019. Per capita revenue reached almost $2,000 final yr, rising greater than three-fold since 2006.
Vietnam has been the identical, averaging near 7 p.c progress and reaching a 7 p.c progress charge in 2019. Per capita revenue reached US$7,900 in 2019. Its center class has been rising, contributing to elevated consumption and retail gross sales.
In some sense, they’re even opponents as Vietnam surpassed Bangladesh to turn into the second-largest garment exporter as per the World Commerce Group in 2020.
Vietnam – Bangladesh relations
But Vietnam and Bangladesh stay shut companions and established ties in February 1973. In 2013 the 2 nations celebrated the fortieth anniversary of the institution of diplomatic ties.
In 2018, former Vietnamese President Tran Dai Quang throughout a three-day go to to Bangladesh stated “Vietnam and Bangladesh get pleasure from a superb conventional friendship on the idea of historic similarities and the shared values of independence, peace, cooperation, and growth.”
Vietnam and Bangladesh are striving to double bilateral commerce to US$2 billion by 2021. Each nations have recognized 11 precedence areas together with agricultural commerce and pharmaceutical exports from Bangladesh to Vietnam. Commerce between Vietnam and Bangladesh has grown because the first Joint Commerce Committee assembly in 2015.
Each Vietnam and Bangladesh have giant and younger populations which suggests a big labor pool that companies can use. Each nations additionally profit from geographical benefits. Bangladesh is situated between China and India and touches ASEAN, it additionally has entry to the Bay of Bengal, permitting ships entry to commerce into the nation.
Vietnam in distinction has an extended shoreline exposing it to the East Asian commerce hall. It has ports, airports, and borders China, making it an excellent China plus one location.
Vietnam – Bangladesh commerce
Vietnam has made a number of investments in Bangladesh up to now: these embrace investments in Bangladesh’s particular financial zones, ICT sector cooperation, bilateral cooperation in textile and clothes sector, commerce in halal merchandise, commerce in software program companies, direct air hyperlink, promotion of commerce in jute and jute items, banking sector cooperation and tourism sector cooperation.
The primary export merchandise from Vietnam to Bangladesh embrace clinker, cement, metal billet, and cell phones. In distinction, Vietnam primarily exports textile, leather-based, shoe supplies, medication, and sesame from Bangladesh.
By way of funding, by April 2019, Bangladesh’s complete funding in Vietnam reached $1.18 million, rating 43 out of 80 nations and territories investing in Vietnam.
In the meantime, Vietnam has one funding challenge in Bangladesh with a complete capital of US$27,900. Bangladesh presently ranks 68 out of 72 nations and territories during which Vietnam has invested in.
Future outlook
Each Vietnam and Bangladesh have open commerce insurance policies, a aggressive labor pressure, and incentives for overseas companies. Vietnam has pursued an open commerce coverage by a number of free commerce agreements. The latest Complete and Progressive Settlement for Trans-Pacific Partnership (CPTPP), EU-Vietnam free commerce settlement (EVFTA), and the UK-Vietnam free commerce settlement (UKVFTA) are a testomony to this. Vietnam has additionally modified home legal guidelines to make the nation engaging to traders with overseas corporations competing for native enterprise. A number of multinational corporations akin to Samsung, Google, Adidas, Nike, Foxconn, and H&M have moved manufacturing to Vietnam boosting Vietnam’s exports and investments.
In Bangladesh, giant export of attire to the EU and the US make many of the nation’s exports. The EU has allowed manufacturing from least developed nations (LDC) like Bangladesh duty-free. Nonetheless, as Bangladesh’s financial system improves and per capita revenue rises it stands to lose its LDC standing.
Bangladesh overseas minister additionally famous that Vietnam-Bangladesh bilateral commerce is but to achieve its full potential and sough extra funding in Bangladesh’s particular financial zones and hi-tech parks.
Bangladesh and Vietnam share frequent targets in main multilateral worldwide boards such because the United Nations (UN), Non-Aligned Motion (NAM), and South-South Co-operation. Leaders from each nations have paid common visits enhancing bilateral relations in addition to prolonged their mutual co-operation in varied multilateral boards.
Whereas Vietnam and Bangladesh would not have a free commerce settlement, each nations have emphasised commerce and the necessity to create the most effective circumstances for entrepreneurs and enterprise communities of the 2 nations to discover enterprise and funding alternatives in each nations.
As each Vietnam and Bangladesh look to additional their economies there are ample alternatives for commerce between the 2 nations. Each Vietnam and Bangladesh have benefitted from the US-China commerce warfare and that is unlikely to alter any time quickly. As well as, as China strikes up the worth chain, manufacturing within the nation is rather more costly than it was a number of years in the past. And whereas China’s manufacturing industries, infrastructure, and provide chain is unmatched, Vietnam and Bangladesh have excelled in industries akin to garment and textiles, creating alternatives.
Nonetheless, Vietnam is trying to draw hi-tech funding and transfer up the worth chain from simply easy assemblies. Bangladesh is trying to do the identical by diversifying its manufacturing. Slightly than simply clothes, it wants to maneuver into electronics manufacturing like Vietnam and transfer up the worth chain. Bangladesh additionally has China as a big buying and selling companion and is a part of the Belt and Street Initiative; that is seemingly to assist additional develop its financial system. Whereas Bangladesh has an extended method to go, it’s on the way in which to turn into a middle-income nation
Whereas COVID-19 has affected these plans to a sure extent, long-term targets stay on observe as each nations are poised to turn into financial powerhouses.
About Us
Vietnam Briefing is produced by Dezan Shira & Associates. The agency assists overseas traders all through Asia from places of work internationally, together with in Hanoi, Ho Chi Minh Metropolis, and Da Nang. Readers might write to vietnam@dezshira.com for extra assist on doing enterprise in Vietnam.
We additionally keep places of work or have alliance companions aiding overseas traders in Indonesia, India, Singapore, The Philippines, Malaysia, Thailand, Italy, Germany, and the United States, along with practices in Bangladesh and Russia.
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