“Is Vietnamese labour cheaper than us? We should find out what is the reason behind this.”
Thus ran one below the line comment on a story about Vietnam overtaking Bangladesh to become the second-largest ready-made garment exporting nation after China.
I will never understand why people on social media platforms spend more time typing out a question than they would have on looking up the answer.
No is the answer of course. Vietnam may not be a high wage country, but on IMF estimates its per capita GDP (in PPP terms) is heading towards twice that of Bangladesh.
As both nations have had annual RMG exports over $20 billion for over six years and Vietnam’s market share was growing faster, the only sensible question to have asked was: What took Vietnam so long?
Before we count some ways in which this should not be a mystery, it’s worth remembering Bangladesh’s RMG sector still has room for growth. The industry is well-established and first grew when the nation’s infrastructure and logistics were weaker than today. Larger suppliers have also invested significantly in more modern factories and have a growing number of LEED Green Factory certifications. As global demand picks up and the pace of Chinese offshoring increases, they should deservedly expect to grow market share.
Vietnam, meanwhile, is an economic powerhouse exporting a wide range of commodities and electronics worth over $300bn a year. Its export value is far closer to all of India’s than it is to Bangladesh, amounting to well over $3,000 dollars per annum for each of its 97 million people, and far from over-reliant on RMG.
Foreign direct investment into Vietnam also runs at several multiples of that achieved by Bangladesh at over $16 billion and is growing fast. As part of the Trans-Pacific Partnership, it also has superior access to markets. Bangladesh is far behind in terms of trade diplomacy; after all these years, despite neighbouring Asean, it is not even one of Asean’s 10 dialogue partners (predominantly much richer nations but including both Pakistan and India.)
No excuse for being surprised then. And even less to ask questions that belie ignorance. A harsh word, but its underlying assumption — that Bangladesh can only compete on cheap labour — says a lot. The person asking that question, not to mention other commenters who tended towards self-pity, has low ambitions and/or expectations for the country.
Presumably they have reasons and experiences for thinking this way and these should be tackled by those better placed than myself. But fatalism is not a helpful mindset.
In fact, its potentially suicidal.
All the world’s problems, from climate change to building democracy and human rights and sustainably increasing living standards, have a frontline in Bangladesh and need to be solved in Bangladesh. There is no alternative unless you think 2% of humanity is going to get a green card.
Citing corruption and blaming the government are the go-to scapegoat for all ills in Bangladesh, but just as fatalistic really. Every country in the world has some form or another of corruption and people everywhere tend to distrust politicians, but this does not stop other countries from being better at delivering services for their people.
Denial and self-delusion are found in every country of course. Governments of wealthier countries for instance seem to imagine that the problems caused by climate change can be alleviated without doing more to support poorer countries in improving living standards.
Ultimately, it is low investment in education and workplace skills that keeps around 140 countries more productive and above Bangladesh in global per capita GDP rankings, even though by size alone it is about a hundred places higher and rising.
Sadly, it often seems many of the things in which the nation’s opinion formers take the most pride are those where denial lies beneath.
Women’s empowerment is rightly a cornerstone of public policy and key to many of the nation’s achievements in the past 50 years, not least in the garment sector and in reducing family size. But patriarchy prevails, inequality in inheritance rights is the norm, and the actual average age of marriage is still under the minimum legal age of 18 for girls.
Bangladesh is rightly proud of its farmers. Their innovation and resilience have taken food production to new heights, and is the bedrock on which the economy has grown since independence. But there are clear limits to the land available and the already huge number of people they can productively employ.
Equality and secularism are championed by the constitution, but how often do you hear of people talking about “others,” being racist, or disparaging minority groups and refugees? Maybe not as frequently as people saying the word corruption, but even once is too often.
Bangladesh has much to be proud of in the pace of its development, entrepreneurship, and rising economic growth. But employers still complain about shortages of appropriately skilled workers in key sectors. Literacy rates are rising along with school enrolment among the young, but still not everyone gets enrolled or lasts the course. And for those that do, the quality of education is often poor. Or at least weak enough for academics and employers alike to complain about standards.
No surprise really. The economy is addicted to cheap labour, both at home in the pitiful day rates on which so many must survive, and in the heroic but often maltreated or underpaid armies of remittance men the nation touts to the Middle East.
Originally a consequence of a bountiful climate and fertile soil bequeathing a high density of population, the boon of cheap labour is now just as much an albatross. Bangladesh’s very own resource curse, perpetuated by a lack of aspiration and half-baked remnants of feudal attitudes. “We/they don’t expect any better.”
Global events and imperial legacies no government can change alone. But a proportion of government spending? Well, that’s within what governments could do and tax-payers ought to support.
But they don’t, do they?
So it is that Vietnam has a 95% literacy rate and (like Malaysia and Thailand) spends over 4% of GDP on public spending in education.
Bangladesh spends less than 1.5%.
Ending denial is meant to be a good first step towards overcoming an addiction.