You are here
BREXIT: Impact on the textile industry of Vietnam and Bangladesh
The recent UK-EU membership referendum (referred to as ‘Brexit’) resulting in an overall vote for UK to leave the EU as opposed to remaining an EU member, has Bangladesh’s apex garment manufacturer’s entity – Bangladesh Garment Manufacturers and Exporters Association (BGMEA), prominent economists and trade bodies expecting negative impact on Bangladesh’s exports, especially on apparels, as the UK is the third largest garment importer from Bangladesh.
Like many other countries, economists and analysts in Dhaka also expressed apprehensions about probable negative impact of UK’s exit from the EU, among which are losing duty benefits on Bangladesh’s exports, decline in remittance inflow and volatility in the foreign exchange market… “It seems that our export to Bangladesh’s big market – the UK will be under pressure. We seek Government support so that we can maintain smooth export to the region,” reportedly stated BGMEA Vice President (Finance) Mohammed Nasir to a news agency.
Dhaka Chamber of Commerce and Industry (DCCI) has also urged the Government to immediately take into account possible consequences and take precautionary measures to deal with the developments, besides requesting the Government to initiate focused bilateral discussions with UK to find alternative way outs and avoid unforeseen economic repercussions. In the wake Britain’s exit from the EU, the Government has now reportedly decided to form a committee to fix the next course of action. “A new situation has been created after Britain voted to break away from the EU in a historic referendum,” said Commerce minister Tofail Ahmed, adding the Tariff Commission Chairman would lead the proposed committee as the country needs to keep its business interest unharmed.
Reacting on the development, prominent economist of the country, Dr. Khondaker Golam Moazzem reportedly maintained that if the ‘volatility’ continues in Britain’s internal economy, such a situation may discourage import in Britain. “In that case, there might be an impact on Bangladesh’s export,” Moazzem underlined, while former advisor to the caretaker Government, Dr. AB Mirza Azizul Islam reportedly said Bangladesh’s export might be affected to some extent. “If the value of both British Pound and Euro falls, there’ll be a negative impact on Bangladesh’s export,” reportedly maintained Islam.
It may be mentioned here that Bangladesh enjoys full duty- and quota-free access to the EU for all its exports with the exception of arms and armaments under EU’s ‘Everything but Arms’ arrangement. Since UK left the EU, Bangladesh now will have to renegotiate trade agreement with the UK after two years, since the decision of leaving the EU will come into effect after 2018 only.
Vietnamese textile industry experts feel that immediate Brexit impacts on the market are unlikely. No significant impact will be there on the textile trade too, as the UK currently accounts for only 3 per cent of Vietnam’s textile export to the EU.
As far as bilateral trade ties between Vietnam and the UK are concerned, experts are of the opinion that the situation will remain a little tough at the moment, but there will be no major impacts from the Brexit in long term. Vu Duc Giang, Chairman of Vietnam Textile and Apparel Association (VITAS) is of the opinion that UK’s decision to leave the EU will have certain impacts on the roadmap to realize the free trade agreement between Vietnam and the EU in the coming time. In the immediate term, export orders to the UK are unfazed. There will certainly changes in the longer term but I believe there will be no severe impact for Vietnam’s textile industry.”
On the other side, leather and handbag industry will also remain unaffected… Nguyen Duc Thanh, Chairman of Vietnam Leather, Footwear and Handbag Association (LEFASO) says that compared with other EU countries, the UK also accounts for a modest share of Vietnam’s footwear export, so the impacts, if any, will not be significant.