Bangladesh is the world's second-largest exporter of textiles (after China). They have a large workforce, especially with low wages.
The Bangladesh Textile Mills Association has announced the closure of all member factories for three days, following the government's decision to impose a three-day general holiday. All banks and public offices have been closed. The government has imposed a nationwide curfew and blocked 4G mobile networks to contain the unrest. Bangladesh is the world's second-largest exporter of textiles (after China). They have a large workforce, especially with low wages. According to the Business Standard newspaper of Bangladesh, many textile exporting enterprises in Bangladesh are seeing a 25-40% decrease in orders. Not to mention the decline in export prices. The reason is the decrease in demand in the world. Imports from Western Europe have decreased due to inflation.
Imports from Russia have also declined sharply. Some businesses, which used to export more than 1 million USD/month to Russia, have now dropped to zero. But the more important reason is the gas supply crisis many Bangladeshis face. The tight budget situation is said to have forced the Bangladeshi government to cut gas subsidies.
Orders were already tighter than before, but when orders came, many businesses had to decide to cancel them. Textiles are a gas-intensive industry. In many cases, the production costs of Bangladesh businesses are now higher than the export price on the market. The Asian Development Bank recently warned that over-reliance on the textile industry has posed a major and long-term risk to the Bangladeshi economy. ADB research also pointed out that Bangladesh is not only over-dependent on textile exports, but its textile markets also lack more diversity. 4/5 of the country's total exports are currently limited to North America and the European Union markets. As a strong competitor of Vietnam, with the above situation, there will be some advantages for Vietnam's textile industry in the short term when the Bangladesh textile industry will face difficulties because:
1/ Bangladesh's textile production capacity will temporarily decrease (in the middle of the hot season, producing goods for winter). Many customers must move orders to other countries to compensate for the shortage.
2/ Customers' trust in the Bangladesh textile industry will decrease
3/ There will be pressure to increase wages for Bangladeshi textile workers. Thus, Bangladesh's advantage in terms of labor costs will decrease.
