Vietnam surpasses Bangladesh in RMG export

[bluesky]

VND is linked to chinese currency the Yuan. If Yuan goes up against USD then VND goes up. Same in other direction.

Below is a newspaper report of January this year and it says because of trade war between the USA and China, the Vietnamese Dong will depreciate this year in terms of dollar which may be already happening. So, in this case Vietnamese export prices will be cheaper almost at the same rate as its depreciation.

In the case of BD, the Govt is not allowing a Taka depreciation. I do not know the real reasons but one could be that the GoB likes its GDP shown superficially higher than the actual. Another reason could be the rise of prices of imported items in Taka which will cause a decreased import that will again cause the import duties to decrease forcing the govt to borrow more money from banks and issue more bonds in the market in order to cover Budget deficits.

Excerpt:
"Moreover, as US President Donald Trump wants to use the trade war to gain an advantage over his opponent in his re-election campaign, the war cannot end in 2020, Hieu said, adding this would continue to have a strong impact on US dollar and Chinese yuan in 2020, putting pressure on the dong.

“The impacts will cause the dong to depreciate by between 2 and 3 percent in 2020,” Hieu forecast".

 

[Viet]

Below is a newspaper report of January this year and it says because of trade war between the USA and China, the Vietnamese Dong will depreciate this year in terms of dollar which may be already happening. So, in this case Vietnamese export prices will be cheaper almost at the same rate as its depreciation.

In the case of BD, the Govt is not allowing a Taka depreciation. I do not know the real reasons but one could be that the GoB likes its GDP shown superficially higher than the actual. Another reason could be the rise of prices of imported items in Taka which will cause a decreased import that will again cause the import duties to decrease forcing the govt to borrow more money from banks and issue more bonds in the market in order to cover Budget deficits.

Excerpt:
"Moreover, as US President Donald Trump wants to use the trade war to gain an advantage over his opponent in his re-election campaign, the war cannot end in 2020, Hieu said, adding this would continue to have a strong impact on US dollar and Chinese yuan in 2020, putting pressure on the dong.

“The impacts will cause the dong to depreciate by between 2 and 3 percent in 2020,” Hieu forecast".

But looking YoY, the Yuan appreciates 2pct against USD, VND still increases 1.5 pct in value against the USD. It can be we will lower the currency this year to boost exports. Nevertheless the long term trend for VND is a rising value because we accumulate high trade surpluses.

 

[Destranator]

@bluesky : Currency depreciation is a handy tool for a country like China which produces almost all essential goods locally.

Currency depriciation will be disastrous for BD as, to quote yourself, "we cannot even produce needles".
Unregulated inflationary pressure can cause famine and civil war in an import dependent country like BD.
Currency depriciation is also a lazy short term strategy to boost exports without addressing key deficiencies such as low labour productivity, red tape, poor infrastructure, etc..

I am actually glad that BB has so far resisted the urge to depreciate taka and only hope that they continue keeping taka stable.

Keeping taka stable would help us plan for the long term.

 

[DalalErMaNodi]

@bluesky : Currency depreciation is a handy tool for a country like China which produces almost all essential goods locally.

Currency depriciation will be disastrous for BD as, to quote yourself, "we cannot even produce needles".
Unregulated inflationary pressure can cause famine and civil war in an import dependent country like BD.
Currency depriciation is also a lazy short term strategy to boost exports without addressing key deficiencies such as low labour productivity, red tape, poor infrastructure, etc..

I am actually glad that BB has so far resisted the urge to depreciate taka and only hope that they continue keeping taka stable.

Keeping the taka stable would help us plan for the long term.

We know how to plan

 

[Destranator]

We know how to plan

As the old dinasours in the political arena keep kicking the bucket, younger leaders just might start implementing new ideas and strategies including thinking long term.

 

[bluesky]

But looking YoY, the Yuan appreciates 2pct against USD, VND still increases 1.5 pct in value against the USD. It can be we will lower the currency this year to boost exports. Nevertheless the long term trend for VND is a rising value because we accumulate high trade surpluses.

I forgot to mention the main point in my previous post. That is. even if the Chinese Renminbi and Vietnamese Dong depreciate at the same rate, the cost of labor in China will remain about five times higher than in Vietnam making the cost of low-value production in Vietnam much cheaper.

The Chinese companies will keep on de-investing from the textile industry and invest more in the higher value-added industries based on metals and petrochemicals/plastics. With $1.3 billion investment, China was the largest investor last year in Vietnam, and the total FDI there was as high as $43 billion.

 

[Imran Khan]

This is how Pakistan went from zero to nothing now... we should try to regain and surpass by a wide margin or will be left in dust

pakistan garment exports are doing well you better think yourself .

 

[bluesky]

@bluesky : Currency depreciation is a handy tool for a country like China which produces almost all essential goods locally.

Currency depriciation will be disastrous for BD as, to quote yourself, "we cannot even produce needles".
Unregulated inflationary pressure can cause famine and civil war in an import dependent country like BD.
Currency depriciation is also a lazy short term strategy to boost exports without addressing key deficiencies such as low labour productivity, red tape, poor infrastructure, etc..

I am actually glad that BB has so far resisted the urge to depreciate taka and only hope that they continue keeping taka stable.

Keeping taka stable would help us plan for the long term.

Thanks, but I was talking about Dong depreciation and not the Chinese currency. China is in a different league. I think the market should decide the value of a currency. BD Taka remains today stronger than its real value mostly because of cash remittance by its expatriate citizens. However, GoB also manipulates its rate in order to keep the import cheap.

The import volume is kept high at that and it becomes a good source of govt revenues. But, unless the currency market is allowed to take its course within a limit the high value of Taka will cause to lose our export market to other exporters such as Vietnam whose Dong has been depreciated.

When the export market is under pressure it will be reflected in the employment situation and futher expansion of textiles production which would hurt the economy when there is no large base of other industrial sectors that Vietnam has been building continuously.

Not the Taka depreciation, but other economic mismanagement by the govt are causing a continuous inflation whatever the BBS data claim. The rice price rose by 2 Taka within a week and that is without a Taka depreciation. A depreciation will mostly cause a higher import value of luxury goods with which common people have no relation.

BD exports to EU about $13 billion worth of goods produced and serviced by about 3 million people. On the contrary, it imports $3 billion worth of luxury goods for consumption exclusively by rich people. The total import value must be near or more than $50 billion. What is the number of super-rich people in the country?

However, the govt receives a good amount of import taxes and this is one reason that it does not like a depreciated Taka.

 

[bluesky]

pakistan garment exports are doing well you better think yourself .

I think @Michael Corleone was talking about the time before the depreciation of Rupee.

 

[Imran Khan]

I think @Michael Corleone was talking about the time before the depreciation of Rupee.

well after i learn about rupee i store worring it anymore

he may be right n his view but countries are growing well and have good economy too without artifice increase in currency
1USD = 14917 indonesian ruppiya

 

[Michael Corleone]

pakistan garment exports are doing well you better think yourself .

Not as well as it was, you guys used to be number 2 while we were number 5

 

[bluesky]

well after i learn about rupee i store worring it anymore

he may be right n his view but countries are growing well and have good economy too without artifice increase in currency
1USD = 14917 indonesian ruppiya

However, when the price of Coke/Pepsi (12 oz small bottle) is 8,232 Rp in Indonesia, the price in dollar is $1.81 almost the same in other countries. So, even though the term is Rupiah in Indonesia, it is something like Paisa in Pakistan or Bangladesh. Its 100 Rupiah is the lowest value coin. Please refer to the wiki citation below:

"The current rupiah consists of coins from 100 rupiah up to 1000 rupiah (1 rupiah coins are officially legal tender, but are effectively worthless and are not circulated) and banknotes of 1000 rupiah up to 100,000 rupiah".

 

[Nilgiri]

However, when the price of Coke/Pepsi (12 oz small bottle) is 8,232 Rp in Indonesia, the price in dollar is $1.81 almost the same in other countries. So, even though the term is Rupiah in Indonesia, it is something like Paisa in Pakistan or Bangladesh. Its 100 Rupiah is the lowest value coin. Please refer to the wiki citation below:

"The current rupiah consists of coins from 100 rupiah up to 1000 rupiah (1 rupiah coins are officially legal tender, but are effectively worthless and are not circulated) and banknotes of 1000 rupiah up to 100,000 rupiah".

Both Italian and Turkish Lira (old ones) saw the same kind of downstream effects from earlier upstream inflation (or even hyperinflation) episodes. Even Japanese Yen to some degree (thats why like 100 yen is like 1 USD traditonally).

Sometimes countries create new version and revalue and reissue to make things simpler. Turkey did that with new lira, thats why its like 1 USD = 7 lira now or so rather than some million lira like before.

Taiwan also has New Taiwan Dollar etc for similar reason, coz the old one depreciated to some crazy level.

But the number itself in current time frame is not really an indication of snapshot of the current economic strength by itself....as a country can meaningfully stabilise its currency rate and inflation rate at any level be it 1, 10 or 10,000 or 10 million even to a dollar (though the larger it is, the kind of sillier it is to have it there).

 

[Viet]

I forgot to mention the main point in my previous post. That is. even if the Chinese Renminbi and Vietnamese Dong depreciate at the same rate, the cost of labor in China will remain about five times higher than in Vietnam making the cost of low-value production in Vietnam much cheaper.

The Chinese companies will keep on de-investing from the textile industry and invest more in the higher value-added industries based on metals and petrochemicals/plastics. With $1.3 billion investment, China was the largest investor last year in Vietnam, and the total FDI there was as high as $43 billion.

That is a misunderstanding.
Vietnam’s labor cost is 1/2 of China not 1/5. If we are just 1/5 of the cost, China manufacturing has no chance against Vietnam in making products.
The long term trend is clear: China delivers raw materials and resources while we make it to finished goods.
Second, $1 is 23.208 VND (15, August 2019). Now $1 is 23.174 VND (14, August 2020). That means USD is less worth.

 

[Tigers]

The South East Asian country with limited resources has fought a good fight against the virus – contained it promptly and successfully with zero fatality rate; while it killed millions around the world, especially in Southern European countries such as Italy and Spain, and the US – the top destinations for both Vietnamese and Bangladeshi apparels.

Terrible reporting from TBS.

The official tally of deaths from coronavirus has not crossed one million. Latest figures are 766,000 dead which is a lot but far away from 'millions'. You can argue there is under-reporting and misreported deaths so unofficial total can be one million but no one in their right mind claims 'millions' are already dead.