That question looms particularly acute for Bangladesh and Cambodia.
As LDC graduation redraws the trade map, the real test for apparel exporters is staying ahead without the old safety nets.
Experts say the new currency of competitiveness is reliability, quality, resilient supply chains and industrial upgrading.
In this next chapter, success would not be tariff-driven; it will be powered by productivity, innovation and efficiency.
Both countries have benefited significantly from duty advantages, allowing their exports to enter key markets at preferential rates. For Bangladesh, the challenge is especially significant. The country, the world’s second-largest apparel exporter and also one of the largest users of LDC trade preferences, is expected to face significantly higher tariffs once preferential access is withdrawn.
Historically, exporters in these countries have benefited from two fundamental advantages: competitive labour costs and preferential market access. Both, however, are becoming increasingly uncertain, posing significant challenges to their long-term competitiveness.
Meanwhile, the broader trading system that once underpinned the rise of export-led manufacturing is being reshaped by geopolitical tensions, sustainability mandates, shifting sourcing strategies, and so on. As a result, global buyers are no longer guided by cost alone; they are increasingly prioritising speed, reliability, traceability, environmental compliance, and overall supply-chain resilience.
Take, for example, the European Union’s GSP+ framework, which places greater weight on compliance standards, sustainability commitments, and local value addition even as rules of origin are tightening simultaneously.
For Cambodia, the rules of origin pose a pressing challenge, as its export base remains heavily reliant on imported raw materials, and stricter requirements could intensify pressure to develop stronger domestic textile capabilities.
Industry observers also argue that the era of competing primarily on wages is drawing to a close. Cambodia’s garment sector, which has traditionally leveraged cost competitiveness, as is Bangladesh, is now being urged to invest in productivity, skills, and higher-value manufacturing.
“Cambodia’s garment sector has always competed on cost, but that is no longer enough on its own,” observed the secretary-general of the Textile, Apparel, Footwear & Travel Goods Association in Cambodia (TAFTAC), underscoring a growing reality that competitiveness now depends as much on innovation, sustainability and efficiency as on affordable labour.
According to the TAFTAC secretary-general, the factories most likely to thrive after LDC graduation will be those capable of offering reliability, quality and a workforce able to move up the value chain alongside increasingly sophisticated products.
Industry stakeholders across the region echoed this sentiment, even as Bangladeshi garment manufacturers continue prioritising value-added products and operational efficiency to offset the loss of duty-free, quota-free benefits and direct export subsidies following the country’s LDC graduation.
Meanwhile, the Cambodian Prime Minister has emphasised that the country should prepare for its planned graduation from the United Nations’ Least Developed Country (LDC) status by 2029. Speaking at the 3rd National Day of Micro, Small and Medium Enterprises (MSMEs) recently, the Prime Minister is reported to have said, “Although this transition will bring some unavoidable challenges, it is an important and necessary step for the nation to pursue greater global opportunities and achieve true economic independence,” even as he underlined that after LDC transition, preferential tariff conditions will be reduced.
Given the current landscape, experts say the time has come to strengthen upstream industries to build a more resilient and competitive sector. They also stressed the need for greater investment in human capital, arguing that workforce capability will become an increasingly critical competitive advantage as trade preferences gradually diminish. Pointing to Vietnam, they said the country’s experience offers a useful benchmark for navigating the transition.
While Vietnam’s development trajectory differs from that of Bangladesh or Cambodia, its experience demonstrates how competitiveness can be strengthened through integration rather than protection.
Over the years, Vietnam has implemented a comprehensive agenda of trade liberalisation, investment facilitation, infrastructure upgrades, and regulatory reforms. This strategic positioning within global value chains has enabled the country to attract substantial foreign investment and move into higher-value manufacturing activities.
However, industry insiders are also quick to caution that Vietnam’s path cannot be replicated easily as different countries operate under different economic, institutional and geopolitical realities. However, they agree on one central theme: sustained competitiveness is built through productivity gains and industrial upgrading, not through indefinite reliance on special treatment.
As Bangladesh and Cambodia move closer to LDC graduation, the debate is therefore shifting beyond tariffs and trade preferences. The real issue is whether their apparel industries can successfully reinvent themselves for a world in which competitiveness is defined by innovation, sustainability, efficiency, and value addition.
“While graduation marks the end of one phase, the decisions taken now will determine the trajectory of the next chapter of development,” observed an industry insider to conclude on an optimistic note.
Fibre2Fashion News Desk (DR)
