HA NOI (Biz Hub) — The garment-textile and leather-footwear sectors brought in US$10.5 billion from exports in the first four months of this year.
Of the total, the garment-textile sector generated $6.82 billion, an annual increase of 6.2 percent.
The Vietnam Textile and Apparel Association (VITAS) said most orders sealed in the period came from major markets including the US, EU, the Republic of Korea and Japan.
Overall export revenue increased, but the value of orders stayed unchanged, it said.
According to the Ministry of Industry and Trade, a number of apparel producers have secured enough orders for production until the end of the second quarter; others even have enough work for the entire year.
The leather-footwear industry earned $3.68 billion worth of export turnover in January-April, up 4.8 percent compared to the same period last year.
The Vietnam Leather and Footwear Association (Lefaso) said many firms operating in the sector are ramping up their production to fill export orders in May and June.
Workers process garment products for export at Norfolk Joint Stock Company in Dong Van 1 Industrial Zone. (Photo: VNA)
Hanoi (VNA) – Producers of export quality garments are facing a reduction in orders, according to the Vietnam Textile and Apparel Association (VITAS).
Vu Duc Giang, VITAS Chairman, said they were considering moving export garment orders from Vietnam to Cambodia, Laos, and Myanmar, because customers of those countries would join the preferential export tax when exporting to the United States (US) and Europe.
Meanwhile, the Trans-Pacific Partnership Agreement (TPP) and Vietnam-European Free Trade Agreement have not yet come into effect. Therefore, partners of Vietnam’s export garment producers could not join any preferential tax regime from those agreements.
According to the General Department of Customs, Vietnam gained a year-on-year growth in export values of garments at 7 percent to 7 billion USD in the first four months of this year, lower than the expected rate of 10 percent. Import of materials for export garment production dropped in four months.
Hoang Trong Khang, Deputy Head of the Import and Export Division at the Viet An Joint Stock Company specialising in garment exports to the US, European Union (EU) and the Republic of Korea (RoK), said the company saw reduction in exports to some major markets, including RoK.
In fact, export orders for production in the second and third quarters have reduced by 5 percent to 7 percent against the same period last year, according to the association. The local enterprises were worried about the ability to move export orders of traditional customers to other regional countries in the second and third quarter. That situation would affect exports of enterprises as well as the garment industry.
To take more export orders and set up professional production and business activities, the Vietnam Textile and Garment Group (Vinatex) has developed Vinatex International Joint Stock Company (VTJ) and the Supply Chain Development Center (SCDC).
The two businesses would combine and support member companies of Vinatex to exploit and expand the export market, seek customers and develop a supply chain from material to finished products, Tran Quang Nghi, Vinatex Chairman, said.
So far, the SCDC has had eight regular customers for garment products and been developing 20 customers in the US, the Europe, RoK and Japan.
The centre has had 10 customers for cotton and fibre and has been developing 30 customers of the products in Chile, China, Thailand, and Malaysia, in addition to RoK.
VTJ has had 10 customers and it has concentrated on the US and Japan markets with large export volumes.
Vietnam expected to gain total export value of 30 billion USD for this whole year, which is 3 billion USD more than in 2015.
Vietnam’s small and medium apparel enterprises struggled to survive in the first quarter of 2016, with many of them suspending production, as their customers shifted orders to Myanmar and Laos to enjoy lower prices, Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (Vitas) said at a conference in Ho Ch Minh City recently.
Vietnam exported $27.4 billion worth of apparel last year and over $8 billion in this year’s first four months, up 6 per cent against the same period a year earlier, Giang said.
But the Vitas chief said that despite rising shipments, the industry is coping with a slew of challenges. Many small and medium enterprises have been mired in difficulties as they have found it hard to compete.
Giang explained that apparel products of Myanmar and Laos enjoy special tariffs for exports to Europe and the US while Vietnamese firms will have to wait until 2018 to make use of preferential tariffs to export products to these two major markets when the new free trade agreements with them take effect.
Additionally, apparel enterprises have become exhausted by so many inspections by customs, taxation, labour, environment and food safety authorities, with up to three or four inspection teams a quarter.
Giang also reiterated Vitas’s request to the Government to revise the master development plan for the textile-garment industry towards 2020 as it is now outdated. Vietnam’s apparel exports exceeded $27 billion last year against a target of $20 billion for 2020.
He also said that the plan must be revised to match the development of industrial parks to facilitate management and wastewater treatment.
In response, Minister of Industry and Trade Tran Tuan Anh said the development plan would be revised next year to make it compatible to the country‘s international integration moves. (SH)
Representatives of several textile and garment companies in Vietnam have rejected popular perception that they would be the biggest beneficiaries of the TPP (Trans Pacific Partnership) Agreement.
At a recent workshop organized by World Bank and the Vietnam Chamber of Commerce and Industry (VCCI), industry experts said that the sector would not stand to gain much from TPP and the government’s own policies on the textile and garment industry, a Vietnamese online newspaper has reported.
“Many textile and garment companies are leaving the market because of the state’s unstable policies,” said Truong Van Cam, Deputy Secretary General of the Vietnam Textile and Apparel Association (Vitas) citing the example of an exporter whose import of a printer was delayed by six months because of a government decree that says business owners must have junior college’s degree to be able to import printers.
A business in Nam Dinh province, which employs 2,000 workers, said it has to pay VND40-50 billion additionally every month because of the required higher minimum wage and trade union fee.
“The State’s policies need to be designed in a way to encourage investors to do business and stay in the market,” Truong said.
Another analyst said that the government seemed to be too optimistic about potential opportunities to the textile and garment sector by TPP.
In 2015, Vietnam exported $27 billion worth of textile and garment products, 60 per cent of which went to TPP member countries. However, foreign invested enterprises (FIEs) pocketed most of the money.
He further explained that TPP’s strict requirements on origin of products, would not be of much help for Vietnam as it imports 10 per cent of yarn and 5.3 per cent of cloth from TPP countries while 60-70 per cent of materials needed are imports, mostly from China.
Thus, most of materials needed come from non-TPP countries and products with non-TPP origin won’t be able to enjoy preferential tariffs, he said.
Pham Xuan Hong, chair of the HCMC Textile, Garment, Knitting and Embroidery Association, also pointed out that the profits earned by Vietnamese enterprises are modest because they mostly do outsourcing for foreign partners.
According to an industry report, Vietnam now has 6,000 textile and garment companies, of which garment units account for 70 per cent, 17 per cent are textile enterprises, 6 per cent spinning, 4 per cent are dying enterprises and 3 per cent make accessories and additional materials.
A good 70 per cent of units make products under the mode of cutting – assembling – trimming. This means that Vietnamese are proficient in the last phases of the production chain, and less so in dyeing and weaving. This is not likely to reap much benefit under the TPP agreement, they noted. (SH)
