Garments and Textiles In Vietnam – Is The Future As Bright As The Past? | ||||||||||||||
来源: 发布时间:2019-01-17 14:35:07 | ||||||||||||||
Vietnam’s garment and textile industry has been one of the country’s leading sectors, recording growth of more than 15% annually between 2001 and 2014, remaining the chief contributor to Vietnam’s economy. 18% year-on-year growth was registered by Vietnam’s textile and garment exports in 2013, which took exports value to a whopping US$20 billion.
Garment and textile exports also accounted for a significant proportion of Vietnam’s GDP (approximately 15%) and total exports (about 18%), in the same year. The industry provides jobs and salaries to over 4.5 million workers, out of which approximately 2.5 million are direct workers in 4,000 textile and garment enterprises. Products of the industry get shipped to more than 180 countries across the world.
A lot of optimism is budding around the industry’s performance for the year 2015 and ahead, part of which is arising from the market’s consistent positive growth trajectory traced during the past several years. Another reason for the optimism is Vietnam’s potential Trans-Pacific Partnership (TPP) with 11 countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the USA) and FTAs with the EU, South Korea, and the Eurasian Customs Union of Belarus, Kazakhstan, Armenia, Kyrgyzstan, and Russia.
The TPP and the FTA with the EU are in last stage of negotiations, while the FTAs with Eurasian Customs Union and South Korea were signed in December 2014 and May 2015, respectively. Industry stakeholders are relying on the TPP and the FTAs to steer the sector into the future. Completion of the TPP is estimated to increase Vietnam’s garment and textile exports to the USA to US$30 billion by 2020, as compared with US$8.6 billion exports recorded in 2013, recording growth of approximately 250%. With the EU being the second largest importer of Vietnam’s textiles and garments, a FTA between the two would further boost Vietnam’s garment and textile industry. It is expected that exports from Vietnam to the EU would increase by 20% during 2013-2020 as the value of textiles and garments exports is projected to increase from US$2.7 billion to US$3.2 billion. Vietnam’s FTA with South Korea is expected to almost triple bilateral trade value during 2015-2020, to reach US$20 billion by 2020. Garment and textile industry is expected to be amongst several Vietnamese industries, which are likely to be positively impacted by the FTA. Also under the FTA between Vietnam and the Eurasian Customs Union, Vietnam’s exports, including textiles and garments, as well as seafood, wooden furniture, and agricultural products, are benefiting from preferential tariffs and are expected to increase by 30% during 2013-2020. Opportunities for Vietnam’s Garment and Textile Industry from the TPP and the FTAs
Roadblocks for Vietnam’s Garment and Textile Industry Growth
Future Outlook For the period 2015-2020, Vietnam’s garment and textile industry targets a production growth of 12-14% on an annual basis, 3 million people additionally employed in the industry, and export revenues valued at US$25 billion by end of 2020. In the light of challenges faced by the market, the industry has started to take efforts in order to have a roadblock-free path ahead to achieve its targets. Reduce heavy dependence on imported raw material After realizing the importance of localizing raw material production for the industry, initiatives to increase domestic raw material production are being undertaken. A cotton manufacturing plant, known as “Rang Dong Industrial Park” (infrastructure development expected to complete by end of 2015), at a size of 1,500 hectares and worth US$400 million is being established in Vietnam’s Ninh Thuan province. The park is expected to record production value of US$3 billion on an annual basis. In addition to this, Vietnam is urging for inclusion of “weak rule of origin” or “single transformation rule” in the TPP agreement. Inclusion of the rule will mandate only cutting and sewing aspects of garment and textile manufacturing process to be performed in one of the TPP member countries. This would allow Vietnam to export garments and textiles manufactured with imported raw material to other TPP members.
Lower production cost Since the production cost is bound to increase due to growth in minimum wages, it is of paramount importance for Vietnam’s garment and textile manufacturers to look for ways to control and minimize the overall production cost hikes. This might be possible through adoption of more efficient and advanced technologies. To make the adoption possible, the government in channeling its efforts to attract higher number of FDIs in the industry. The industry plans to host “Vietnam Garment and Textile Forum – 2015 edition” in June 2015 in Hanoi. Major garment and textile companies such as H&M, Adidas, Puma, and Li & Fung are expected to participate in the forum.
Protect the interest of domestic market players The government undertook attempts to help domestic raw materials producers as it noticed that certain raw materials utilized by the Vietnamese industry are being imported without any tax. As such imports tend to hurt domestic producers, in May 2015, Vietnam’s Ministry of Textile and Garment proposed a 2% import tax on polyester staple fibre, which is presently enjoying no import tax. Objective of the proposal is to safeguard the interest of domestic fibre producers, who were found not to be running at full capacity while imports of the fibre were being recorded at around 150,000 tonnes on an annual basis All these initiatives will have to stand the test of time, and whether they prove themselves to be sufficient to help Vietnam’s garment and textile industry grow while deriving maximum benefit from the potential of the TPP and various other FTAs, is to be seen. |