January 21, 2020 15:57

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'Missing an appointment' of 40 billion USD, textile and apparel export faces many challenges

14:00 | 15/12/2019

VCN - Scarce and small orders are a common situationhave beentextile and garment export (export) from the beginning of the year until now. It is expected that in 2019, textile exports will reach about 39 billion USD, 1 billion USD below the target set from the beginning of the year.

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The US-China trade war has had a strong impact on Vietnam's textile and apparel exports. Photo: Nguyen Thanh

Fierce competition, reduced orders

According to the Ministry of Industry and Trade,export turnover of textiles and apparel in 11 months was estimated at US$29.89 billion USD, up 7.8 percent over the same period last year. For the whole year, the total textile and apparel export turnover is expected to reach $39 billion, up 7.55 percent compared to 2018.

Assessingtextile and garment exportsthis year, Vu DucGiang, Chairman of Vietnam Textile and Apparel Association (Vitas) said: “In 2019, Vietnam's textile and garment industry will be greatly affected by the situation. The global economic downturn is due to political fluctuations and trade conflicts between major economies, especially the US-China trade conflict. Even so, the industry still maintained a good growth with a total export turnover of $39 billion, which is encouraging.”

The Ministry of Industry and Trade made a specific analysis: As a rule, by the end of the fourth quarter of the previous year, many textile and garment export enterprises had orders for the whole year thereafter, but this year, orders were decreased compared to 2018.

Currently, orders of many new businesses are at 80percent of the same period last year. Furthermore, many businesses do not receive long-term orders, but instead short-term orders by month, with the longest by quarter.

In addition, textile enterprises have been facing many difficulties. Competition from textile powers like China, India andBangladesh is very fierce.

Currently, many countries focus on supporting the textile industry, including emerging countries in Africa, leading to a sharp increase in the number of manufacturers, shared orders and flow of orders moving to other countries, makingVietnam’s textile and garment ector struggle. Specifically, orders from China tend to move to countries with preferential tax rates such as Bangladesh and Cambodia.

A variety of challenges

Regarding the picture of textile and apparel export, according to Giang, opportunities are there, but challenges are also piled up. Vietnam is the largest textile and garment exporting country in ASEAN and one of the largest textile and garment exporting countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Opportunities are open widelyasVietnam has joined a series of free trade agreements (FTAs), typically CPTPP and FTA Vietnam-EU (EVFTA). The textile and garment industry has access to science and technology. Several factories have invested in automating many stages, especially in the textile and dyeing industries . In the fashion design industry, many businesses have also invested in 3D design.

However, Giang also emphasisedthe typical challenge of the textile and apparel industry comes from shifting investment structure from big cities to rural, remote and isolated areas. Untrained rural labour creates significant pressure for businesses. Because according to the provisions of the Labour Law, after recruiting for onemonth, even though employees are not yet trained orskilled, enterprises still have to sign labour contracts, pay social insurance and pay minimum wage.

The next challenge relates to the strategic vision of sustainable development associated with global supply chains. Currently, the textile industry is importing more than half of raw materials from abroad.

This issue cannot be sortedby the textile and garment industry but needs a strategic orientation of the Government, State management agencies and localities. FTAs such as CPTPP and EVFTA have very clear rules of origin to enjoy preferential tax rates.

“For example, Vietnamese textile and garment export enterprises that buy fabrics in CPTPP countries and then export garments to the intra-region will enjoy preferential tariffs, but if importing fabrics from China, export products cannot receive any incentives. If sector planning is not issued rapidly, building a regional and global supply chain platform, the risk of losing is extremely large,”Giang said.

To solve difficulties and even "bottlenecks" of the textile and garment industry, the Vitas President emphasisedthatthe key is to issue a plan for textile and garment industry development. Twenty years ago, the industry development plan set a target of exporting 20 billion USD by 2020.

However, in 2019, the export figure has reached 39 billion USD, so the old plan is not suitable. Vitas has submitted a report to the Department of Industry (Ministry of Industry and Trade) as well as many work to soon release the planning of Vietnam's textile industry in the new period.

In the plan, we need to determine the target on position of Vietnam textile and apparel industry in the world to compete with other opponents. Vietnam is ranked thirdin the world in textile and apparel export, so in 20years, who will be the competitors of Vietnam textile and apparel?

At the same time, it is necessary to identify the role of the Government in local land fund planning strategies to develop industrial parks that meet environmental standards and are attractive enough to attract investors to invest in the field of textile anddyeing, solving the problem of shortage of raw materials and supplies.

"The Department of Industry is finalisingthe plan. It is expected the Prime Minister will preside over the meeting to review and approve the textile and garment industry plan so there is a sustainable development strategy," Giang said.

By ThanhNguyễn/Bui Diep