Despite recording impressive growth figures in recent years, Vietnam’s textile and apparel sector has failed to become deeply involved in the global supply chain as the local supporting industry has not developed with heavy dependence on imported raw materials, according to industry insiders.
The country’s garment and textile sector enjoyed an impressive trade surplus during 2019, with a total export turnover of US$39 billion, a rise of 7.55 per cent in comparison to 2018.
Although the nation recorded a trade surplus in yarn and garments, it suffered a hefty trade deficit in fabric and fibre.
This is shown in the figures with domestic fabrics meeting less than 50 per cent of the sector's demand, forcing the country to import over US$10 billion of fabrics each year.
Truong Van Cam, Vice Chairman of Vietnam Textile and Apparel Association, states that the yarn output from 1999 to the present has recorded a 12-fold increase.
Local firms during 2019 produced over 2.5 million tonnes of yarn, of which exports reached more than 1.5 million tonnes, recording an export value of over US$4 billion, while fabric output also soared by six times, enjoying an export turnover of US$2.1 billion.
In spite of these strong figures, products supporting the garment and textile sector failed to meet demand, especially garment products for exports.
This can be seen as the supporting industry has been unable to produce fabrics and raw materials that meet requirements regarding quality and persification of goods.
Simultaneously, the textile and garment industry has also failed to become more heavily involved in the global supply chain, with the majority of domestic businesses in the sector outsourcing to foreign businesses.
If Vietnam is unable to meet the goods origin requirements under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and the EU-Vietnam Free Trade Agreement, then it will face challenges when it comes to enjoying the preferential treatment from these FTAs, according to Cam.