Apparel industry faces tough times despite high export growth

Vietnam’s textile and garment industry aims for US$31.3 billion in export revenue this year

At a working session with Minister and Chairman of the Government Office Mai Tien Dung on June 20, Tran Quang Nghi, board chairman of Vinatex, said the sector had faced a slew of challenges. For instance, only a small number of Vietnamese enterprises are well-qualified to enter global supply chains.

Besides, supporting industries for the local textile and garment sector have remained underdeveloped. It is now facing a lack of skilled workers while its input costs are high and loan interest rates are higher than in other regional countries.

However, exports are still expected to fare well this year.

The industry is forecast to earn US$31.3 billion in export revenue in 2017, up roughly 11% over the previous year. Such a number if realized will account for 16% of the country’s total outbound sales.

Vinatex alone aims for nearly US$3 billion in export revenue.

At the meeting, Minister Mai Tien Dung asked Vinatex to be more active in its production and business performance, speed up work on 41 projects worth VND5.5 trillion (US$242 million), create value chains for its products, upgrade technologies, and reform administrative procedures.

Besides, the group should accelerate its divestment,  Minister Dung stressed, adding the Government intends not to hold controlling stakes in the sector.

He said if Vinatex failed to undergo equitization as Nha Be Garment Corporation and Viet Tien Garment Joint Stock Corporation had done, the group would find it hard to compete with foreign companies, penetrate demanding markets, attract investors, take part in global value chains, and create products of higher added value.

Chairman Tran Quang Nghi pledged the group would work harder to achieve the export target of US$3 billion this year, a year-on-year rise of 20.4%, according to a report presented at the working session.

Earlier, Vinatex general director Le Tien Truong said Vietnamese textile and garment products are up against fierce competition with those from other countries, especially China, because in addition to quality, price and delivery time, domestic exporters have to meet strict environmental protection requirements.

Therefore, local manufacturers have had to replace old equipment to meet four key criteria – productivity, quality, energy saving and environmental protection.

Vietnam, one of the five largest textile and garment exporters in the world, got US$28.3 billion in outbound sales last year. The added value was still not high as local content in its apparel products was just over 50%.

The domestic sector is strong in export outsourcing but weak in weaving and dyeing.