Vietnam 's apparel exports surged 17.1 percent in the first five months of the year against the same period last year, reaching 3.8 billion USD, said deputy chairman of the Viet Nam Textile and Apparel Association (Vitas) Pham Xuan Hong.

Hong said the industry would have to earn a monthly export turnover of nearly 1 billion USDfor the remainder of the year to meet the industry's annual export target of 10.5 billion USD.

He said the industry's biggest challenge was a shortage of labour which has led to a 10 percent decrease in its production capability.

Garment workers currently earn no more than 4 million VND (200 USD) per month. Despite a 10-20 percent rise in export prices in 2009, enterprises were still required to increase wages by 10 percent to retain workers. Companies are having difficulty keeping workers at such low wages.

The industry is also facing high prices for raw materials, which have increased so sharply that the export price increase of roughly 5-7 percent over late 2009 cannot cover costs.

Ninety percent of the input materials used by Vietnam 's apparel industry are imported. Cotton prices have surged from 1.3-1.4 USD per kilo earlier this year to 1.9 USD per kilo after India decided to halt cotton exports. The price of the fibre has increased by 34.3 percent compared to the same period in 2009.

The price hikes of input materials have, in turn, caused a sharp rise in material import revenues. According to the General Statistics Office, the industry spent 269 million USD on imported cotton in the first five months of the year, up 154.2 percent over the same period last year. The figures for fibre and cloth were 427 million USD and 2.02 billion USD, respectively, up 54.6 percent and 23.9 percent over the same period last year.

Import value for materials and accessories used in the apparel and footwear industries also reached 1.01 billion USD, up 31.7 percent year-on-year.

Despite the increase in input material prices, Vietnamese exporters cannot re-negotiate export prices because they are tied into contracts with their buyers./.