A clothing production line of the Best Pacific Vietnam Co in the northern province of Hai Duong. (Photo: VNA) Hanoi (VNS/VNA) – Totake advantage of free trade agreements and expand exports, meeting rulesof origin is crucial for the garment and textile sector, industry insiders have said.
Lower-than-expected export revenue last year showed the industry was facingproblems in participating more deeply in the global value chain and expandingexports to niche markets.
Le Tien Truong, General Director of the Vietnam National Textile and GarmentGroup (Vinatex), said 2019 was a difficult year for the industry with exportrevenue of 39 billion USD, 1 billion USD lower than its target.
Despite many expectations for the industry due to the Comprehensive andProgressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam FreeTrade Agreement (EVFTA), Truong said it was critical for the sector to makemoves to comply with origin rules to enjoy the preferential tariffsin the trade deals.
Truong said Vietnam needed to invest in fabric production to meet originrequirements when exporting to CPTPP and EVFTA countries.
This would not be easy because Vietnam must compete in terms of designs,quality, prices and delivery time with other major fabric producers like Chinaand India, Truong said.
He said investing in fabric production needed careful consideration in terms ofproduction scale because Vietnam’s garment industry uses less than 1 billionmetres of woven and knitted fabric every year, or 18 percent of global exports.
If fabric production targeted only Vietnam, production scale would be too smallwhile investing in large-scale production and competition with China andIndia must be taken into account, Truong said.
He said that Vietnamese garment firms should work with global giants toestablish value chains and invest in production to meet their demands.
According to Nguyen Xuan Duong, Chairman of the Hung Yen Garment Corporation,at this time in previous years, his company had orders and contracts up untilthe end of the second quarter.
However, this year is different, Dương said, adding that many partners onlysign short-term contracts. He said they seem to be more cautious and are watchingfor developments of the US – China trade war.
A report from the Ministry of Industry said many garment firms had only 80 percentof the order volume for 2020 as they did the same time last year.
Vu Duc Giang, President of the Vietnam Garment and Apparel Association, said Vietnam’sgarment and textile sector must speed up reforms with innovations in designs,management, fabric production and building brands.
Giang said that this year, the sector targeted export revenue of 42 billion USD,which would require firms to invest in raw material production to meet rules oforigin in trade deals.
The association’s statistics showed the garment and textile industry ran atrade surplus of 16.62 billion USD in 2019, up 2.25 billion USD compared tothe previous year.
The Viet Tien Garment Joint Stock Corporation (VGG) has signed up withLuenthai and Newtech to establish the Viet Thai Tech fabric factory, which isexpected to supply fabric for the garment and textile industry.
Giang said this project aims at proactively sourcing raw materials,shortening production and delivery time, as well as meeting strict qualityrequirements from customers in the garment industry.
The project has a total investment of 20 million USD, of which the first phaseof the project is 12 million USD and the second is 8 million USD. It’s expectedto be inaugurated and go into operation on June 30 this year.
Giang, who is also Chairman of VGG, said the factory will contribute to solvingthe shortage of fabric resources which is now a big obstacle for the garmentand textile industry of Vietnam.
Giang suggested that Viet Thai Tech should quickly set a target of factory deployment,investment in equipment and technology, so it can supply fabric for VGG andexport markets by September this year.
The factory will be built according to US green standards and will be the firstgreen standard fabric factory in Vietnam. It’s expected to meet thefast-changing requirements of the global fashion industry./.
VNA
