Vietnam's garment and textile industry will face a downturn in contracts next year due to the poor economic conditions in the US and Europe, despite monthly export revenue of more than 1 billion USD, the Ministry of Industry and Trade said (MoIT).

Ministry statistics showed the sector would reach its export turnover target of 13-13.5 billion USD this year due to the growth in the first nine months of the year which saw the industry hit an export record of 10.5 billion USD, the highest level in the past four years.

The ministry said the industry had been affected by less spending in the US and European markets which would drive down the number of contracts.

The sector has experienced a capital shortage with imported materials totalling 9.2 billion USD of input costs.

The minimum wage hike for workers took effect at the beginning of this month which also created pressure on garment and textile exporters as salaries are 65 percent of total costs.

Deputy general director of the Vietnam National Textile and Garment Group Le Tien Truong said the lack of contracts would be especially hard for small- and medium-sized enterprises (SMEs).

Vice chairman of the Vietnam Textile and Garment Association Pham Xuan Hong said export turnover in the last quarter of the year would be 10 to 15 percent down due to a reduction in contracts from the US and Europe.

MoIT said the industry would facilitate capital access to businesses while promoting co-operation between larger firms and SMEs in sharing market information.

The ministry added that garment and textile producers should be active in developing cotton plantations and maximising production capacity.

The Government aims to develop the industry into one of its key export sectors according to current planning.

The sector's yearly growth rate was 12 to 14 percent while exports were 15 percent.

The ministry hopes to bring total cotton production to 500,000 tonnes per year, creating 2.75 million jobs.

The industry's key products will be fibre, cotton, knitwear and garments, as it aims to increase the portion of original design manufacturing to 20 percent by 2020.

Vietnam now has more than 3,700 garment and textile businesses, most of which are located in large cities such as Hanoi and HCM City./.