Textile and garment businesses are struggling to make use of free trade agreements, since most fabrics and other materials have to be imported. (Photo: VNA) HCM City (VNS/VNA) – Vietnam’s underdevelopedfabric production is making it difficult for textile and garment businesses totake advantage of free trade agreements, including the Europe – VietnamFree Trade Agreement (EVFTA).
The textile and garment industry exports nearly 40 billion USD worth ofproducts and requires around 10 billion metres of fabric each year.
The rate of domestic materials used by textile and garmentbusinesses in Vietnam is only about 40-45 percent, according to the Ministryand Industry and Trade.
The local fabric industry produces around 2.3 billionmetres of fabric a year, meeting only 25 percent of the country’sdemand. Over 7 billion metres of fabric material for production and export isimported from China, Taiwan and the Republic of Korea.
In 2019, Vietnam imported around 13 billion USD worth offabric for the textile and garment industry. The amount of fabric produceddomestically is often used to make low or medium quality clothing, andtypically does not meet the requirements of clothing manufacturing andexporting businesses.
Tran Tuan Anh, Minister of Industry and Trade, said thecountry’s production of cotton, fibres and dyes does not satisfy the textileand garment industry’s demand.
Not enough attention is being given to dyeing technology andenvironmental protection to develop the textile dyeing industry, sobusinesses are reluctant to invest in textile production or form start-ups infashion design.
Vietnam’s textile and garment industry focusesmostly on manufacturing, with low added value.
While the industry has many opportunities from Vietnam’sfree trade agreements with other economies, around 60 percent of exportscomes from FDI companies.
The EVFTA’s rules of origin regarding textiles and garmentsis referred to as “from fabric onward”, meaning a garment product’s fabric hasto be woven, finished, cut, and sewn in Vietnam.
Truong Van Cam, deputy chairman of the Vietnam Textile andApparel Association, said that due to the lack of fabric materials,FTA rules of origin make it harder for businesses to use theirvalues.
Investment in fabric productionhas faced challenges including a lack of funds and expensivetechnologies. As a result, while the textile and garment industry has seenexports rise over the years, imports of fabric materials have alsorisen.
An investment of around 30 billion USD is needed in order forthe industry to be able to produce the remaining 8 billion metres offabric, according to the association.
Luong Hoang Thai, director of the Multilateral Trade PolicyDepartment under the Ministry of Industry and Trade, said the EVFTA’s rules oforigin allow businesses to import fabric from Korea (which has an FTA withthe EU), but Vietnam and the RoK would have to hammer out technicalspecifications and decide how to examine and confirm the origin of thefabric.
Nevertheless, the amount of fabric imported from the RoK onlymakes up 15.2 percent of imports, and fabric from China and Taiwan can becheaper than from the RoK.
Than Duc Viet, general director of the textile and garmentcompany May 10, said that the industry should focus on investing inautomation to save costs and maximise profits, adding that the company’sautomation helps it deal with challenging stages that require a greatdeal of precision./.
VNA
