Participation in the Trans-Pacific Partnership Agreement (TPP) would create favourable conditions to boost Vietnam's textile and garment sector as the third key industry of the country, according to industry insiders.

This is also the view that Deputy General Secretary of the Vietnam Textile and Apparel Association (VITAS) Nguyen Van Tuan shared at a recent workshop on the TPP and impacts on Vietnam 's textile and garment enterprise.

At the same time, Tuan warned that it's also a challenge for Vietnamese textile and garment businesses when the industry still faces a big deficiency in materials including cotton and cloth as well as technology.

"The industry uses 820,000 tonnes of materials every year, which include 420,000 tonnes of cotton and 400,000 tonnes of fiber. However, we had to import 415,000 tonnes of cotton, 99 percent of the total demand of the industry's production last year," Tuan said.

"Last year the garment industry used 6.8 billion metres of cloth, of which 88 percent was imported.

Domestic cloth production only supplied 0.8 billion metres," he said.

Tuan pointed out that 70 percent of the total exports were still made from Cut-Make-and-Trim (CMT) contracts.

"It's a weak point and disadvantage for Vietnamese businesses with TPP participation. Local enterprises should make a big change to strengthen the competitiveness," he suggested.

Last year, 4,000 enterprises earned a combined revenue of 20 billion USD, of which 17.2 billion USD came from exports, contributing 15 percent to the country's Gross Domestic Product (GDP).

He also recommended that local enterprises invest in the cotton, spinning and weaving industries, shifting production modality from CMT to free-on-board (FOB) practice, as well as expanding cooperation with foreign partners.

Nguyen Duc Tri, General Director of Hoa Tho Textile and Garment Joint Stock Corporation, said a deficiency in raw material, design and technology has been a big problem for his enterprise.

"Although earning 100 million USD per year in exports, the company's production is still dependent on imported material. A small change in the price of material would lead to poor competition against rivals in the export market," Tri said at the seminar sideline.

"Participating TPP would be a big chance for us to restructure our production and make investment in advanced technology."

Vice Chairman of VITAS Nguyen Dinh Truong emphasised that TPP would help sustain the country's industry as one of the top-five exporters in the world.

"The industry has developed with an annual growth of 20 percent over past two decades. From 200 textile companies with an export value of 1 billion USD in 1990, the industry has expanded to over 4,000 enterprises with 5.1 million spindles," he said, adding that it employs 2.5 million workers.

VITAS' Deputy General Secretary Nguyen Van Tuan said the government should call for more direct investment from foreign textile manufacturers, while creating favourable conditions for the production of raw materials and core products.

"We have to identify key areas in fiber-weaving-dying to promote the value chain from thread, weaving and dying to sewing. Skilled labour force training centres will also play a key role for better competition of the industry," Tuan said.

"Our garments and textiles could not have big power if we do not produce materials ourselves," he concluded./.