To take advantage of free trade agreements and expand exports, meeting rules of origin is crucial for Vietnam’s garment and textile sector, industry insiders have said.
Lower-than-expected export revenue last year showed the industry was facing problems in participating more deeply in the global value chain and expanding exports to niche markets.
Vietnam National Textile and Garment Group director-general Le Tien Truong said 2019 was a difficult year for the industry with export revenue of $39 billion, $1 billion lower than its target.
Despite many expectations for the industry due to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), Truong said it was critical for the sector to make moves to comply with origin rules to enjoy the preferential tariffs in the trade deals.
He said Vietnam needed to invest in fabric production to meet origin requirements 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 China and India, he said.
Truong said investing in fabric production needed careful consideration in terms of production scale because Vietnam’s garment industry uses less than one billion metres of woven and knitted fabric every year, or 18 per cent of global exports.
If fabric production targeted only Vietnam, production scale would be too small while investing in large-scale production and competition with China and India must be taken into account, Truong said.
Truong said that Vietnamese garment firms should work with global giants to establish value chains and invest in production to meet their demands.
Hung Yen Garment Corporation chairman Nguyen Xuan Duong said that at this time in previous years, his company had orders and contracts up until the end of the second quarter.
However, this year was different, Duong said, adding that many partners only signed short-term contracts. He said they seemed to be more cautious and were watching for developments of the Sino-US trade war.
A report from the Ministry of Industry said many garment firms had only 80 per cent of the order volume for this year as they did the same time last year.
Vietnam Garment and Apparel Association president Vu Duc Giang said Vietnam’s garment 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.
VIET NAM NEWS/ASIA NEWS NETWORK