To capitalise on the new regulation, which gives developing countries unilateral tariff preferences for the 2014-16 period, the Ministry of Industry and Trade has directed local footwear producers to design long-term investment policies that will help boost domestic sources of materials and develop ancillary industries.

This will potentially raise the industry's competitiveness and reduce outsourcing for foreign footwear giants, it said.

Although footwear is the leather industry's key product, the ministry has also asked local producers to pay attention to diversifying production to include high-quality handbags and wallets as these are also among the industry's most profitable lines.

The footwear industry's export turnover was US$10.3 billion in the past year, up 18 per cent against the previous year.

The EU is Vietnam's largest footwear importer, and Vietnam is the second-largest footwear exporter to the EU after China, with an export turnover of US$3.4 billion in 2013, accounting for 33 per cent of Vietnam's total footwear export turnover.

Chairman of the Vietnam Footwear Association Nguyen Duc Thuan said, the GSP will present a good opportunity for Viet Nam's footwear exports to compete against the same products by EU producers.