Vietnam’s garment-textile sector gear up to 2020
Vietnam’s garment-textile sector wants to revise a development plan to 2020 with vision for 2030, to match the progress of the country as they mainly specialise in straightforward production stages and study market demands.
The current plan was approved in April 2014, and it is expected that Vietnam garment exports will reach between 20 billion USD and 25 billion USD by 2020. In 2015, the garment sector already earned an export turnover of 27.5 billion USD. All the garment and textile businesses have actively taken advantage of opportunities through trade agreements such as the Trans-Pacific Partnership (TPP), Vietnam-Korea Free Trade Agreement (VKFTA), and Vietnam-EU Free Trade Agreement (EVFTA).
Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (VITAS) said the industry wants the Government to revise the plan as it is inappropriate and regressive. The Government should outline another long-term plan until 2040 to help the industry go in line with the country’s economic development.
According to VITAS, with the current growth, the sector has set export turnover at between 40 billion USD and 50 billion USD by 2020, instead of targets set in the current plan. Vitas estimated that between 1988 and 2012, the sector attracted 1,551 FDI projects. Of this figure, there were 1,193 garment projects and 358 fibre production projects with a total investment of 3.5 billion USD.
Thanks to the FDI influence, such businesses brought 2 billion USD into Vietnam’s garment sector in 2015. As a result, the total export turnover of the garment sector reached 24 billion USD in 2014 and 27.5 billion USD in 2015, and it is expected to reach 31 billion USD by late 2016. Giang said that apart from the five key export products, Vietnam also exports various kinds of fibre with an export turnover of over 3 billion USD annually and different types of fabric with a turnover of 1 billion USD per year.
Apart from the rapid production scale and strong export growth, the garment sector has also coped with unresolved shortcomings. These shortcomings needed to be handled soon to make the sector’s development sustainable. VITAS has also proposed that the Government initiate policies to attract investments in this sector, including high-quality fibre production and dyeing projects. In doing so, VITAS has also asked the Government to make a review of industrial parks or key economic zones including those from the garment and textile sector.
Over the years, the garment and textile industry has not had specialised industrial zones to attract investments in textile and dyeing. As a result, the sector still relies on importing high-quality fibre for manufacturing export products, and it cost 15 billion USD in 2015. In addition, Giang said the Government needs to invest in infrastructure development, and create incentives for investors. Special attention should be paid to the production units and the origin of textile fibre and threads, and dyeing. To obtain these, VITAS has asked the Government to pay attention to investment in international quality waste water treatment plants.
According to the official, the global supply chain refers to a set of necessary activities to create a finished product or a service, from the first step of conception to delivery to the end customer. Joining the global supply chain will help businesses know where they are standing in the international arena in order to select suitable stages to participate in, thus maximising their benefits.
Besides, domestic firms have yet to pay much heed to how their foreign peers and rivals do business, thus they are slow to revamp their production methods and technologies, and raise their competitiveness. In fact, a lot of support industry companies have joined hands with local garment-textile enterprises which, however, have failed to seek markets for their products, resulting in the collapse of the collaboration.
Moreover, the Trans-Pacific Partnership (TPP) agreement and other free trade agreements will turn Vietnam into a destination for the global supply chain, suggesting the country make the best use of this opportunity. To raise the sector’s competitive edge when joining the global supply chain, the Vietnam Textile and Garment Group suggested businesses overhaul their production and management strategies, and build a quality troop of labourers, while teaming up with each other to create a national supply chain.
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