Increase competitiveness in the EU market through sustainable development

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Green transformation, businesses cannot "do it alone". Photo: Internet

Sustainable exports can earn 8 times more value

Sharing about the green standards that EU importers set for Vietnamese textiles and garments, Mr. Vuong Duc Anh, Chief of Office of the Board of Directors of Vietnam Textile and Garment Group (Vinatex) said, Textile and garment is the industry with the third largest environmental impact in the EU, so from the beginning we identified this as an issue that must be closely followed.

On March 30, 2022, when the EU approved the strategy for circular and sustainable development of the textile and garment industry, Vinatex immediately had seminars to disseminate throughout the system. In the EU's sustainable and circular development strategy for the textile and garment industry, there are many contents, of which the highlight is the goal of how to reduce fast fashion consumption, that is, reduce clothing emissions into the environment every year.

Mr. Vuong Duc Anh said, most recently, the story of expanded producer responsibility was recently approved by the European Commission on July 5 this year. The EU aims to require textile waste generators to pay them to collect and process annual textile waste within the EU. However, the EU is currently finalizing a waste framework directive to determine who will have to pay the fee, importers of EU textiles, distributors, or manufacturers from third countries.

“This story is not clear and the amount of the fee is still being discussed. From now until the end of 2024, our textile and garment enterprises have not been subject to any measures," Mr. Vuong Duc Anh informed.

Regarding the story of the Carbon Border Adjustment Mechanism (CBAM), Mr. Vuong Duc Anh said that textiles and garments are also a group of products that have a large environmental impact in the EU, so they are in the group of 30 risky products which can be included in the CBAM mechanism from now until 2030. Currently, textile and garment products have not been included in the first phase of CBAM application.

With a series of new EU regulations related to sustainable development, Mr. Vuong Duc Anh assessed that there are challenges but also opportunities: there are short roadmaps, long roadmaps and there are regulations that do not have roadmaps, which must be applied immediately. “Sustainable development must be identified as an irreversible trend. We must proactively grasp to try to keep pace with the market; catching it too early will not be effective, but it must be caught correctly," Mr. Vuong Duc Anh assessed.

Regarding this issue, Mr. Ngo Chung Khanh, Deputy Director, Department of Multilateral Trade Policy (Ministry of Industry and Trade) commented that if the sustainable development factor is implemented effectively, it will help businesses increase their value and also orient themselves towards building Vietnamese brands and Vietnamese businesses in the European market.

“Building a brand is a very difficult story, but not impossible. If we care about sustainable development, it is a very important factor for us to gradually build brand value and from there, the money we bring in will be more. For example, instead of earning 10 VND from export, we can earn up to 70-80 VND" - stated a representative of the Ministry of Industry and Trade.

Businesses need support for green transformation

Sharing about the roadmap and transformation method, Ms. Nguyen Hong Loan, Technical Support Project Expert on CBAM impact assessment, said that the current roadmap is shortening, especially with CBAM, the period from the time of approval to the time of official effect, it is only 5 months. "Domestic businesses themselves are currently not familiar with and not many businesses are capable of building reports related to greenhouse gas emissions," Ms. Nguyen Hong Loan commented and added, businesses that do not prepare in advance and do not have a roadmap cannot meet European requirements.

Ms. Nguyen Hong Loan recommended that businesses should not wait until the EU has a policy to start responding urgently. “Businesses should proactively develop their own environmental, governance and social standards to prepare awareness and capacity. When there is a request to convert, we only need to discuss with the European side to recognize our standards or just adjust the practice a little to be able to apply. But there is also a roadmap, there is no need to change quickly and immediately", Ms. Nguyen Hong Loan shared.

From a business perspective, Mr. Vuong Duc Anh shared, we determine that sustainable development is a long-term story. From a proactive perspective, businesses will take actions related to changing perceptions and changing personnel. However, if we want to meet all sustainable development requirements, we need support from the State in terms of policy.

“Because making completely green textiles, the final product will definitely be very expensive. The cost for such a complete green product must certainly be more than 50% higher than a conventional product," Mr. Vuong Duc Anh commented.

Therefore, according to Mr. Vuong Duc Anh, although the Government has a plan and action program, up to now it is still unclear. We need to have criteria, goals and quantification to come up with appropriate incentive policies related to investment in sustainable development. Because the financial requirements for trial production of green products are very expensive.

“If we also consider green products as normal products without any support, then it is certainly difficult to make them green under current conditions. Therefore, there needs to be support in terms of fiscal policy and corporate income tax. For example, corporate income tax incentives for green businesses" expressed Mr. Vuong Duc Anh.