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Ms. Phan Thi Thanh Xuan

Could you please tell us about how enterprises in the leather and footwear industry have effectively made use of the UKVFTA since it came into effect?

Previously, when the UK was still in the EU, it was one of the EU's largest footwear importers, with an average share of 10-12%. After the UK decided to leave the EU, Vietnam's footwear exports were severely affected. The customers almost stopped ordering and reduced orders by up to 50%. Enterprises in the industry were very worried because this directly affected the proportion of Vietnamese leather and footwear exports to the EU.

However, the recovery signal was quite good when Vietnam signed the UKVFTA. Export turnover to the UK market has grown again. In the first 5 months of 2022, Vietnam's leather and footwear exports to the UK market reached US$330 million, equalling 50% of the year plan and it is forecast to continue to maintain this growth momentum in the following years.

In your opinion, what are the difficulties and challenges that footwear enterprises have been facing when exporting to this market?

The EU market in general and the UK market in particular always have strict requests. To successfully export to this market, enterprises must meet the requirements from the import market, even from the production process.

With leather and footwear products exported to the UK market, the requirements of this market are mainly for leather shoes. In terms of raw materials, Vietnam has not been able to provide high-quality leather for the production of leather shoes, so it has to import a lot. That is a huge challenge. However, manufacturing plants will face even greater challenges such as the requirements for environmental protection in the production process; combating climate change as well as reducing carbon emissions and greenhouse effects on the production process. All these requirements will set out codes of conduct that factories must meet to export successfully. The internal capacity of enterprises needs to be improved to meet those requirements.

What suggestions and recommendations does the Vietnam Leather, Footwear and Handbag Association give to State management agencies to help enterprises in the footwear industry implement the UKVFTA more effectively in the near future, Madam?

The successful negotiation of the UKVFTA, opening the market is an initial success. The next step is to work together to strengthen enforcement capacity. The UKVFTA has created a very close connection between State management agencies and enterprises because the parties must work together to effectively take advantage of opportunities.

The Vietnam Leather, Footwear and Handbag Association said that, not only with the UKVFTA in particular but also with FTAs in general, after the FTA takes effect, there should be an assessment to continue to improve and support enterprises in a timely manner. This assessment can be carried out annually or every 3-5 years, seeing the effectiveness, from which new policies will be introduced to improve utilization.

Joining an FTA is often compared to traveling on a highway. In the leather and footwear enterprises, not all them can take advantage of the opportunities. For enterprises that have not taken advantage of opportunities from FTAs, it is also necessary to have policies to promote and support enterprises to improve their capacity, typically improving the quality of human resources, thereby expanding opportunities for them to gain benefits.

In particular, in the new context, enterprises will have to meet a series of very high standards from the markets because when tariff barriers are reduced, non-tariff barriers will be put in place. The Vietnam Leather, Footwear and Handbag Association hopes that policies will focus on supporting enterprises, so that they can both grasp information as well as solve weaknesses and have strategies to take advantage of opportunities.

Thank Madam!