Raw material prices increase, enterprises develop domestic sources

VCN- Textile, footwear, wood, and electronics are the billion-dollar export industries of Vietnam. However, these industries are dependent mainly on the import of raw materials. In the context of the Covid-19 pandemic, businesses are facing more and more difficulties, forcing them to find solutions.
GDVC removes difficulties caused by Covid-19 pandemic to ensure materials for production GDVC removes difficulties caused by Covid-19 pandemic to ensure materials for production
Reduce import of raw materials to stabilize animal feed market Reduce import of raw materials to stabilize animal feed market
Agriculture, aquaculture firms focus on growing their own raw materials Agriculture, aquaculture firms focus on growing their own raw materials
4210-2504-18-5557-img-3760
The leather, footwear and textile industry still imported more than US$8 billion of raw materials in the first four months of 2021. Photo: H.Diu

Material problem

According to the Vietnam Textile and Apparel Association (VITAS), most textile and garment enterprises have orders until the end of June, even until July and August.

The main export markets are still Europe, the US, and Japan. These markets are even more favorable when Free Trade Agreements (FTAs) come into effect like the EVFTA. According to the Vietnam Leather, Footwear and Handbag Association (LEFASO), the Covid-19 pandemic is still complicated, negatively affecting the leather and footwear industry, especially the supply of raw materials and labor. LEFASO said that currently, the supply of raw materials and accessories for the leather and footwear industry is dependent on 60% of imports. In the context of the Covid-19 pandemic, disruptions in the supply chain of imported raw materials will greatly affect Vietnamese footwear manufacturers.

According to the General Department of Customs, in the first four months of the year, the total import turnover of this group of goods reached US$8.39 billion, a sharp increase of 22% (equivalent to an increase of US$1.51 billion) compared to the same period last year. Of which, China is the largest import market of the group of raw materials and accessories for Vietnam's textile, garment and footwear industry with US$4.19 billion, up by 34% compared to the same period in 2020 and accounting for 50% of the total import turnover of this group.

Experts estimate that relying too much on raw materials not only makes it difficult for businesses to set prices, but also difficult to meet regulations on rules of origin under FTAs.

Regarding prices, the Vietnam Cotton Yarn Association (VCOSA) said that in the first two months of 2021 alone, the price of imported cotton materials to Vietnam averaged US$1,625 per ton, up by 0.87% compared to the same period last year.

As for the rules of origin, typically for the European market, the EVFTA stipulates that Vietnamese enterprises use raw materials (leather, fabric) imported from any country that has an FTA with Vietnam and the EU, provided that the final product is made in Vietnam.

Support to find solutions

It can be seen that the problem of raw materials has been mentioned many times, so in the context of the pandemic, businesses have been looking for solutions to the problem.

Le Tien Truong, Chairman of the Board of Directors of Vietnam National Textile and Garment Group (Vinatex), said that the opportunity to increase exports to Europe has become a driving force for manufacturers of raw materials to boldly invest in factories, prepare and supply more raw materials that are "made in Vietnam".

In fact, recently, many investment projects to expand the production of raw materials for the textile industry have been announced.

For example, recently, Binh Duong Provincial People's Committee awarded a certificate of adjustment to increase by US$610 million to expand the production capacity of polyester synthetic fiber products and cotton spinning products to Polytex Far Eastern Company Limited of Far Eastern Group.

Century Yarn Joint Stock Company has announced the restart of the Unitex synthetic fiber factory project in Tay Ninh. This is a project with a total capacity of 60,000 tons, focusing on the segment of recycled yarn, high quality yarn and special yarn. Viet Tien Garment Corporation also planned to invest in a fabric factory through the establishment of Viet Thai Tech Co., Ltd. Thanh Cong Trading Investment Textile Joint Stock Company (TCM) also plans to invest in a dyeing and knitting factory of Vinh Long project in 2022 to complete the supply chain.

Regarding the steel industry, the price of raw materials has skyrocketed, so the leader of Hoa Phat Group said that the company will quickly complete the legal procedures to be able to start the Hoa Phat Dung Quat 2 Complex Project soon, with the goal of producing 8 million tons of crude steel.

Currently, all of Hoa Phat's iron and steel production complexes have brought into full play their designed capacity to serve market demand. In four months, Hoa Phat Group has produced more than 2.7 million tons of crude steel, increasing by 58% compared to the same period in 2020. Thanks to the initiative in hot-rolled coil (HRC) raw materials, in April, the volume of pipes Hoa Phat's steel sales reached 87,000 tons, up by 44.5% compared to the same period last year. Galvanized steel products grew by 55%.

Talking more about taking the initiative in sourcing raw materials from the enterprise, a representative of CP Vietnam Livestock Joint Stock Company said that the experience of the enterprise is to actively increase the reserve of raw materials for production, avoiding the situation of "living from hand to mouth" in the context of rising raw material prices and the impact of the Covid-19 pandemic.

He said that, especially for the livestock industry, the domestic market also has many raw materials for livestock such as fish and shrimp processing by-products, which businesses can take advantage of, so it is not be too dependent on imported materials.

However, in order to really develop in terms of raw materials, businesses believe that it is necessary to have financial support. Namely, there is a preferential mechanism for financial loans or tax reduction for enterprises investing in supporting industries, which will help businesses have resources to create quality products that are less competitive in terms of price with imported products.

By Huong Diu/Kieu Oanh

Related News

Over 300 Southern enterprises attend workshop to provide feedback to the General Department of Vietnam Customs

Over 300 Southern enterprises attend workshop to provide feedback to the General Department of Vietnam Customs

VCN - On November 21, 2024, more than 300 enterprises from Southern Vietnam with significant import-export (I/E) volumes participated in a workshop held in Ho Chi Minh City. The event, organized by the General Department of Vietnam Customs, sought feedback on the draft decree amending and supplementing Decree No. 08/2015/ND-CP dated January 21, 2015, and the draft circular amending and supplementing Circular No. 38/2015/TT-BTC dated March 25, 2015, and Circular No. 39/2018/TT-BTC dated April 20, 2018, issued by the Minister of Finance.
Hanoi Customs resolves tax policy queries for enterprises

Hanoi Customs resolves tax policy queries for enterprises

VCN - Queries regarding customs consultation procedures and tax refunds due to price reduction clauses were addressed by the Hanoi Customs Department, providing clarity for businesses.
Quang Ninh Customs sees revenue boost of nearly VND 900 Billion from new enterprises

Quang Ninh Customs sees revenue boost of nearly VND 900 Billion from new enterprises

VCN - Efforts to attract and support businesses have significantly boosted state revenue for the Quang Ninh Customs Department, thanks to a proactive approach in facilitating customs procedures.
Developing supporting industries for the billion-dollar export commodity groups

Developing supporting industries for the billion-dollar export commodity groups

VCN - Electronic products and components are one of export commodity groups with turnover exceeding one billion USD, but the supporting industry for this group is still modest.

Latest News

Agricultural, forestry and fishery trade surplus value shoots up

Agricultural, forestry and fishery trade surplus value shoots up

VCN - According to the Ministry of Agriculture and Rural Development, the total export turnover of agricultural, forestry and fishery products in the first 10 months reached 51.74 billion USD, up 20.2% over the same period in 2023. Notably, the trade surplus value recorded a spectacular increase year on year.
New export and business cooperation opportunities from "dual conversion"

New export and business cooperation opportunities from "dual conversion"

VCN - According to a recent study from NielsenIQ, 16% of Vietnamese consumers consider a sustainable future as one of the important factors in their consumption decisions.
VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - As one of Vietnam's strong export industries to the UK, especially when the Vietnam - United Kingdom of Great Britain and Northern Ireland Free Trade Agreement (UKVFTA) comes into effect, with a detailed information approach strategy, it has created a great driving force to promote the export of Vietnamese seafood products to this market.

More News

Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

VCN - By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Vietnamese enterprises facing challenges from cross-border e-commerce platforms

Vietnamese enterprises facing challenges from cross-border e-commerce platforms

VCN – In recent years, with the rapid development of cross-border e-commerce (CBEC) platforms, domestic enterprises in Vietnam have been facing numerous difficulties and challenges.
Vietnam, Malaysia eye new milestone in trade ties

Vietnam, Malaysia eye new milestone in trade ties

The official visit to Malaysia from November 21-23 by Party General Secretary To Lam is expected to open up new opportunities for and mark a new milestone in the economic and trade cooperation between Vietnam and Malaysia. Vietnam and Malaysia are key economic, trade, and investment partners. Their economic and trade ties have steadily grown since the two nations established diplomatic relations in 1973.
Shrimp exports surge in 10 months, generating 3.2 billion USD

Shrimp exports surge in 10 months, generating 3.2 billion USD

Vietnam’s shrimp exports in October reached US$394 million, a strong 24% increase year-on-year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Vietnam’s exports to the U.S. near US$100 billion milestone

Vietnam’s exports to the U.S. near US$100 billion milestone

VCN - By the end of October, Vietnam's exports to the United States approached US$100 billion, reaffirming its position as Vietnam's largest export market.
From the “abnormal” coffee price, worries about the new crop

From the “abnormal” coffee price, worries about the new crop

VCN - The Vietnamese coffee industry enters the new crop with the question of what is a reasonable price to ensure benefits for coffee growers while still retaining international consumers.
What obstacles limit the market share of Vietnamese goods in the UK?

What obstacles limit the market share of Vietnamese goods in the UK?

VCN - Vietnamese goods account for only about 1% of total imports into the UK market. One of the reasons is that they have not yet built their own brands and have not focused on effective strategies and approaches to market information.
Why seafood exports to some Middle Eastern Countries are stalled

Why seafood exports to some Middle Eastern Countries are stalled

VCN - Several shipments of seafood exported to certain Middle Eastern countries have been delayed due to legal challenges related to consular legalization procedures. This has created significant bottlenecks in accessing these markets.
Storm No. 3 destroys profits of many insurance companies

Storm No. 3 destroys profits of many insurance companies

VCN - Due to the impact of storm No. 3, the business results of the third quarter and the first 9 months of 2024 of the insurance sector have been significantly affected. This requires more efforts from businesses for the results of the whole year 2024.
Read More

Your care

Latest Most read
Agricultural, forestry and fishery trade surplus value shoots up

Agricultural, forestry and fishery trade surplus value shoots up

VCN - According to the Ministry of Agriculture and Rural Development, the total export turnover of agricultural, forestry and fishery products in the first 10 months reached 51.74 billion USD, up 20.2% over the same period in 2023. Notably, the trade surp
New export and business cooperation opportunities from "dual conversion"

New export and business cooperation opportunities from "dual conversion"

According to a recent study from NielsenIQ, 16% of Vietnamese consumers consider a sustainable future as one of the important factors in their consumption decisions.
VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - Mr. Nguyen Hoai Nam, Deputy General Secretary, Vietnam Association of Seafood Exporters and Producers (VASEP), said that the advantage that UKVFTA brings is that the main products of the seafood industry enjoy 0% import tax to the UK, especially key
Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Mobile Version