Textile and garment industry: Expect to remove knot of supply shortage

	The textile and garment industry looks towards sustainable development
	It is not easy for textile workers’ wages to achieve a standard of living
	Textile exports grew positively

Vietnam’s textile industry is attracting the attention of many foreign investors. Photo: Nguyen Hue.

Maintaining export growth

According to the Vietnam Textile and Apparel Association, in the first six months of 2019, the export turnover of the textile industry reached nearlyUS$18 billion, increasing by 8.6% compared to the same period in 2018.

According to Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association, in the context of reduced global purchasing power due to the impact of the US-China trade war, in which the export of Chinese textile and garment products is greatly reduced, the textile and garment industry still maintained export growth, showing a great spirit to overcome difficulties with many effective solutions.

Not only maintaining a high growth rate, Vietnam's textile products are gradually asserting theirposition in many new markets. Three years ago, Vietnam didn’tdream about exporting textiles to China, but nowChina is the biggestyarnimporter of Vietnam. On average, Vietnam annually exports about US$3 billion of yarn, of which China accounts for 70%. In addition, China also imports many textile products from Vietnam such as shirts, jackets and trousers.

Along with China, Vietnam's textiles and garments are also pushingexportsto CPTPP member countries. Previously, Vietnam never expected to export to Canada, Australia or New Zealand, but after signing the CPTPP, entrepreneurs and buyers fromNew Zealand, Australia and Canada came to Vietnam. We have had many orders from these markets in the first months of 2019. In particular, exports to Canada increased by 46%, Australia increased by 17% and New Zealand increased by 18%.

Although these are small markets, the textile industry is looking forward to the sustainability of the CPTPP when importers and buyers choose Vietnam and benefit from tax reductions will create great attraction for orders from these markets. With the momentum in the first six months of the year, it is expected that this year, the textile and garment industry can reach and exceed the target of US$40 billion.

Vietnam currently ranks 3rd in the five largest export countries. Compared to the second largest country, India, Vietnam is only about US$200 million less. Vietnam is the world’s textile and garment export power. This is the motivation for Vietnam to continue to export strategies for the textile and garment industry to boost the export of textiles and garments to the world market, including China.

Expect to offset supply shortage

According to the Vietnam Textile and Apparel Association, the textile and garment industry has a huge opportunity in development from newly signed FTAs. In which, the FTA with the EU has been expected for many years by textile enterprises, because this is a market with high added value, quality products, diversification of models and types and a traditional market.

Since the 1990s, the textile industry has participated in this market. Since 1992, the textile and garment industry has maintained export growth to the EU market. This is a market that requires sustainability with fabric origin.

Similarly, the CPTPP has special implications for the textile and apparel industry because it helps reduce tariffs, diversify markets and export products, of which the most expected markets are Canada and Australia. In particular, the CPTPP requires yarn to be the foundation for the development of the fiber industry to meet the rules of origin.

To take advantage of opportunities from these agreements, businesses must meet origin requirements. The textile industry is still under pressure from supply shortage despite the large investment in yarn. In previous years, information on the FTA wasnot clear, so the investment attraction was low.

By the end of 2017, and in 2018, a series of new investment projects have begun.

At present, the textile and garment industry is still promoting investment in the textile and dyeing sector, so that by 2020-2021, we will gradually reduce the supply shortage. Currently, the association is still encouraging businesses to import fabric from member countries such as Malaysia and Japan to take advantage of the CPTPP incentives or take advantage of incentives from FTAs ​​between Japan and ASEAN countries. Currently, exports to the US still face tax rates of 16-20%, because there are no bilateral FTAs, so they do not get tax incentives when exporting to the US.

According to the Vietnam Textile and Apparel Association, FTAs ​​have created attractive opportunities for investors in the supply shortage of Vietnam’s textile industry. With investment attraction from FTAs, Vietnam has many modern fiber factories. Including automation at all stages that meetsinternational standards.

Vietnam is not the largest exporter of textiles and garments, but it is a leader in applying technology to textile production and automation. It can be seen that the textile industry is making an important contribution to diversifying foreign investment activities in Vietnam with many investors from Russia, the Middle East and Europe who choose Vietnam to invest in raw materials, textiles and dyeing with projects amounting to hundreds of millions of dollars. This shows that the attraction from FTAs is very high.

"With the advantages of FTAs and the open-door policy of the Government, it will continue to create attraction for domestic and foreign investors to invest in supply shortage. It is expected that by 2022-2023, there will be a lot of raw materials, textile and dyeing factories that can meet the supply shortage of the textile industry,” Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association said.