Textiles and garments exports face difficulties by the end of the year

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Exports of textiles and garments are expected to reach only $39.6 billion. Photo: Nguyen Thanh.

According to the Ministry of Industry and Trade, export turnover of textiles and garments in the ten months of this year was estimated at $27.36 billion, up 8.7 percent over the same period last year.

The remarkable point is that, by the last months of the year, textiles and garments enterprises faced many difficulties like unstable input, few orders, increasing market demand with low prices, competitive pressures and trade barriers.

The is due to US-China trade tensions, affecting the exchange rates between currencies. The processing cost in Vietnam is higher than other countries in the region such as South Korea and China, hampering export orders, especially for textile and garment products.

Besides, the consumption of fibre and raw materials faces many difficulties as China has cut imports.

The Ministry of Industry and Trade stated that garment products are facing declining orders. If in 2018, by the middle of the year, many large enterprises in the industry had orders until the end of the year, in 2019, they could only sign monthly contracts with small a quantity of orders.

Some enterprises have only received about 70 percent of new orders compared to the same period in 2018. The common psychology of buyers is being concerned about the escalation of the US-China trade war, so orders are split into small quantities.

Around the story of the strong decline in export orders this year, Truong Van Cam, Vice Chairman and General Secretary of Vietnam Textile and Apparel Association, said one of the reasons for the decline may also stem from the impact of free trade agreements (FTAs).

FTAs, such as the Vietnam-EU FTA (EVFTA), were initially thought as strong impact, however, in reality, this FTA has been signed but not yet taken effect, exports have been still taxable. Customers recognised that FTAs ​​brought many opportunities but the opportunities are not real, Vietnam only has potential, if the orders shift to other markets, the benefits are higher.

The Ministry of Industry and Trade recommended textiles and garment enterprises need new measures to change production and business methods for the new situation.

In the last months of the year, enterprises need to seek orders to ensure production; and coordinate with customers to develop a production chain, meeting the rules of origin as committed in FTAs. In addition, enterprises must also comply with the brand's requirements for sustainable development to attract more orders.

Regarding textile and apparel export value for the whole year, Vietnam Textile and Garment Group (Vinatex) forecasted that the export value will reach about $39.6 billion, up 9.8 percent from 2018. Thus, the exports for the whole year will not reach the set target of $40 billion.

As for Vinatex, in the face of complex developments in the world economic situation, especially the US-China trade war which has not shown signs of ending, the group's performance results this year will not be achieved as planned.

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Specifically, the value of industrial production value will reach VND 45,439.6 billion, equal to 96 percent of the year plan. Revenue (without VAT) will be VND 49,184.3 billion, equal to 97.7 percent of the year plan. Export turnover will be $ 2,896.3 million, equaling 97.6 percent of the year plan. Profit before tax will be VND 1,281.55 billion, equal to 73.95 percent of the year plan.