Vietnam wants to become ‘textile hub of the world’

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vinatexBilateral and multilateral trade pacts will make Vietnam a garment and textile production center in the world, say economists.

The country is currently negotiating the Trans-Pacific Partnership Agreement (TPP) and the Vietnam-EU Free Trade Agreement, which are expected to be applied in the next couple of years.

When these agreements are signed, Vietnamese garment and textile products will enjoy zero per cent tax rate in the US and EU. The average tax rates are presently 17.5 per cent and 9.6 per cent in these two markets, respectively.

One of the US’ conditions for the zero per cent tax rate is that fibers must be produced in Vietnam or other TPP countries. Most countries in the TPP have not developed the fiber industry yet, forcing Vietnam to produce domestically. The EU also imposes conditions on fabric production.

The textile and garment industry consumed 7.4 billion square meters of fabrics in 2013 when export turnover reached $20 billion, according to the Vietnam Textile and Apparel Association (VITAS). Of these, 1.4 billion square meters were domestically made. The remaining was imported.

Both quantity and quality of domestically-made fabrics fail to meet export requirements. The weakest phases are from weaving and dyeing.

Vietnam textile and garment export grows 15-17 per cent per year since 2007, said Nguyen Van Tuan, deputy head of the Vietnam Cotton and Spinning Association cum deputy secretary general of VITAS. The export turnover is estimated to reach $40 billion by 2020-2025, requiring 12 billion square meters of fabrics and five million workers.

At present, Vietnam export to the US and EU is still limited, according to experts. The US and EU markets spent $105 billion and $260 billion, respectively, on garment and textile products last year. However, Vietnam export is accounted for only 8 per cent and 3 per cent of their market share respectively.

Sixty per cent of 90 million Vietnamese are in the working age, which will be a good human resource supply to develop the garment and textile industry.

“Several economic experts in the world believed that Vietnam will become the world center of garment and textile production,” said Tuan.

China used to occupy 50 per cent of the global supply. However, the country’s textile exports were reduced to only 40 per cent due to environment pollution, increasing production costs and shortage of human resources. Meanwhile, there are several risks in other export countries like Bangladesh, Pakistan, Cambodia and Myanmar. Thailand focuses on fashion retail as a policy instead of production.

 

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Reading Time: 2 minutes

Bilateral and multilateral trade pacts will make Vietnam a garment and textile production center in the world, say economists.

Reading Time: 2 minutes

vinatexBilateral and multilateral trade pacts will make Vietnam a garment and textile production center in the world, say economists.

The country is currently negotiating the Trans-Pacific Partnership Agreement (TPP) and the Vietnam-EU Free Trade Agreement, which are expected to be applied in the next couple of years.

When these agreements are signed, Vietnamese garment and textile products will enjoy zero per cent tax rate in the US and EU. The average tax rates are presently 17.5 per cent and 9.6 per cent in these two markets, respectively.

One of the US’ conditions for the zero per cent tax rate is that fibers must be produced in Vietnam or other TPP countries. Most countries in the TPP have not developed the fiber industry yet, forcing Vietnam to produce domestically. The EU also imposes conditions on fabric production.

The textile and garment industry consumed 7.4 billion square meters of fabrics in 2013 when export turnover reached $20 billion, according to the Vietnam Textile and Apparel Association (VITAS). Of these, 1.4 billion square meters were domestically made. The remaining was imported.

Both quantity and quality of domestically-made fabrics fail to meet export requirements. The weakest phases are from weaving and dyeing.

Vietnam textile and garment export grows 15-17 per cent per year since 2007, said Nguyen Van Tuan, deputy head of the Vietnam Cotton and Spinning Association cum deputy secretary general of VITAS. The export turnover is estimated to reach $40 billion by 2020-2025, requiring 12 billion square meters of fabrics and five million workers.

At present, Vietnam export to the US and EU is still limited, according to experts. The US and EU markets spent $105 billion and $260 billion, respectively, on garment and textile products last year. However, Vietnam export is accounted for only 8 per cent and 3 per cent of their market share respectively.

Sixty per cent of 90 million Vietnamese are in the working age, which will be a good human resource supply to develop the garment and textile industry.

“Several economic experts in the world believed that Vietnam will become the world center of garment and textile production,” said Tuan.

China used to occupy 50 per cent of the global supply. However, the country’s textile exports were reduced to only 40 per cent due to environment pollution, increasing production costs and shortage of human resources. Meanwhile, there are several risks in other export countries like Bangladesh, Pakistan, Cambodia and Myanmar. Thailand focuses on fashion retail as a policy instead of production.

 

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