Vietnam’s
rapid growth in textiles may be tapering off.The country’s Ministry of
Industry and Trade said global demand for textile garments fell in the first
eight months of the year.Wages for workers and logistics costs have been
rising, putting local garment exporters under pressure, particularly in the
face of fierce competition from regional rivals like Bangladesh, Myanmar and
Cambodia,” according to local reports from The Voice of Vietnam.
Part
of the problem with Vietnam’s competitors, according to the article, is that they’ve
enjoyed preferential policies from their governments—including things like tax
breaks to boost exports—where Vietnam hasn’t had as many of these perks.
They’ve also enjoyed preferential trade status from major trade partners like
the U.S. and EU, something the Trans-Pacific Partnership would have afforded
for Vietnam with its exports to the U.S.
As such, the Ministry of Industry and Trade in Vietnam is in the process of
drafting legal amendments designed to help domestic garment producers cut
costs, and they’ve also implored state agencies to support domestic textile and
garment exporters with things like administrative procedures to help ease some
of the other obstacles to competition.Chairman of the Vietnam Textile and
Apparel Association Vu Doc Giang said the sector aims to export roughly $30
billion worth of textiles and garments in 2017, with the U.S. taking 50 percent
of that total, followed by the EU with 20.5%, Japan with 19.5% and Korea
importing 7.5% of Vietnam’s garments and textiles.
The U.S. has taken in $6.8 billion worth of textiles and apparel from Vietnam
for the year through July, a 5.36% year over year increase, according to OTEXA
data. In 2016, U.S. imports totaled $11.3 billion, which was a 2.27% increase
over 2015.For the year through August, according to The Voice of Vietnam, the
country’s exports reached $19.8 billion, but the Ministry is concerned the $30
billion target won’t be reached since the bulk of the country’s big orders have
likely already been placed.No timeline has yet been made available for when
some of these cost cuts could take effect, and it remains to be seen whether
these cuts will be passed on to companies sourcing in Vietnam.
Source: Vietnam Economic Times, Vietnam Wednesday, 04 October 2017