On March 24, Nguyen Cong Ai, partner of auditing firm KPMG, told participants at a seminar titled "TPP and the Textile, Apparel and Footwear Sectors" held by the Vietnam Investment Review in HCM City that Vietnam currently depends too much on imports of raw materials. "It is estimated that 60-70 percent of inputs are imported, predominantly from China, the Republic of Korea and Chinese Taiwan," he said, pointing out that imports from China account for 48 percent of the textile industry's feedstock.
The industry can source only 2 percent of its cotton needs locally and 12.5 percent of fabrics, and the quality is inconsistent, he said. Another challenge is the weakness in design, he said, explaining that Vietnamese textile and garment companies are mostly subcontractors for other firms in the region because they do not have the ability to design and develop their own brands.
In the footwear sector, the local content is no more than 45 percent, while it has to import 80-100 percent of leather, chemicals for tanning, soles and buckles, and synthetic rubber from Chinese Taiwan, China, Thailand, and Brazil, he said. He suggested that link between companies in the value chain should be promoted through planning and developing industrial clusters specialising in textile and garment and footwear.
The two sectors should increase investment in producing feedstock, weaving and dyeing. Supporting industries, especially domestic companies in them, should be provided easy access to credit, he said. They need to adopt modern technologies to improve design capacity thus add value to their products, he added.
Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises, agreed with Ai, saying the textile and garment and footwear associations should strengthen co-operation among their members and help set up specialised industrial parks. He called on the Government to facilitate the parks and support businesses facing difficulties.
Deputy Minister of Planning and Investment Dang Huy Dong said TPP countries account for 40 percent of global GDP and 30 percent of trade, meaning the deal would bring plenty of opportunities as new supply chains are formed. Vietnam has around 6,000 companies in the textile and garment industry that employ more than 2.5 million workers. Last year exports were worth 27 billion USD, or 16.6 percent of the country's total exports.
TPP is a free trade agreement between 12 countries - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. It aims to break down trade and investment barriers between these countries of 800 million people, which constitute 30 percent of global trade and about 40 percent of the world’s economy. The pact will now undergo a two-year ratification period in which at least six countries - that account for 85 percent of the 12 nations’ combined gross domestic production - must approve the final text for the deal to be implemented.
