Registering a year-on-year surge of 6.1 per cent, Vietnam’s garment and textile exports only reached nearly US$8.5 billion in the first five months of the year. As reported by a number of enterprises, export orders tended not to increase, which was accompanied by a decline in export prices and increase in production costs, resulting in a lot of drawbacks in manufacturing and distributing products.

Such circumstances are taking place more severely among small and medium-sized enterprises, which are facing fierce competition with regional opponents from Laos, Cambodia, Myanmar and Bangladesh. This indicates that Vietnam’s garments and textile industry is being confronted with numerous challenges as consumers have been switching part of their orders to several other countries such as Cambodia, Myanmar and Laos due to export tax incentives to Europe and the US – the two largest export markets of Vietnam’s garment and textile sector. Meanwhile, Vietnam’s garment and textile exports to the US and EU are subject to an average taxation of 17 per cent and nearly 10 per cent respectively. If nothing changes, it is not until mid-2018 that the roadmap of tax reduction under TPP and EVFTA will take effect, which will therefore bring about a lot of disadvantages for Vietnamese enterprises in the process of competition with international opponents.

Moreover, China, India and Bangladesh, who are on the ‘upper floor’ compared to Vietnam in the global supply chain, are also implementing a number of active measures aiming to compensate for the downsides caused by their TPP non-membership, driving competition to new heights. Unless effective solutions are taken soon, Vietnam will surely become an ‘underdog’ on the world market.