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Import dependence cripples Vietnam’s textiles industry

Vietnam’s textile industry is heavily dependent on imported raw materials and accessories. In the first nine months of this year, cotton imports surged 30.3 per cent, fabric imports increased 13.5 per cent and yarn imports were up 34.6 per cent.

If this dependence continues, Vietnam’s textile industry will not be able to take full advantage of free trade agreements like the Europe-Vietnam free trade agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

Particularly, when these take effect at the end of this year, with tax lines cut to zero, Vietnamese garment and textile products will have opportunities to expand their market share in Canada, New Zealand and Australia. However, the two deals set high requirements in terms of thread and fabric origin, which poses barriers to the industry, when it is productive in terms of final products but grinds to a halt in the production of materials.

Textile firms in Vietnam produce 0.8 billion meters of fabric a year, meeting only around 13 per cent of the total demand. And this amount can’t be used to make high-quality products. In fact, many businesses have to import more than 90 per cent of their material to satisfy production. However, some domestic firms have invested heavily in weaving and dying and this is expected to provide the sector sufficient material.