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Support industries can boost Vietnam’s success in textiles and garment industry

  

To succeed the Vietnam textile and garment industry needs to make the required investments in support industries. With 65 percent of their inputs imported, Vietnam’s businesses have outsourced to overseas partners. This enables them gain favorable tariffs and a competitive advantage in member markets thanks to free trade agreements.

The textile and garment manufacturing industry has benefited the most from these agreements. The industries benefit from Vietnam’s compliance of norms of origin. For example, Vietnam’s products comply with the yarn forward rule to qualify for favorable tariffs under the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership).

The fabric forward rule governs the EVFTA (EU-Vietnam Free Trade Agreement). This implies that the yarn used to make the fabric, as well as the fabric used to make textile and apparel items, must be sourced from Vietnam or FTA members. However, Vietnam’s ability to produce yarn and fabric is limited, and these resources are largely imported.

Vietnam can create a chronology for the development of the weaving and dyeing businesses. It can also establish textile and garment clusters, which include not just yarn, textile, dyeing, and garment industries, but also downstream businesses.

 
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