Vietnam’s total garment exports are expected to fall by 20 per cent against the previous year to about $31-32 billion. Garment makers in the country need to implement urgent and flexible measures to adapt to the new situation and take full advantage of the opportunities brought about by new-generation free trade agreements, especially the one with the EU (EVFTA) which took effect on August 1.

Vietnam’s clothing exports to the European Union are only $5.5 billion or a market share of 2.2 per cent. There is still a lot of room for Vietnamese garment producers to bolster exports and expand their markets. Their garment exports to the EU can grow rapidly by 67 per cent over the next five years. To achieve this, Vietnam needs more than 9 billion meters of fabric annually, domestic suppliers can meet only one third of this and the rest must be imported.

Ministry of Industry of Trade should include fabric from Japan and the Republic of Korea, which also have trade agreements with the EU and account for 23 per cent of Vietnam’s total imports. Comprehensive measures are also needed to fill the shortfalls facing the garment sector. Specifically it is necessary to build concentrated and large industrial parks in all the northern, central and southern regions, and introduce incentives to call for investment in the spinning, weaving and finishing stages.

The government needs to issue a garment development strategy for 2020-2040 period, consider abolishing value added tax when domestic enterprises purchase materials locally and reduce their logistics costs. The government should also act to help enterprises connect with each other to form close linkages, thus bolstering their growth and keeping them competitive with foreign firms.

For their part, garment makers need to reform themselves towards becoming a sustainable part of the global garment supply chain if they want to quickly increase