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As orders move to regional rivals, Vietnam garment industry face tough time

Vietnam textile and garment industry is experiencing tough days as orders have moved from Vietnam to Myanmar and Laos. According to Pham Xuan Hong, Chairman of the HCMC Textile, Garment, Knitting and Embroidery Association, the orders for the second quarter of the year have come, but the number is lower than predicted.

Vu Duc Giang, Chairman of the Vietnam Textile and Garment Association (Vitas) also said at a meeting with the Prime Minister some days ago that many loyal partners have shifted to place orders with producers from Myanmar and Laos, because the two countries enjoy preferential tariffs when exporting products to the US and EU.

Meanwhile, TPP and the Vietnam-EU FTA which offer preferential tariffs to Vietnam’s exports still have not taken effect. Cambodia now enjoys zero percent tariff under the GSP program applied to underdeveloped countries, while Vietnam has to bear a tax rate of 9.6 percent.

Incidentally, Vietnam not only has to compete with Myanmar and Laos which are now attracting orders, but also with Cambodia, which outstripped Vietnam in exports to the EU, one of Vietnam’s largest export markets, in 2015 due to which many Vietnamese small and medium sized garment companies have had to shut down.