Fluctuating material prices and comparatively lower foreign direct investment have hit Vietnam’s exports. Vietnam’s total exports of garment and textile products till December 15 of the current year showed a year on year growth of 4.8 per cent.
This is the lowest in the last ten years. Britain’s exit from the European Union has resulted in falling orders from importers. Shoe exports during the period had a growth rate of 8.1 per cent, lower than 16.3 per cent of 2015 and 22.9 per cent of 2014.
The country is the world’s fifth largest garment exporter. It has maintained double-digit growth, ranging on average from 10 per cent to 36 per cent, since 2001. Garment exporters are also faced with increasingly intense competition from outsourcing hubs Cambodia and Bangladesh, which get tariff preferences in the US market. Market access for Vietnam’s clothing in the US is limited by an average tariff of about 11.1 per cent, with tariffs on some textile and apparel products nearing 30 per cent.
However, the EU-Vietnam Free Trade Agreement, which will become effective in 2018, will prepare importers, customers and investors for better growth in future. Moreover, there are other free trade agreements as well – such as the one with the Eurasian Economic Union, which Vietnamese shoe and apparel exporters can exploit yet to boost exports.