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Vietnam: Excessive reliance on imports must end

Continued dependence on imports of raw and auxiliary materials will hurt Vietnam’s textiles and garment industry. It will prevent the country from taking advantage of the various free trade agreements and blunt the industry’s competitive edge further and reduce the value added component.

By the end of last year, 99 per cent of the cotton used in the textile industry was imported, a year-on-year increase of two per cent in quantity and 2.5 per cent in value. Each year, Vietnam earns of billions of dollars from textile and garment exports but businesses make modest profits because the garment industry spends more than half of its earnings on importing raw materials.

The textile industry is knotted in the middle i.e. highly productive in terms of making yarn and final products but stunted in the production of fabric and other materials. With the industry’s annual growth rate at about eight per cent, by 2025 the amount of fabric needed will double to 18 billion meters, meaning, without further investment in domestic production, Vietnam will have to import 15 billion meters.

It’s necessary for domestic businesses to invest in the dyeing process, implement a solid human resource training strategy and focus heavily on building an integrated value chain between domestic producers.