Vietnam’s leather and footwear industry expects to raise its export value by 10 per cent this year. To achieve the target, the leather and footwear sector needs to boost technological innovation, invest in new equipment and modernise existing equipment, expand the production scale of domestic enterprises to increase productivity as well as improve the quality of products.
Another promising element is the Vietnam-European Union free trade agreement, which will take effect in 2018 and afford Vietnamese footwear makers more opportunities to boost exports. Footwear currently ranks fourth and suitcase-bag-briefcase ranks 10th among Vietnam’s top ten foreign currency earners.
There are plenty of chances for expanding exports given that orders for footwear and bag processing may be diverted from factories in China that have cut back on incentives for investment in garment and footwear manufacturing to focus on high technology. But there are difficulties to be confronted. Orders from the EU market have plummeted. Asean markets have become unstable. Since January 2016, the tax levied on footwear and leather handbags and items circulated within the Asean bloc have been reduced, leading to stiffer competition from regional rivals. Vietnamese enterprises face a shortage of capital and increasing input costs. The sector’s manufacturing index in 2016 rose a modest 3.7 per cent year-on-year.