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Vietnam’s domestic RMG companies not using FTA benefits

More than 50 per cent of Việtnam’s garment and textile producers are making full use of opportunities provided by FTAs but these are mainly FDI companies. Domestic garment and textile firms have, for the most part, missed out on the much-touted benefits of FTA that Việtnam has signed. Việtnam has signed about a dozen free trade agreements. Some of these are with India, Australia, New Zealand, South Korea, China, Japan, Chile and South Korea.

Garments and textiles are key export items for the country. If enterprises can take advantage of FTA opportunities, the country will be able to increase export revenues as well as expand markets. But to be able to enjoy preferential tariffs under FTAs, the products must meet the requirements under rules of origin. With weak materials supply and supporting industries, businesses in the garment and textile industries face a big challenge in complying with rules of origin.

Domestic garment and textile businesses have not taken much advantage of FTAs since they cannot meet rule of origin requirements. And one of the main reasons for this is that Vietnamese firms lack knowledge on this issue. In the first half of the year, Vietnam’s garment and textile exports increased by 11 per cent year-on-year.