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Vietnam’s garment sector aims to be less dependent on imported raw materials

 

Vietnams garment sector aims to be less dependent on imported raw materials

 

At a recent conference to connect the supply and demand of raw materials for Vietnam’s textile and garment industry, the Ministry of Industry and Trade confirmed the country has risen to be the third largest clothing exporter in the world. Organized by the Trade Promotion Department under the Ministry of Industry and Trade, the conference noted, Vietnam’s share in the global textile and garment market is 6.4 per cent behind China’s 31.6 per cent and Europe’s 27.9 per cent.

Textile and garment turnover rises by 21.6%

As per economist Huynh Thanh Dien, Europe, the US and Japan are Vietnam's three main textile and garment export markets accounting for 34.1 per cent, 16.8 per cent, and 5.3 per cent of global share respectively. Growing rapidly, Vietnam’s textiles and garments export turnover accounted for 12 per cent of the country’s total export turnover in 2021. It amounted to $40.4 billion. In the first half of 2022, Vietnam’s textile and garment export turnover increased 21.6 per cent to $23 billion against the same period in 2021.

Consumer demand decline due to inflation, COVID-19 risk

Despite growth, Vietnam’s textile and garment industry faces multiple challenges today, says Huynh Minh Vu, Deputy Director, Center for International Integration Support. Rising inflation in the US and EU has led to major demand drop in these countries. The Russia-Ukraine war has also pushed up raw material prices. The country also faces the risk of COVID-19 resurgence with sub-variants. This is affecting the textile supply chain as trading partners including China, Japan, and Taiwan have applied strict anti-pandemic measures.

Trade remedy cases rise

The industry’s performance is also being impacted by 15 new Free Trade Agreements (FTA) with 60 countries and territories that Vietnam is participating with, opines Phan Khanh An, Deputy Head-Legal Department-Trade Remedies Authority of Vietnam, Ministry of Industry and Trade. So far, foreign countries and territories have initiated over 210 trade remedy cases against Vietnamese exported goods. Of these, 22 cases are related to textile products, mainly concerning anti-dumping and safeguard measures in Turkey, the US and India. Vietnam exports around 60 per cent of recycled yarns to China. However, the Zero COVID policy being implemented by China is threatening to disrupt China’s market for recycled yarns.

New trade policies way ahead

The pandemic has made Vietnam textile and garment industry heavily dependent on imported raw materials. The country currently sources 55 per cent it is requirements of raw materials locally. Textile and garment enterprises are currently not accepting long-term orders due to the risk of low unit prices. They are urging authorities to introduce new policies to encourage investment and attract FDIs in raw material development. Many domestic enterprises are collaborating with other companies to expand their capacity and become self-sufficient in production

 
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