Want to be in the loop?
subscribe to
our notification
Business News
TEXTILE-GARMENT EXPORT GROWTH COOLS
VCOSA vice chairman Nguyen Hong Giang said the growth slowed compared to that in previous years and below expectations due to a lack of orders and falling demand on global markets.
If the tough situation continues, it will be hard for the sector to earn US$29 billion in revenue this year, which is even lower the target of US$31 billion set earlier this year, Giang said at a news briefing on Tuesday to introduce the 16th Vietnam International Textile and Garment Industry Exhibition (VTG 2016) slated to take place in November.
The decrease in export orders resulted from mounting competition from rivals including China, India, Cambodia, Bangladesh, Myanmar, and Sri Lanka. In addition, Cambodia and Myanmar enjoy tax incentives when selling textile-garment products to the European Union (EU), making their products even more competitive.
In the past two weeks, a number of textile and garment exporters have had no orders to fulfill, said Pham Xuan Hong, chairman of the HCMC Association of Garment-Textile-Embroidery-Knitting (AGTEK).
Given fierce competition on global markets, Hong suggested firms invest in advanced machinery and equipment, choose high-quality materials to cut production costs and raise the competitiveness of their products, and focus on free-on-board (FOB) contracts.
Besides competition, domestic apparel firms are grappling with difficulties, brought about by the minimum wage rise and regulations on inspections.
Fewer foreign direct investment (FDI) approvals have been registered for the textile and garment industry this year than in previous years.
In 2014 and 2015, many foreign enterprises rushed to invest in the sector to capitalize on opportunities from the Trans-Pacific Partnership (TPP) trade agreement, which allows firms to enjoy tax breaks when exporting products to member states.
But investors are in standby mode in the U.S. election year as it the election result could affect the future of the multilateral trade pact, Giang of VCOSA said.
Hong of AGTEK shared Giang’s view, saying that the implementation of FDI projects in Vietnam’s garment and textile sector may be slower than scheduled as investors would wait for the U.S. presidential election result.
But Giang said Vietnam is still attractive to foreign investors thanks to its free trade agreements with Japan, South Korea and the EU, not to mention the fact that the production cost in Vietnam is cheaper than in many other markets.
Up to many foreign retailers want to choose Vietnam to invest instead of China, Giang said, citing data from the U.S. Fashion Industry Association (USFIA).
Source: The Saigon Times
Related News
GREEN ECONOMY, DIGITAL ECONOMY BREAKTHROUGH OF VIETNAM-CHINA TIES: PM
Addressing a Hanoi seminar with 19 Chinese groups operating in green economy and digital economy, the leader said the meeting, the first of its kind, aims to materialise high-level perceptions reached by Party General Secretary Nguyen Phu Trong and Party General Secretary and President of China Xi Jinping, who agreed to build the Vietnam-China community with a shared future.
CONSUMER CONFIDENCE IN ECONOMIC RECOVERY REACHES FIVE-QUARTER HIGH
Vietnam's GDP expanded by a healthy 5.66 per cent in the first quarter of 2024, marking the strongest first-quarter growth since 2020. While slower than the previous quarter's 6.7 per cent growth, this momentum indicates the country is on track to achieve its 2024 economic targets.
THE VIET NAM IMPORT-EXPORT REPORT TO BE RELEASED THURSDAY
In particular, it includes an itemised import and export report, in specific markets and also includes an overview of all State management activities and policy mechanisms related to the import, export market along with details of all the legal documents issued in the year.
TAX AND FEE SUPPORT HINGES ON MPI PROPOSAL APPROVAL
“Business and production activities of enterprises remain in big difficulties. Domestic purchasing power has reduced and people are tightening their belts,” the MPI stated. “Demands in the domestic market are still standing at a low level, while manufacturing and processing enterprises have low competition. These are among the biggest difficulties.”
VIETNAM’S TEXTILE SECTOR BRINGS IN $37 BILLION IN FDI
The foreign-invested enterprises play an important role in the textile and garment sector, contributing 65 per cent to the sector’s total export turnover. Major investors mainly come from South Korea, Taiwan, Hong Kong, and China. Among them, South Korea is the largest foreign investor in Vietnam’s textile and garment sector.
FDI FLOWS STRONGLY INTO MANUFACTURING, REAL ESTATE
According to the General Statistics Office (GSO), the total FDI disbursed in Vietnam in the first four months of this year reached an estimated 6.28 billion USD, up 7.4 per cent year on year, the highest four-month amount in the past five years.