Opportunities and challenges for garment and textile industry in Vietnam
To grow further, Vietnam’s textile industry needs to develop an end-to-end supply chain and invest more in quality as well as innovation.
A large number of foreign investors have shown great interest investing in the Vietnamese textile industry, especially after the country signed a number of Free Trade Agreements, including the EU-Vietnam FTA (EVFTA). Under the EVFTA, all import tariffs on Vietnam’s garment and textile products will be removed within the next 7 years. With the wide and deep integration, Vietnamese textile and garment has transformed from a domestic-oriented sector into one of the leading forces in the country’s export turnover. In specific, the country earned $27 billion from textile and garment export in 2015 and the figure is expected to reach $29 billion at the end of 2016.
Nevertheless, several challenges still remain for the Vietnamese textile industry. According to Oliver Massmann, chairman of legal sector committee of the European Chamber of Commerce in Vietnam, Vietnam has not fully developed an end-to-end supply chain for textile and garment. Currently, the country still depends on imported raw materials from China , Korea and Taiwan and only offers one-part services such as cut-make-trim to transform fabric into garments. As a result, in order to develop further, Vietnam needs to create a domestic supply chain starting from yarn production to weaving and dyeing.
The signed FTAs also become a challenging factor as Vietnamese manufacturers are expected to comply with more stringent quality and safety regulations. So far, the Vietnamese garment and textile sector has only competed with other countries’ in term of cheap labor and other costs. In the following years, the country will need to invest in innovation and quality in order to create a new momentum for growth.
Sources: 1, 2