TPP - Many Advantages for Vietnam’s Textile and Apparel Sector

According to Mr Nguyen Van Tuan, Deputy General Secretary of the Vietnam Textile and Apparel Association (Vitas), TPP represents a huge market accounting for about one third of global trade. TPP includes many major trade partners for Vietnam textiles, namely the US accounting for up to 50 percent of textile trade, and Japan accounting for 12 percent. Besides are other leading partners such as ASEAN, Australia, Canada, etc. Thus, the signing of TPP will provide a great opportunity for the Vietnamese textile industry.

 

In 2012, despite the decrease in textile demand from foreign markets, Vietnam’s exports to the US and Japan remained positive, up 9.2 percent and 19.3 percent respectively. In which, export to the US stayed the highest, accounting for 44.8 percent of the industry.

 

Mr Le Tien Truong, Vice President of Vitas, Permanent Deputy Director of Vietnam National Textile and Garment Group (Vinatex), said that the growth rate of 20 - 30 percent over recent years has confirmed the position of Vietnam as a leading competitor in the global textile industry. He strongly believed that Vietnam’s textile export would continue its growth trend, especially to TPP members, after TPP is concluded and in effect.

 

Mr Le Tien Truong himself was a member of the Vietnamese team in the TPP negotiation. He personally participated in the negotiation with involved TPP parties, as well as working sessions with representative from five US Textile Retail and Import Associations in the TPP Textile Coalition: RILA, AAFA, USA - ITA, NRF, OIA as well as representatives from large corporations such as Levi's, JC Penney, Target and Walmart. "Basically, when the TPP comes into effect, export and import commodities among TPP members will enjoy preferential tariffs, which, in the long term, are expected to be reduced to 0 percent. This is the advantage Vietnam textiles can count on to increase competitiveness against some countries like China and Bangladesh, which are leading textile exporters but not members of the TPP," said Mr Truong.

 

To be able to enjoy preferential tariff in the TPP markets, Vietnamese enterprises have to meet the requirements of proving the origin of export commodities’ materials from the level of raw fibre (cotton not counted), ensuring that these materials are produced in Vietnam or other TPP member countries. If textile enterprises fail to meet these standards, they may face reclaimed taxes for otherwise tax-free exports. This is quite a problem for Vietnamese enterprises, whose manufacturing is based mostly on imported raw materials.

 

"To fully exploit the potential of TPP, Vietnam’s enterprises should form an internal supply chain, establishing an organic connection between manufacturing stages. A close supply chain including design – materials and auxiliary materials - apparel – distribution must be formed within the community of TPP members. More importantly, Vietnam’s companies should not take TPP as a lifesaver for short-term development, but must seize this opportunity to build up competitiveness and develop a strategy for sustainable development," said Mr Le Tien Truong.

 

Mr Truong also warned that even though TPP does not have specific standards for product quality, Vietnam’s enterprises should improve to respond to customer demand in three aspects: quality, delivery time and competitive price.

 

Besides of the requirements of products’ origin, there are also many challenges facing Vietnam’s businesses due to their weak competitiveness. Thus, Vietnam should promote administrative reform and a better business environment.

 

Regarding investment in developing material areas, Mr Nguyen Van Tuan said: "It is crucial to immediately build a clear strategy for developing areas specialised in textile and dye, especially dye, because without it, we can’t make fabric and would not benefit from TPP. On the other hand, we have to invest capital in textile wastewater management as well as workforce training, because weaving and dyeing techniques require good skills."

 

Vietnam’s self-produced material now can only meet about 30 percent of total capacity. To take advantage of the opportunity from TPP and increase competitiveness, Vietnam’s textile enterprises need to connect with the sources of raw materials, especially fabrics sources among TPP countries. They also can cooperate with FDI enterprises to solve this issue.

 

Right now, efforts to promote materials development have already taken off. Vinatex has just launched three fibre factories namely Phu Bai 2, Vinatex - Hong Linh and Dong Van Fibre. Vinatex has also continued to invest in some large-scale fibre plants such as Dong Quy, Phu Hung, PVTEX Nam Dinh and Phu Bai 3. Meanwhile, foreign investors from Hong Kong, Taiwan and South Korea have also been speeding up their material providing for Vietnam in order to get our textile industry ready for the opportunity from TPP.