ASEAN Unites for More Competitive Garment Industry 

Ten members of the ASEAN Federation of Textile Industries (AFTEX) gathered in Vietnam in mid-November 2004 to explore ways of sharpening the competitive edge of their garment and textile industries, which is essential since export quotas will be phased out when the World Trade Organisation’s Agreement on Textile and Clothing expires on January 1, 2005. They focused their discussions on boosting intra-regional cooperation.

During the meeting, 10 members of the Association of Southeast Asian Nations (ASEAN) discussed possibilities of applying the same appellation of origin on all garments and textiles produced in the block, cooperating on market expansion, and implementing proper investment mechanisms. Applying the same ASEAN origin mechanism, the 10 countries will enjoy the same benefits when they export the products to major markets such as the US, the European Union (EU) and Japan.

ASEAN members also touched another urgent issue - how to facilitate the flow of garments and textiles within the block. This can be done by establishing a special "green lane" in which automobiles carrying the products would not have to stop for border inspections. According to AFTEX, garment and textile exports are already checked in the country of origin, so inspecting shipments at border gates is a form of trade barrier. Removing cumbersome procedures at border gates will lower selling prices of garments and textiles in ASEAN, encouraging enterprises in one country to buy more textiles from its fellow block members, instead of heavily relying on Chinese products. This would greatly benefit major textile exporters in ASEAN such as Indonesia, Thailand and Cambodia.

A more feasible solution to forge the intra-regional cooperation is establishing clusters of enterprises in many ASEAN countries to take full advantage of the strengths of each corporate member and turn out products with a sharper competitive edge. Representatives from the Philippines presented a scheme on connecting garment companies which specialize in producing clothes for men, women and children, sportswear, suits and underwear. Accordingly, each country will introduce its most powerful producers to join one or more groups as well as its strong material suppliers which are to serve the producers on long-term basis. The expected six clusters will shoulder the responsibility for making their products widely known by major importers.

To this end, AFTEX has agreed to organise an ASEAN trade show on garments and textiles in Hong Kong, a gateway to both regional countries and China, every March. Such a fair entitled “Source It” will be held on March 21-23, 2005. With an expected participation of around 200 exhibitors from Southeast Asian nations and non-ASEAN countries, the fair will offer a one-stop shop for garment and textile products as well as services such as fibres, yarns, trimmings, accessories, fabrics, garments, specialised machinery, dyeing and finishing facilities and design services.

AFTEX also proposed the establishment of a task force with the key function of raising production capacity and competitiveness of garment and textile plants in the region. The expected task force will be in charge of experience exchange, skill training and establishment of garment model and trade centres in regional countries, especially Vietnam, Cambodia, Laos and Myanmar.   

In addition to boosting garment trade, ASEAN members attached great importance to stepping up intra-regional investment cooperation. Vietnam wants investment of cloth producers from Thailand and Indonesia. In the short term, Thailand is expected to supply Vietnam with its cloth and help the latter design clothes. In a broader move, Vietnam can build garment plants near the border with Cambodia, or supply its workers to Malaysia.

Notably, leaders of garment and textile associations in regional countries, at the meeting, signed a recommendation plan which will be submitted to the 27^th ASEAN Economic Ministers Meeting and the 10^th ASEAN Summit to be held in Laos on November 27 and November 29-30, respectively. The recommendation focuses on a scheme to quickly remove import taxes on garments and textiles. Earlier, ASEAN members agreed to phase out the tariffs by 2007 in Indonesia, Singapore, Thailand, Malaysia, Brunei and the Philippines. Vietnam, Laos, Cambodia and Myanmar will do that in 2012.

Recently, the countries agreed to speed up the process by eliminating the tariffs several years ahead of schedule. Specifically, Indonesia, Singapore, Thailand, Malaysia, Brunei and the Philippines will implement garment trade liberalization in 2005, Vietnam in 2006, and Laos, Cambodia and Myanmar in 2008, according to foreign sources.

• Dong Phong