Vietnam Textile and Pressure to Boost Supporting Industries

5:08:37 PM | 8/14/2014

According to Vietnam Textile and Apparel Association ( VITAS), the Vietnam textile and garment industry has currently contributed 10 percent of industrial production value with over 5,000 businesses and 2.5 million employees, accounting for 5 percent of the Vietnam’s total workforce in the industry. Textile export ranks second and contributes 15 percent of total national export turn-over, ranking in the top five out of 153 worldwide garment exporters. However, the Vietnam textile industry largely depends on importing raw materials which causes imbalanced development and vulnerability. 
VITAS also stated that the Vietnam textile supply chain is currently focusing too heavily on exports (making up 86 percent of production capacity), and greatly depending on imported fabric sources (accounting for 86 percent of total demand), especially China (46 percent). In addition, bottlenecks still happen in the process of knitting and dyeing in Vietnam’s textile supply chain.
The fact that the textile industry mainly focuses on sewing lowered the value-added and income, causing great fluctuations of labour and threatening the stable development of the industry.
Supporting industry development strategy in the textile industry is towards a sustainable development, in which completely exploiting advantages from TPP and FTA, taking the added value as target. In particular, Vietnam’s textile industry strengthens supporting industries and chooses appropriate markets.
Accordingly, the textile industry is mounting the global supply chain with the aim of adding value and producing high-value goods. For the exploitation of the world market, the industry aims to increase profits; while businesses aim to exploit new markets, including niche markets such as South Asia and North East Asia.
In the supporting industry development strategy, the textile industry has launched a number of specific items. Accordingly, the industry will call for investment in the production of polyester fibre - an important factor contributing to the sustainability of the textile industry. Besides, the industry also requires a 580 hectare land area for plant construction to have more 11.6 million spindles by the time of 2025. Moreover, it needs to invest in large-scale industrial parks and develop dyeing to have more 10.8 billion square meters in 2025, following by supporting material development for export garment. 
More specially, the industry will focus on stimulating the fashion design industry of Vietnam. The domestic market with more than 90 million people is the pedal for the development of this industry.
With the strategic direction mentioned above, VITAS said that the Government should supplement and adjust the textile industry development plan in the period 2015-2025 with the orientation to 2035; perform planning in three major areas of the country to call for and attract domestic and foreign investment in the fabric manufacturing sector, including weaving, dyeing and finishing. It also needs to have financial resources to support investment in wastewater treatment in these areas.
Furthermore, the Government should also enhance the quality of human resources according to new textile industry development plan and support human resources training; issue guidelines and policies for attracting advanced technologies, encouraging the transfer and creating a playground for Vietnamese enterprises to grow. 
In particular, the Government needs to complete policies, investment environment; strengthen investment incentives and urge foreign investors to produce raw materials; develop mechanisms to motivate the textile industry such as relocating production bases to the suburb, clean production investment; supporting the development of trading centres of textile materials; enhancing funding to support trade promotion.
Regarding enterprises, VITAS recommends them promoting exports of traditional textiles with efforts to diversify products and raise the competitiveness of Vietnam’s textile through price; strengthening links in the domestic supply chain, increasing design and trade capability. In particular, it needs to find additional sources of raw materials from others countries to gradually replace Chinese ones, reducing the dependence on China.
Quynh Anh