The Vietnamese garment and textile industry is only strong in the sewing stage, while being weak in other stages like spinning, weaving and dyeing. Meanwhile, the automotive supporting industry is weak, while the localisation rate of the motorbike industry has risen to 97 per cent.
Strong in sewing, weak in spinning, weaving, dyeing
Mr Le Tien Truong, General Director of the Vietnam National Textile and Garment Group (Vinatex), said that Vietnam's garment and textile is strong only in sewing but weak in remaining stages as spinning, weaving, dyeing and finishing. Vietnam’s auxiliary industries are currently entangled with so-called bottlenecks when 80 per cent of fabrics is imported from foreign nations.
Locally made components used in the garment and textile industry are low value items such as buttons, threads, zips, elastic bandages and tapes. High value items like yarn, chemicals, dyes and cloth are imported. Localisation rate is still low.
In 2015 alone, Vietnam's garment exports brought in US$27.5 billion but up to US$14 billion had been spent on imported inputs.
Mr Truong said, a company needs only US$3,000 for a position in a garment company (personnel and technology) but it takes up to US$200,000 for a position in a spinning and textile company.
For that reason, a small and medium business will be hardly able to invest in textile and dyeing business. Besides, environmental treatment is also very expensive.
In addition, spinning, weaving, dyeing and finishing stages require huge capital and high-quality personnel, much higher than skill requirements imposed on garment workers. Furthermore, technology and machinery must be modern enough to turn out yarns, fabrics and accessories of high quality.
Currently, the Vietnamese garment and textile industry is calling on companies to invest in complete supply chains by establishing spinning, weaving, dyeing and finishing companies.
Strong in motorcycle, weak in automobile
Mr Vu Quang Tam, Deputy General Director of Honda Vietnam - a motorbike and automobile manufacturer, said that automobile supporting industries are still very weak but motorcycle supporting industries are robustly developed with a high localisation rate.
Big motorcycle output has facilitated supporting industries to develop in the country. Annual sales reach hundreds of thousands of units. Besides, motorcycle production technologies are much simpler than those used in automobile industry. At present, Honda Vietnam has about 140 motorbike parts vendors and its localisation rate is 96 - 97 per cent.
However, it is another case in the automotive industry. Market scale, segmentation, diversification and small sales inhibit investors from investing in auto parts production.
At present, many companies are supplying components for Honda Vietnam, but the Japanese company still has to import steel to make body and gear shaft. Many companies are willing to manufacture auto parts but input supply sources put the brake on them.
Tam added that the development was dragged by divided opinions and inconsistent policies among authorities. While the Ministry of Industry and Trade is seeking to draft the automobile development strategy and want to increase the market capacity and the Ministry of Transport is seeking to reduce vehicles in traffic because of pressures on infrastructure and the Ministry of Finance is applying a variety of fees to restrict car purchases and limit family cars.
Tam said that automobile consumption is an inevitable trend. However, dealing with the above hindrance requires the cooperation and effort of concerned ministries to develop this important industry.
Vietnam should focus on developing small economy cars with the engine capacity of below 1.5L because this segment is the best selling on the market.
T.M
Vietnamese
