Garment Sector Unlikely to Reach Export Target of US$5Bln in 2005

Garment Sector Unlikely to Reach Export Target of US$5Bln in 2005

Experts are concerned that the textile and garment industry may fail to meet its export target of US$5-5.2 billion this year, as total export revenues reached only US$1.7 billion in the first five months of this year, posting a slight on-year increase of 0.2  and fulfilling only 30.9  of the yearly plan.

Trade experts calculate that to reach its goal, the sector must earn at least US$450 million monthly from exporting garment products during the remaining seven months of the year, which is not easy to attain.

There are many reasons for the slowdown in the country’s garment exports so far this year, the experts say, including the US and EU moves to lift quotas on many products from China and India.

Although the US, the largest garment importer of Vietnam, continues to impose quotas on four garment categories imported from China, Vietnamese players cannot step in, they said.

Local garments are also unable to compete with products from Bangladesh, Sri Lanka and Cambodia because they enjoy a non-quota status in the US market, in addition to other import tax exemptions and reduction policies in the outlet, said Le Quoc An, general director of the Vietnam Garment and Textile Association (Vitas).

In the first quarter of this year, China’s garment exports to the US increased 27 , Bangladesh 20 , Sri Lanka 19  and Cambodia 14 .

Meanwhile, most of Vietnam’s garment categories, which account for large export rates, reported sharp falls in the first three months such as cat.338/339, cat.347/348, and cat.647/648 occupying 44 , 25  and 7  of export value but down 17 , 25  and 20 , respectively.

Another reason for the slowdown is poor competitiveness of Vietnamese garment enterprises, An said.

Thus, to enhance competitiveness, Vietnamese businesses must implement measures to improve management and reduce production costs. They should actively find ways to access major markets like the EU, Japan and the US.

The local enterprises also need to have enough comprehension and ability to overcome technical barriers for garment products when entering some big markets.

They must choose their right products and market shares to compete with other foreign exporters and establish an alliance to enhance their competitiveness.

Vietnamese enterprises have set up an alliance but the alliance only aims to receive quotas and is not based on furthering integration so it operates ineffectively.

At present, many enterprises, which have export ability, do not have enough quotas while others have quotas but no ability, he said.

Although the Government has allowed transferring quotas, exporters still wait for export opportunities or price hikes so the quota transfer among enterprises is very slow.

To cope with this situation, the Trade Ministry plans to issue automatic garment export licenses to local producers for shipments to large-scale importers in other countries, he said.

The ministry also wants to repossess export quotas of textile makers who have only used 35  of its total quotas for export in the last five months. The repossession is expected to begin by the end of June or early July.

The ministry reported that so far this year, it has ratified 239 quota transfers.

• Vietnam Economic Times