Textile and Garment Export to Make Greater Efforts to Overcome Difficulties

The Ministry of Trade, the Ministry of Industry and the Vietnam Textile and Garment Association organised a meeting with textile and garment making enterprises in Hanoi in July to review Vietnam's first half exports. On this occasion, VIB Forum interviewed Le Danh Vinh, Deputy Trade Minister.

Could you please tell us about the difficult situation that the Vietnamese textile and garment industry has been faced with due to constrained quotas and disadvantageous competitiveness?

Vietnam’s textile and garment export turnover gained a slight increase in the first quarter thanks to measures to promote exports in late 2004 and the use in advance of part of quotas of 2005. Other countries could not use around eight per cent of 2005 quotas in advance as their agreements terminated on December 31, 2004. This was a significant advantage for Vietnamese enterprises as we stilled had quotas imposed according to the 2005 agreement. However, since April some importers have placed orders with countries, which are competitive and are not imposed with any quota. Therefore, the export of less competitive countries has dropped even though they are no longer imposed with quotas. On the contrary, the export of competitive countries, which don’t have quotas imposed, such as China, India, Pakistan, Sri Lanka and Cambodia, has seen a high increase. This context is difficult for Vietnam.

Which measures has Vietnam applied to cope with such a situation?

The Ministry of Trade, the Ministry of Industry and the Vietnam Textile and Garment Association have taken strong measures, including the simplification of procedures and the automated granting of visas and the allocation of quotas of 17 out of 25 categories. This means that enterprises have been granted with visas according to their export capability. Also, there are mechanisms of quota transfer and management to meet enterprises’ short-term demand for types of goods, which need to be delivered immediately within the month. The two ministries have made 20 quota transfer times. On June 17, the ministries announced the granting of automated visas for categories 347/348 and 647/648 while they have withdrawn quotas from enterprises which have a low implementation results, or are incapable of using automated visas.

Can you tell us about the impact of the US’s decision to re-impose quotas on some categories of textiles and garments imported from China on Vietnam?

In late May, the US asked China to control its export of seven types of products at 107.5 per cent of the US’s import volume. Six of which are main export items from China. Notably, these are items the US imposes quotas on Vietnam’s export and the export turnover of these items were low in the first months of this year. Therefore, the US’s decision to re-impose quotas on China’s products as a protection tool may open an opportunity for Vietnamese enterprises to receive orders from American importers. However, Vietnam is not the only ideal place for these orders as American importers can place orders with other countries without quotas. Therefore, the regulation of quotas in the final months of 2005 should create favourable conditions for Vietnamese enterprises to take this opportunity.

Which solutions will be applied to most effectively exploit quotas to achieve the yearly export targets?

For categories 347/348 and 647/648, automated visas have been granted for the July and August exports. The two ministries have committed that enterprises whose quotas have been withdrawn still have their quotas reserved for goods delivery. Stronger measures will be taken to have enough quotas for those capable enterprises. The ministries will review all allocated quotas. Enterprises which are incapable of using their allocated quotas are encouraged to transfer their quotas. The speculation of quotas will be minimised. Those enterprises which are not allowed to transfer quotas will have to return their quotas. Automated visas of some categories will continue to be granted to enterprises, if necessary. Those enterprises which do not implement their commitments will be penalised. Quotas withdrawn from enterprises will be allocated to enterprises which are capable of producing and exporting their products. Also, the State Bank of Vietnam has allowed the Ministry of Trade to open an account for quota deposit guarantee. We will help those enterprises which really need quotas for export, while maintaining quotas for those enterprises which will deliver their goods in the final months of this year. I think that enterprises should concentrate on improving their competitiveness in the domestic market and categories with automated visa as well as quota-free markets, such as the EU, Japan and Canada for export promotion.