According to latest statistics of the Ministry of Trade, in two first months of 2006, export turn-over of Vietnam’s textile and garment industry is estimated to reach US$867 million, a 45.5 per cent increase in comparison with that of 2005.
This is the highest growth rate in recent years and especially impressive when this industry has just overcome a difficult year in 2005. Chairman of the Vietnam Textile & Apparel Association (VITAS) said, the cause of high growth is the way to manage quota by automatic visa issuance.
With this mechanism, enterprises are able to sign contracts to produce and export from the beginning of year. The latest announcement by the Ministry of Trade shows that until this time, the rate of enterprises export following quota has increased. They have had to stop granting quotas for some “hot” categories. Up till now, at least 5 categories have had their automatic visa grant cancelled.
If everything goes as scheduled, Vietnam will soon finish its allocated quotas, after which enterprises can start to produce produced outside their quota by later in the year. However, this trend can also lead textile and garment exports to be reduced because it takes three to four months to sign and finish a contract so they may find it difficult to find big contracts by the end of year.
China – Vietnam’s biggest competitor in textile and garment exports- is facing limits in Europe and American markets. This is the most important factor in making exports grow in early months of this year.
Mr. An also expressed his worry for the long-term competitiveness of the Vietnamese textile and garment industry. Recent growth has short-term advantages. We should not be too happy. By 2008, China will remove all hindrances. Mr. An warned that if Vietnamese enterprises did not take advantage of this time to invest in reforming and improving competitiveness, they would soon see a setback.
Besides China, we have to compete with India, Bangladesh and Pakistan. Despite recent large scale exports (Vinatex in particular has set the goal of exports of US$1.15 billion), weak points of Vietnamese enterprises include low labour productivity (account for 50-60 per cent of that of China); lack of production of goods of high added value, and poor marketing and commercial ability.
Other difficulties remain. The building of centres for material and additive of textile and garment production has been blocked because of unfinished procedures for land. Custom procedures are very complicated, listed at the bottom of the 21 APEC countries. The time for one container to pass through custom is 10 minutes in Singapore, 1 day in Thailand and 7 days in Vietnam.
A new difficulty has come in relations with the workforce. In February, complicated strikes in Dong Nai badly effected production activities. Enterprises had to agree to increase production by 10-15% but working discipline and productivity have not improved. Our economy attracts a lot of foreign investment in labour – intensive industries thanks to our large and cheap workforce.
Leather and shoes and textile enterprises are facing a lack of skilled workers and workforce because of strikes and resignation. If this trend continues, in the long term, it will badly effect our ability to attract foreign investment. Mr. An especially noted that, at this time, as Vietnam is negotiating to join the WTO, we have to strive to prevent partners from imposing self-defence terms to avoid being reimposed with quotas as is the case in China now.
Vietnamese
