Prime Minister Phan Van Khai has decided to stop granting investment preferentials and state subsidies for the textile and garment sector, said Le Quoc An, chairman of the Vietnamese Textile and Garment Association (Vitas).
The move is to realize Vietnam’s commitment [with the US under their WTO bilateral agreement] to repeal its Decision No.55 regarding the State subsidies to the sector development.
According to An, the biggest preferential that the garment industry receives is from the Government’s preferential credit fund to carry out investment projects.
However, An said, the sector, in the past four years, has received preferential credit loans totaling only US$110 million.
Under the bilateral WTO agreement, signed on May 31 in Ho Chi Minh City, the US will remove quotas on Vietnamese textile and garment imports when Vietnam joins the global trade body.
Vietnam will have five years to totally end its subsidies to the sector.
Chairman of the National Council of Textile Organizations, a Washington-based lobbying group, Jim Chesnutt, said that the agreement is a victory for Vietnam more than for the US, a victory for an “unbalanced and job-destroying” trade policy and a severe blow to US textile manufactures.
According to Vitas’ chairman, WTO entry will offer Vietnam a great host of benefits. The country would be able to import more textile materials from the US to produce more goods for export to the US without the barrier of quotas.
The Vietnamese market share for garments and textiles in the US currently stand at only 3-4 per cent earning about US$2.5 billion last year.
Vietnam expects to earn US$5.5 billion from garment and textile exports, mainly to the EU and the US in 2006, up nearly 14.6 per cent against 2005.
Youth, Vietnam Panorama
Vietnamese
