Vietnam’s textile and garment industries are likely to be most affected by the country’s WTO commitments to cut import tariffs, a senior official of the Finance Ministry warned Thursday.
Mai Thu Van, Head of Export-Import Tax Division of the Tax Policy Department under the MoF made her remarks at a seminar themed “WTO Joining: Assessments of Impacts on Localities and Businesses”, held by Ho Chi Minh City’s Department for External Relations yesterday December 14.
Vietnam’s market will be flooded with competitive textiles and garments from foreign rivals such as South Korea, Taiwan, and Thailand, based on the same taste as Vietnamese consumers, Van noted.
Under the country’s WTO commitments, import tariffs of textile and garment items and input-materials are set to be cut to 13.7 per cent from 37.5 per cent, namely import tariff of cloth material will be reduced to 12 per cent from 40 per cent, fibers are to decrease to 5 per cent from 20 per cent whilst clothes to 20 per cent from 50 per cent.
Vietnam witnessed great impacts on the domestic business environment when cutting import tariffs in line with bilateral trade agreements with trade partners, Truong Trieu Duong, Acting Head of Department of Diversified Economic Cooperation under the Ministry of Foreign Affairs emphasized.
Services will be exposed to more tough competition, especially the state-owned enterprises, Duong forecast.
According to a recent World Bank report for 2007, the production cost is higher than that in other regional countries and China, namely exports cost Vietnam $701/container while imports are $887/container, and customs procedures take 36 days.
However, foreign media see growing room for the country’s textile and garment industries to expand further in the post-WTO period due to exemption from quotas.
Under WTO rules, Vietnam will gain access to all WTO members’ goods and service markets with lower tariffs, in addition to the perfection of economic legislation and improved business environment, particularly the textile industry will have greater access to the US market, Vietnam’s biggest textile importer with 60 per cent of its total value.
There are also other factors advantageous for the expansion of Vietnam’s textile and apparel production. In terms of labor cost, Vietnam is more competitive than its neighboring countries. According to a survey conducted by the Overseas Research Department of Japan External Trade Organization (JETRO) in October, the minimum monthly wage level of Vietnam is about US$50, the lowest compared to other Asian countries including India (US$74), Indonesia (US$90), the Philippines (US$135), South China (US$92) and Thailand (US$110).
Vietnam is a growing economy with emerging domestic demand. About 70 per cent of the country’s total population is under the age of 35. Their purchasing power is supported by a robust economy, which had an annual GDP growth rate of 8.4 per cent in 2005, second only to China in Asia.
(Young People, Foreign Media)
Vietnamese
