Vietnam's textile industry not to gain much from TPP

At a recent workshop organized by World Bank and the Vietnam Chamber of Commerce and Industry (VCCI), industry experts said that the sector would not stand to gain much from TPP and the government's own policies on the textile and garment industry, a Vietnamese online newspaper has reported.

 “Many textile and garment companies are leaving the market because of the state's unstable policies,” said Truong Van Cam, Deputy Secretary General of the Vietnam Textile and Apparel Association (Vitas) citing the example of an exporter whose import of a printer was delayed by six months because of a government decree that says business owners must have junior college's degree to be able to import printers.

A business in Nam Dinh province, which employs 2,000 workers, said it has to pay VND40-50 billion additionally every month because of the required higher minimum wage and trade union fee.

“The State's policies need to be designed in a way to encourage investors to do business and stay in the market,” Truong said.

Another analyst said that the government seemed to be too optimistic about potential opportunities to the textile and garment sector by TPP.

In 2015, Vietnam exported $27 billion worth of textile and garment products, 60 per cent of which went to TPP member countries. However, foreign invested enterprises (FIEs) pocketed most of the money.

He further explained that TPP's strict requirements on origin of products, would not be of much help for Vietnam as it imports 10 per cent of yarn and 5.3 per cent of cloth from TPP countries while 60-70 per cent of materials needed are imports, mostly from China.

Thus, most of materials needed come from non-TPP countries and products with non-TPP origin won't be able to enjoy preferential tariffs, he said.

Pham Xuan Hong, chair of the HCMC Textile, Garment, Knitting and Embroidery Association, also pointed out that the profits earned by Vietnamese enterprises are modest because they mostly do outsourcing for foreign partners.   

According to an industry report, Vietnam now has 6,000 textile and garment companies, of which garment units account for 70 per cent, 17 per cent are textile enterprises, 6 per cent spinning, 4 per cent are dying enterprises and 3 per cent make accessories and additional materials.

A good 70 per cent of units make products under the mode of cutting – assembling – trimming. This means that Vietnamese are proficient in the last phases of the production chain, and less so in dyeing and weaving. This is not likely to reap much benefit under the TPP agreement, they noted. (SH)

Fibre2Fashion News Desk – India