Current situation of Vietnam Textile and Garment industry development
In 2018, Vietnam's textile and garment industry marked an important milestone when export turnover reached over US $ 36 billion, an increase of more than 16% compared to 2017 (2015 increased by 12.1%, 2016 increased by 4.07%, in 2017 increased by 10.8%). Vietnam's textile and apparel industry is among the top 3 largest exporters in the world, behind only China and India. Specifically, in 2018, garment export turnover reached US $ 28.78 billion, up 14.45%; fabric exports reached US $ 1.66 billion, up 25.5%; fiber exports reached 3.95 billion USD, up 9.9%; non-woven fabric export reached 528 million USD, up by 15.54%; Export of textile materials reached US $ 1.23 billion, up 14.59%, notably, the surplus value of the textile industry in 2018 was estimated at US $ 17.86 billion, up 14.39%.
According to the Report of the Vietnam Textile and Apparel Association, in the first 6 months of 2019, the world economy tended to slow down due to political and trade fluctuations and conflicts, especially protection policies and trade wars. The trade increased more and more complicatedly and unpredictably, but the textile industry reached a total export turnover of nearly US $ 18 billion, up 8.61% over the same period in 2018; in which, garments reached 14.02 billion USD, up 8.71%. Litchi products reached US $ 1.02 billion, up 29.9%; fiber and fiber products gained 2.01 billion USD, up 1.1%; geotextile increased by 16.9%; textile accessories by 0.29%.
In terms of export markets, the US is still the largest market of Vietnam with 6-month export turnover estimated at US $ 7.22 billion, up 12.84% over the same period and accounting for 46.9%; followed by the member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) reaching US $ 2.57 billion, up 11.13%, accounting for 16.71% of the proportion (Japan alone reached 1, 79 billion USD, up 5.6% and accounting for 11.68%); EU reached 2.05 billion USD, up 10.46%, accounting for 13.36%; South Korea reached 1.37 billion USD, up 5.59%, accounting for 8.91%.
Although, achieving satisfactory results, Vietnam's textile and garment industry is facing difficulties and challenges, namely: US-China trade tensions affecting the exchange rates between currencies and commodity prices. The labor force in Vietnam is higher than some other countries in the region such as Korea, China, leading to the impact on export orders, especially for textile products. Accordingly, some enterprises have only had 70% of new orders compared to the same period in 2018. Especially, the consumption of yarn and raw materials faces many difficulties because the main export market is China (accounting for 60%) cut back on imports.
Meanwhile, garment products also saw a drop in orders. If in 2018, by the middle of the year, many large enterprises in the industry had orders until the end of the year, in 2019, they could only sign small quantity orders and sign monthly. In addition, in recent years, the textile industry has grasped the trend of sustainable development, it is prerequisite to escape from pure processing - purchasing raw materials and semi-finished products (CMT to FOB), designing by themselves. sales (ODM) or own brand (OBM) brand.
Vietnam's textile and garment industry is facing new difficulties and challenges, namely: US-China trade tensions affecting the exchange rate between currencies and processed goods prices in Vietnam are higher than some. countries in the region, affecting export orders, especially for textiles. The consumption of fibers and raw materials faces many difficulties because the main export market, China, is reducing imports.
Some enterprises in Vietnam National Textile and Garment Group (Vinatex) have achieved positive results. However, this figure is very modest, only companies with capital, large scale, and over 80% of small and medium enterprises still outsourcing. The reason is that there are some limitations such as: The source of raw materials is mostly dependent on foreign countries, the main mode of export processing (65%), FOB 25%, ODM and OBM only fight. 10% density.
Besides, the technology level is only at an average level. The qualification of textile and garment workers is low, the unskilled labor accounts for 76%; elementary, professional secondary accounting for 17.3%; college, university and postgraduate accounted for 6.8%.
According to the Vietnam Textile and Apparel Association, the textile industry is facing great development opportunities from the newly signed free trade agreements (FTAs). However, in order for the Textile and Garment industry to enjoy preferences from FTAs, it is required to strictly meet the rules of origin from fabrics, yarn ... Normally, the fiber industry exports over US $ 3 billion / year and the Chinese market. Quoc accounted for about US $ 2.4 billion, but now it cannot export.
The reason is that China is buying at a very low price, so businesses cannot sell. While Vietnam cannot export yarn to China, China encourages its enterprises to export yarn back to Vietnam. Meanwhile, China's input value added tax is quite high at 17%, while Vietnam's value added tax is only 10%.
With the FTAs Vietnam has signed, textile enterprises have high expectations because they will benefit from the tariff reduction. In particular, Vietnam FTA with the EU (EVFTA Agreement) has just signed, textile enterprises have been looking forward for many years, because this is a market with high added value, quality products and diversification. designed, classified and a traditional market with steady growth every year.
However, in fact, after the Agreement was signed, Vietnamese textile and garment enterprises exporting to the EU could not enjoy the immediate tax reduction and according to the roadmap from 3-7 years, the tax rate will gradually decrease from 12% to 0. %. In the immediate future, enterprises have not seen the benefits of preferential taxes, but the difficulty that textile enterprises have to face is that they must strictly comply with the requirements of rules of origin.
Accordingly, when exporting textiles to the EU, the fabric made in Vietnam must be used; cutting and sewing must be done by Vietnamese or European enterprises. The EU allows only the use of fabrics manufactured in Korea because it has a bilateral FTA with the EU. This condition makes it difficult for textile enterprises to receive incentives from the Agreement brought about by domestic enterprises that have not actively produced fibers and fabrics. This material is mainly imported from countries and territories that do not have free trade agreements with the EU.
Similarly, with the CPTPP, the Textile and Garment Industry expects the most from Canada and Australia. If the FTAs that Vietnam has participated in only apply the principle of 1-2 stages, then with the CPTPP, the three-step principle is applied to create fibers, spinning; weaving and finishing fabrics; confection. These stages must be carried out in the member countries covered by the CPTPP. Rules of origin from fabric onwards are also the weakest of the domestic textile and apparel industry, when they have to import up to 80% of the fabric.
In particular, imported nearly 50% from China, 18% from South Korea, 15% from Taiwan. Meanwhile, China does not participate in CPTPP. Under pressure on the rules of origin of EVFTA and CPTPP, in order to benefit from taxes, domestic textile and apparel industry must invest in the construction of factories producing raw materials, textile, dyeing ... to be proactive. source material. However, the current difficulty is that some localities are very "allergic" to the textile industry, especially dyeing, because of the risk of environmental pollution, so do not license to build production plants. raw materials for export textile industry.
In addition, textile export growth is still based on outsourcing production and cheap labor, while these two factors are not sustainable. Because as a general rule, outsourcing production will move to countries with cheaper labor resources, while labor costs of Vietnam are increasing.
In addition, an important factor is the application of science and technology in the textile industry is limited. According to a survey of the Institute of Strategic and Industrial Policy Research (Ministry of Industry and Trade) in 2018, the rate of using high-tech technology equipment, especially using software in product design, product management export accounts for about 20%; 70% of equipment has medium technology; 10% low technology. In the field of weaving, most of the weaving equipment has a fairly average level but the technology used in knitting is low and medium.
Solutions for developing Vietnam's Textile and Garment industry
In order for the Textile and Garment industry to overcome difficulties and develop sustainably, the following solutions must be attached:
Firstly , enterprises in the industry must join hands to implement solutions on investment, market, training and developing human resources, applying science and technology, solving weak and inadequate stages of the industry.
Secondly, Vietnam Textile and Apparel Association needs to do better its role as a bridge between member enterprises and domestic and foreign markets through trade promotion activities, international cooperation activities ... is to act as a bridge between businesses and state management agencies in receiving and reflecting enterprises to research, propose and propose to solve difficulties and problems for enterprises.
Thirdly, the State continues to reform administrative procedures, specialized inspection, remove difficulties for businesses, ensure a clear business investment environment for businesses. Create conditions to attract and license large investment projects, with advanced equipment and technologies, and an environmentally friendly wastewater treatment process, at the weaving and dyeing stages to solve the "bottlenecks" of and meet the origin requirements of Free Trade Agreements such as CPTPP and EVFTA ... At the same time, development policies are needed in the next 10-15 years to take advantage of this agreement. At present, some localities return to textile and garment, especially dyeing, but many projects of reputable and fully-qualified investors are not licensed.
The government should plan industrial zones and treat waste water to create favorable conditions for businesses. The adjacent localities need to coordinate so that the location of the industrial parks to attract more labor is not located in the adjacent areas. The State and enterprises should invest more strongly in the development of science and technology.
Specifically, build a 3D design platform to respond to the fast-moving market; Building - training quality human resources, fashion vision, foreign languages to update the world fashion trend. At the same time, manufacturing enterprises must be conscious and responsible to the end for products made so that consumers can feel secure and trust. In addition, the state needs to build industrial zones with waste water treatment, to call for investment in factories on yarn - weaving - dyeing, as well as give more drastic measures to develop the domestic market. geography, associated with the campaign "Vietnamese people prefer to use Vietnamese goods".
Fourthly, Vietnam Textile Association and manufacturing enterprises must improve the value of their supply chains. The bypass of barriers like De Minimis is only a temporary measure, because in the future, we have the ambition to elevate our export position to many other countries, especially in the context of global trade. demand is facing instability, China is also struggling to maintain its leading position in exporting textiles and garments. The foreign direct investment in textile and garment enterprises now needs to increase in upstream raw materials such as yarn, fabric, and sewing.
Fifthly, the textile and garment industry needs to aim at sustainable development, meeting the requirements of major markets in the world, and scientific and technological solutions to greening the textile and garment industry play an important role in the development strategy. development. Textile and apparel industry needs to attract selective foreign investment, prioritize investment projects in advanced textile and dyeing technologies, do not adversely affect the environment, connect with domestic garment enterprises, and form chains links across the value chain ...
Source: tapchitaichinh.vn
