The Vietnam Textile and Apparel Association (VITAS) has welcomed proposals from Vietnam's ministry of industry and trade to develop large textile and garment industrial zones to attract investment for dyeing and fabric and yarn production.
The aim of the proposed zones, which would be 500 to 1,000 hectares in size, is to bring in investment from both local and foreign garment companies. The ministry also hopes to develop transport infrastructure to connect these large zones to existing ports and logistics centres to reduce transport costs.
Thus far, 2016 has been a good year for Vietnam's textile and garment exports. Export values in the first six months of the year hit US$12.8bn, up 6% from the same period in 2015. Meanwhile, export values to major markets such as the US and Japan rose 5.9% and 2.9%, respectively.
But Vietnam's apparel and textile exports in the first-half have reached just 41% of the total expected for the full year, with the country warning it expects to miss its export target in 2016 due to slowing consumer demand and increased competition.
The industry also faces a number of other challenges, and VITAS thinks the special zones could help.
Speaking to just-style, Hoang Ngoc Anh, vice general secretary and trade promotion department director at VITAS, stressed how Vietnam's upstream textile sector remains very weak, causing potential supply problems to downstream clothing manufacturing.
Anh said that with Vietnam signing more free trade agreements, such as the Trans-Pacific Partnership (TPP) and the recent European Union deal, its garment sector will need better backward linkages to follow these agreement's rules of origin. Under the TPP's yarn-forward rules of origin, for instance, apparel made with yarn and fabric imported from non-TPP countries would not qualify for duty-free treatment.
"If we want to benefit from TPP, we must drive the industry into upgrading the upstream sector…professional and well-organised industrial zones with high standards are highly recommended," she said.
Given these needs, VITAS strongly supports the ministry's proposal. Anh explained. "We believe the government…will create such industrial parks for the long-term development of the Vietnam textile and garment industry."
However, the ministry proposal has yet to explain where capital for these projects will be sourced, making some clothing manufacturers (who preferred not to be named) concerned about when the zones would be set up.
A recent analysis on just-style pointed out that the tariff phase-out schedule under the TPP, along with Vietnam's shortfall in meeting the pact's restrictive yarn-forward rules of origin, is likely to lead to modest growth in US textile and apparel imports from Vietnam – at least in the initial four years after TPP takes effect.
Separate reports suggest Vietnam's central Thua Thien-Hue Province is investing more than VND6.6trn (US$295m) on transforming itself into a textile and garment hub.
While last week Vietnam labour groups and businesses agreed on a 7.3% increase in the national minimum wage.
Source: http://www.just-style.com
Key words : Vietnam garment sector, welcomes, proposed textile zones.
