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Import costs hit Vietnam's textile firms
Publication Date : 13-08-2013
Vietnam's garment and textile industry remains reliant on imported raw materials, concerning enterprises seeking to take advantage of zero tariffs mandated in the Trans-Pacific Partnership (TPP), which has been under negotiation.
Statistics showed that in the first seven months of this year, the total export turnover of garment and textile products reached US$9.636 billion, a rise of 16.3 per cent year-on-year. But, the import of raw materials for the industry hit $7.646 billion, up 18.2 per cent.
Nguyen Thi Bich Lien, deputy director of Dong Nai Industrial Garment Co, said dependence on imported raw materials would be the biggest challenge to the country's garment industry when TPP came into force.
The TPP's "yarn-forward" rule of origin required nations to use a TPP member-produced yarn in textiles in order to receive duty-free access.
However, Vietnam currently imported raw materials from many countries which were not members of TPP, such as China.
Efforts to increase raw materials made in Vietnam had not met demand yet, she said, adding that the locally produced raw materials were often sold at higher prices than imported and delivery took longer.
Director of Dong Tien Garment Co in southern Dong Nai Province Vu Ngoc Thuan said many localities did not aim to attract investments in knitting and dying due to concerns over environmental impacts.
Enterprises hoped that TPP negotiators would agree that Vietnam, Malaysia and Mexico could import raw materials from countries which were not TPP members and receive duty-free access.
Still, investment in manufacturing raw materials for the industry was critical for development, together with a greater participation in the global supply chain, experts said.
The 19th TPP negotiations were scheduled for the end of this month in Brunei. The US, the biggest importer of garment and textile products from Vietnam, accounting for about 50 per cent of the industry's export turnover, was among 11 members joining the negotiations.
Vietnam was the second biggest garment exporter to the US with a market share of 8 per cent, after China.
Vietnamese garment and textile products were taxed an average 17 per cent by the US.