According to the Ministry of Industry and Trade (MoIT), the garment and textile industry enjoyed the largest proportion of growth amongst other industries during the first ten months of 2018.
During the reviewed period, garment and textile export turnover hit roughly US$25.15 billion, up 17.1% from last year’s same period, with a major focus on the key markets such as the US, the EU, the Republic of Korea, China, and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) member nations.
Textile and garment companies’ production activities have showed positive signs due to an abundance of orders with many companies having even filled orders that will run until the end of the third quarter or the end of 2018. Most notably, the US has retained its place as a potential import market for Vietnamese garment and textile products with many large orders boosting growth in the industry.
Furthermore, the output of leather shoes hit US$227.1 million pairs in the first ten months of 2018, up 5.6% from a year earlier while total footwear export turnover was estimated to be at US$ 12.9 billion, a year-on-year increase of 9.7%.
The signing of free trade agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) will offer plentiful opportunities for further development of the garment and textile industry through greater foreign investment attraction, giving a boost to Vietnam’s exports to the EU and CPTPP member nations’ markets.
Foreign investment capital flowing into both industries are expected to see higher growth after Vietnam’s involvement in a series of FTAs. The recent ongoing US-China trade war will result in foreign clients’ decision to shift their production orders from China to Vietnam in order to avoid higher taxes.
In addition to opportunities and prospects, the MoIT has pointed out one of the challenges facing garment and textile businesses, including rising input costs for the minimum wage, social insurance, electricity and water consumption. Industry 4.0 is also set to have a strong impact on Vietnam's garment and textile sector.
As a matter of fact, there will be more risks from the US’ traceability of materials used for imported garment products in order to impose additional taxes on products made from Chinese materials.
Therefore, the MoIT has warned Vietnamese businesses to use materials sourced domestically or from other markets rather than Chinese materials to avoid potential risks.
Businesses need to take full advantage of FTAs and be proactive in responding to trade protection and technical barriers that occur in different foreign markets.
It is imperative for them to find solutions to bolster export and import in a variety of highly lucrative markets, seize any opportunities for market expansion, and expand market share of Vietnamese goods with traditional and FTA partner markets, the ministry said.
