Apparel exports earn $3.8b in first five months

Viet Nam’s apparel exports surged 17.1 per cent in the first five months of the year against the same period last year, reaching US$3.8 billion, said deputy chairman of the Viet Nam Textile and Apparel Association (Vitas) Pham Xuan Hong.

Hong said the industry would have to earn a monthly export turnover of nearly $1 billion for the remainder of the year to meet the industry’s annual export target of $10.5 billion.

He said the industry’s biggest challenge was a shortage of labour which has led to a 10 per cent decrease in its production capability.

Garment workers currently earn no more than VND4 million ($200) per month. Despite a 10-20 per cent rise in export prices in 2009, enterprises were still required to increase wages by 10 per cent to retain workers. Companies are having difficulty keeping workers at such low wages.

The industry is also facing high prices for raw materials, which have increased so sharply that the export price increase of roughly 5-7 per cent over late 2009 cannot cover costss.

Ninety per cent of the input materials used by Viet Nam’s apparel industry are imported. Cotton prices have surged from $1.3-1.4 per kilo earlier this year to $1.9 per kilo after India decided to halt cotton exports. The price of the fibre has increased by 34.3 per cent compared to the same period in 2009.

The price hikes of input materials have, in turn, caused a sharp rise in material import revenues. According to the General Statistics Office, the industry spent $269 million on imported cotton in the first five months of the year, up 154.2 per cent over the same period last year. The figures for fibre and cloth were $427 million and $2.02 billion, respectively, up 54.6 per cent and 23.9 per cent over the same period last year.

Import value for materials and accessories used in the apparel and footwear industries also reached $1.01 billion, up 31.7 per cent year-on-year.

Despite the increase in input material prices, Vietnamese exporters cannot re-negotiate export prices because they are tied into contracts with their buyers. —VNS

Tags: Vietnam Apparel, Vietnam Apparel Exports