Apparel exports touch $1b in first four months of 2010

The line-up of signed contracts since the start of 2010 has made Vietnam’s textile and garment sector ranked the fourth among top six export items reaching $1 billion in export turnover during the first four months. In details, the country earned $3.04 billion from apparel export in Jan-Apr, rising by 18.9 percent year-on-year. However, many export companies are worrying the more they export the higher their risk loss is because of a couple of reasons.

Despite the 2009 economic crisis, Vietnam’s apparel export still reached the plan and posted an impressive export growth in the first four months of this year. According to official statistics, at this time the apparel export fulfilled one third of the whole year’s target of $10.5 billion.

But just insiders–apparel exporters–said that although the orders from foreign importers have soared 5-7 percent from 2009 end and nearly 15 percent year-on-year, few percent rise in export price of apparel products still could not offset the higher increases in import prices of production materials.

Factually, Vietnam’s apparel still relies 90 percent on imported materials. So according to a leader of a textile and garment firm, India’s ban on cotton fibre recently pushed up the global price to $1.9 per kilogram, much higher than $1.3-1.4 per kilogramme in the year early. Also the price of imported fibre now jumps 34.3 percent year-on-year.

All above reasons made the total import of apparel materials increase to $738 million in Jan-Apr, leading the group of import items for light industrial production, and a little lower than the import spending of steel and complete built cars.

Meanwhile, Vietnamese apparel exporters could not fix the previously signed contracts with the prices in year early, forcing them to face difficulties in balancing the input-output prices and signing new contracts for 2010-2011. Moreover, the exporters both have to deal with a potential rise in contract volume and shortage of employees. At present, the lack of human resources pulled the general production of apparel industry down 10 percent against 2009.

In Vietnam, a big apparel firm only affords to pay average wage of no more than $200 a month (four million dong/month) to an employee while they have to face the increasing impetus of all material prices, living costs and basic salary for workers.
Competitive advantage of Vietnamese apparel products is in prices. Other advantages are delivery time, processing quality and closed-production process. Otherwise, foreign buyers will be more cautious in selecting partners based on the ability of production initiative.

At many meetings with enterprises to work out instigating the export turnover, officials from Vinatex always gave priority to concern the tendency of global companies in shortening production time. The time from an apparel contract signed to delivery finished was shortened from 180 days to 90 days. But Vietnamese enterprises have to meet many big hardships because they depend much on material imports plus long time spent on customs procedures.

Hence, some exporters proposed Ministry of Industry and Trade to release a support and adjustment policy to help domestic fibre producers supply materials for exporters. But pursuant to WTO commitments, Vietnam cannot issue such a protection policy while factually; the domestic fibre supply only meets 2 percent of the demand.

Heavy depend on material imports will be lasted long and only reduced until a polyester fibre production plant of 160,000 tonnes a year in the south and a foreign invested fibre plant capable of 60,000 tonnes a year in Nhon Trach, Dong Nai province are put into operation by 2011.

TBKTSG

Tags: Vietnam Apparel, Vietnam Apparel Exports