Big plans for footwear, leather

The leather and footwear industry will be a national key export in 2020, according to a new development plan published by the Ministry of Industry and Trade (MoIT) for the industry up to 2020, toward 2025.

By 2015 the ministry is estimat to earn US$9.1 billion in export turnover. MoIT hopes the turnover will increase to $14.5 billion in 2020 and $21 billion in 2025.

Meanwhile, the ministry aims for localisation to be 60-65 percent in 2015, 75-80 percent in 2020 and 80-85 percent in 2025.

During this time, the industry will focus on developing designs, products and their human resources sector.

While the ministry has set the target for the industry, the Viet Nam Leather and Footwear Association (Lefaso) reported that domestic leather and footwear companies were facing a number of challenges due to high overhead costs.

Slight increase

Lefaso said that during the first quarter, the leather and footwear industry’s export turnover was $1.4 billion, a slight increase over the same period last year even though the sector received many orders for 2011.

The association’s deputy chairwoman Nguyen Thi Tong said the sector’s export value only increased in January.

In February and March, the sector hit 70 percent of its established target.

Lefaso said that inflation directly affected their industry. Many Vietnamese companies depend on imported raw materials, so they were directly affected by the increase in price of raw materials.

Meanwhile, interest rates have been fluctuating between 18 percent and 20 percent.

A representative from Ngoc Ha Footwear Joint Stock Company in Ha Noi said his company was dealing with several difficulties because the price of raw materials was rising. His company and other companies had signed contracts at the time when prices were low.

The contracts were signed in late 2010 and the Vietnamese companies were unable to re-negotiate with their partners, said General Director of Ladoda Joint Company Dinh Quang Bao.

Bao said his company would increase the price of some of their products on the domestic market. However, more than 300 of the company’s branches have objected to this move. – VNS

Tags: Vietnam Footwear, Vietnam Footwear Exports, Vietnam leather exports