Footwear industry needs leg-up

Vietnam’s leather and footwear sector is currently not likely to meet proposed growth targets from now until 2020 and beyond due to capital shortages.

According to the Ministry of Industry and Trade-approved development planning, Vietnam’s leather and footwear sector was expected to reap $9.1 billion in export value in 2015 and $14.5 billion in 2020, with corresponding localisation rate of 60-65 per cent by 2015 and 75-80 per cent by 2020, respectively.

Deputy chairman of the Vietnam Leather and Footwear Association (Lefaso) Diep Thanh Kiet said the sector would require enormous investments of VND59.570 trillion ($2.97 billion) up to 2020 – 43 per cent of which would be locally sourced.

“This means the sector will need over VND2.5 trillion ($125 million) worth in investments each year within the next decade, a too high level compared to its current capital raising capacity,” Kiet said.

In respect to human resources Kiet said local footwear sector needed around 650,000 direct workers and a large amount of indirect workers operating in diverse fields of material supply and services to achieve current export value. Thereby to triple the export value (from $4.5 billion in 2010 to $14.5 billion in 2020) the sector would need human resources at least double current manpower size, provided that the production output hiked 20 per cent and the sector’s added value up 30 per cent during the period.

Seeking sufficient labourers by that time would be an arduous task given current widespread labour scarcity by footwear enterprises.

Besides, investments in the sector’s production expansion did not go proportional with investments in materials and accessories production and businesses in the sector were consequently heavily reliant on imported materials.

This was evinced through the fact that a decade ago, the sector had a plan to build two footwear industrial clusters and two materials and accessories centres when establishing its development plan for 2000-2010. These two projects, however, remained on the drawing board till the present.

The footwear sector has also witnessed fierce competition from similar made-in-China items in the world marketplace as China reportedly has many advantages in price and material terms.

In this situation, Kiet proposed to heighten Lefaso’s role in overseeing the leather and footwear sector’s whole development plan implementation process and start work on the sector’s investment projects as of early 2011 to better confront challenges and make use of opportunities in the coming period. – VIR

Tags: Vietnam Footwear Industry