Textile, garment companies brimming with foreign orders

In the first seven months, textile and garment exports brought $5.87 billion in revenue, while Vietnam aims to gain $10.5 billion for all of 2010.

Le Quoc An, Chair of the Vietnam Textile and Apparel Association (Vinatas), in a recent interview given to Tuoi Tre newspaper, stated that most garment exporters have enough orders for the year. Firms have refused more, fearing they cannot fulfill them on schedule. The export price has increased by 15 percent on average over 2009, revealing the high competitiveness of Vietnamese enterprises that are conquering the US, Japan and European markets.

Tuoi Tre: It is clear that the recovery of the world market has helped increase Vietnam’s garment exports. But are there any other reasons?

Le Quoc An: Economic and trade agreements between Vietnam and other countries have also contributed to export increases. The export revenue to the Republic of Korea (ROK), for example, has increased sharply by 80 percent, thanks to tariff cuts under the agreement between ASEAN and ROK. The Vietnam-Japan Economic Partnership Agreement has helped export revenue to Japan jump by 15 percent in comparison with the same period of 2009. As for ASEAN markets, exports have increased by 30 percent.

Vietnamese companies have been dynamic in seeking new export markets. Thien Nam Investment and Development Company located markets that import fiber – Turkey and Brazil. Meanwhile, Phu Bai Fibre Company exported products to ROK and the Philippines. As for fabric, Formosa Vietnam signed many contracts with India, which is considered the world’s main fabric supply source.

Tuoi Tre: In order to export $5.87 billion worth of products, is it true that firms must spend $5 billion to import cotton, fiber, fabric and materials for production?

An: If you compare import and export revenue, you may think that the added value of the garment industry is small. However, I have to remind you that a portion of imported materials are consumed domestically. These also include materials for use in the next months.

In 2009, we exported $9.1 billion in products, while enterprises spent $5.8 billion on import materials, so they earned a 40 percent profit.

Tuoi Tre: To date, domestic material producers can only provide some 40 percent of total materials needed for production. Will the proportion change in the time to come?

An: There is a growing tendency used by Japanese investors to set up factories in Vietnam to produce fiber used for products earmarked for Japan. It is still early to comment on the effects of these projects, but I believe that we will be able to see the effects in the coming years.

Regarding synthetic fiber, 10 years ago, we imported 100 percent, but now domestic sources can provide 70 percent. The proportion of imports has fallen rapidly. Two years ago, these firms could only meet 40 percent of the demand from domestic production. I strongly believe that the proportions of locally-made materials will soon surpass the current 40-50 percent level.

Tags: Vietnam Garment industry, Vietnam textile