Vietnam receives just a small slice of the garment industry pie

Garment export turnover has been high over the last four years at up to nine billion annually – however Vietnamese businesses are losing out on a large slice of the profits.

Despite Vietnam having a climate and soil suitable for growing cotton, its total cotton output is still not high enough to provide for the textile industry.

Meanwhile, wider raw materials for the garment industry are also lacking, which explains why garment companies every year have to import 70 percent of the materials needed, mainly from China and Taiwan.

In general, every year, Vietnamese enterprises have to import between $2.5 and $4 billion worth of materials.

In 2009, Vietnam earned $9 billion in total turnover from garment and textile imports, but spent $5.4 billion on cotton, fiber and fabric.

Le Quoc An, chairman of the Vietnam Textile and Apparel Association said that domestic materials for the garment industry are seriously lacking which makes garment companies unable to rely local suppliers. Hanosimex, for example, still has to import the majority of cotton fiber it needs from Thailand and Japan

An related that he once visited Hong Kong where he found several thousand kinds of lace used to edge underwear, while there are only several types in Vietnam.

Under plans on garment and textile industry development put in place and approved by the Prime Minister, Vietnam strives to obtain a turnover of $14.8 billion by 2010, $22.5 billion dollar by 2015 and $31 billion by 2020

As a part of the plan, the Ministry of Industry and Trade and the Vietnam Textile and Garment Group  (Vinatex) plan to increase the cotton growing area to 150,000 hectares in order to obtain 80,000 tonnes of cotton fiber by 2010.

This would meet 50 percent of the total demand for that year. In order to do that, Vinatex and its member companies would have to spend some 6,500 billion dong.

The development plan has been called very ambitious and not easy to implement. Experts say it would require huge investment which could be provided only by very big enterprises or foreign investors.

A leader of Vinatex said that it is proving very difficult to seek foreign partners to set up dying and finishing joint ventures. Most partners are not keen to bring their technologies abroad.

In addition, treating waste water is now a big problem. Enterprises still cannot find places to set up treatment factories or expand existing factories. Local authorities refuse to allocate land for fear of environment pollution.

In Dong Nai province, the local authorities had refused to grant an investment license to Dong A Textile Garment to set up a dying factory in the province.

VietNamNet/TBKTSG

Tags: Vietnam garment export, Vietnam Garment industry