Vietnam seeks breakthrough in garment industry

Vietnam plans to make heavy investments to create a breakthrough in garment production and export. In the immediate time, the country plans to export products worth $10.5 billion in 2010.

Many garment exporters foresee the potential for Vietnam to obtain $10.5 billion in export turnover in 2010, as the global economy escapes from crisis.

Exporters have every reason to believe in a high export turnover in this year. For the first time, they gained $750 million in export turnover in March 2010, raising the total garment export turnover in the first quarter of the year to $2.16 billion. This is an increase of 12.3 percent compared to the same period of 2009.

Garment exports have surpassed crude oil to hold the number one position among key export items.

Le Quoc An, Chair of Vietnam Textile and Apparel Association (Vitas), noted that most export companies are satisfied with their operation. Some report that they have orders until the third quarter or even the end of the year. The new orders are also bigger and unit prices are higher than those in 2008 and 2009.

Phan Van Kiet, Deputy General Director of Viet Tien Garment Company, remarked that Viet Tien has enough orders to stay busy until the end of the second quarter of 2010, with total contracts valued at over $80 million.

Kiet observed that the orders are better than 2008 and 2009, though they are still far less satisfactory than the pre-crisis orders.

Economic experts believe that high exports in the first quarter will fuel exports in the second quarter. Big garment producers and exporters throughout the world, including China and Bangladesh, are now restricting garment industry development, because the industry needs many workers, high investment, but provides low profit margins.

“Once these countries shift to develop other kinds of businesses, Vietnam’s garment industry will have bigger opportunities to develop,” An speculated.

Despite optimistic signals, some caution that Vietnam’s garment industry must cope with many difficulties.

Exporters explain that they must import garment materials from China, but the yuan has been appreciating, meaning higher costs. Fuel and other materials’ price increases have also made enterprises suffer. The cotton price, for example, has increased to its highest levels in recent years ($1.9 per kilo from $1.5 ). Meanwhile, labor costs will also increase when the minimum wage increases in early May.

An has believes that the US environment protection law of January 1, 2010, will install new technical barriers in the garment export market. Under the law, exports must be certified by third parties to determine their safety for people’s health.

Unit export prices are still low, 10-15 percent less than in the pre-crisis period, although they are more satisfactory than during the crisis.

To overcome challenges, the Ministry of Industry and Trade has set up a project to construct modern laboratories that can meet US requirements for certification. The labs will replace out-of-date equipment for testing garment quality.

Vitas will invest 1100 billion dong to improve productivity, technologies and they will reorganize relations among import-export companies and companies that provide materials, hoping to create a breakthrough in the garment industry.

Dien dan doanh nghiep

Tags: Vietnam Garment, Vietnam Garment industry