Hopes and Fears for Textile and Garment Industry

Textile and garment industry performance in 2007 improved again with an estimated US$7.8 million in exports, up 31% over 2006. But 2008 is forecast to be a tough year as Vietnamese apparel firms will face many challenges.

Workers at a textile and garment factory

That conclusion was made at a recent conference organized by the Ministry of Industry and Trade (MoIT) in Ha Noi, which looked to review the industry’s performance this year and work out solutions to guarantee solid growth next year.

“The industry boasted better-than-expected export revenue of US$7.8 billion, some US$450 higher than earlier targets…”, said Viet Nam Textile and Apparel Association (Vitas) Chairman Le Quoc An.

It was no easy feat, however. It faced numerous obstacles, such as a monitoring program imposed on Vietnamese garments by the US and price hikes in imported raw materials and accessories, An added.

For the first time, the textile and garment industries surpassed crude oil to top the list of the country’s highest export earners, said Deputy Minister of Industry and Trade Bui Xuan Khu.

Despite difficulties due to US protectionism, exports to the US achieved US$4.5 billion, making up 55% of industry export revenues.

Vietnamese apparel firms also succeeded in entering new markets, like Turkey, South Africa, Argentina and Canada.

In pursuit of all-time record exports, the sector aims to reach earn US$9.5 billion next year, officials at the conference said.

An, however, shared his concerns that the sector will face new challenges in 2008, and enumerated increasing competition with other countries, anti-dumping investigations by the US, shortages of laborers and a series of recent labor strikes for higher pay.

According to Vitas, Viet Nam’s rivals in the garment manufacturing industry, China, India, Cambodia and Bangladesh, have devised ambitious plans to double their garment export turnover by 2010. China, for instance, plans to reach US$250 billion up from US$140 billion.

An said apparel firms should focus on solutions, such as increasing the local supply of raw materials and accessories and helping workers improve their working and living conditions.

MoIT also urged local garment makers to stop signing low-priced contracts for exports to America as it would diminish the nation’s average price of US-bound products. MoIT warned garment exporters they must consider inking deals with higher added value and premium prices starting December of this year and early next year.

A supervisory delegation, comprised of members from MoIT and Vitas, is to inspect the production bases of enterprises whose export volumes outpace their expected capacity and who are currently signing contracts at lower rates than last year, reported the MoIT.

By Viet Lan – Translated by Thuy Hang

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