A Challenge for Vietnam's Garment and Textile Sector Was Posed by TPP: VITAS

Vietnam is one of the countries negotiating the Trans-Pacific Partnership (TPP), and the agreement throws a challenge for Vietnam’s garment and textile sector which heavily depends on raw material imports for production of finished goods, according to the Vietnam Textile and Apparel Association (VITAS).
 
Speaking at a workshop on the “TPP and its impacts on Vietnam’s textile and garment enterprises” in Da Nang city, VITAS deputy general secretary Nguyen Van Tuan said TPP poses a challenge for Vietnamese garment and textile businesses, as the industry still depends on imports of cotton, fabric and technology.
 
Of the 420,000 tons of cotton used by the Vietnamese textile industry last year, around 99 percent or 415,000 tons was imported, Tuan said.
 
Similarly, 88 percent of the 6.8 billion metres of fabric used by the garment industry last year was imported, he added.
 
Moreover, about 70 percent of the total exports were still made from cut-make-and-trim (CMT) contracts, which is a disadvantage for Vietnamese businesses wanting to benefit from the TPP.
 
This would require that local businesses make a big change to strengthen their competitiveness, by investing in cotton, spinning and weaving industries, and shift production from CMT to free-on-board (FOB), while increasing cooperation with foreign partners, Mr. Tuan said.
 
To meet the challenge of TPP, the Government should invite more foreign direct investment in the textile industry, and create favorable conditions for the production of raw materials need in the garment and textile sector, he suggested.
 
In 2012, around 4,000 textile and garment companies in Vietnam together earned US$ 20 billion, with exports contributing US$ 17.2 billion, accounting for 15 percent of the country’s Gross Domestic Product (GDP).
 
The nineteenth round of TPP negotiations ended last month in Brunei. The 12 countries negotiating the TPP agreement are the US, Canada, Mexico, Japan, Chile, Peru, Malaysia, Singapore, Brunei, Vietnam, Australia, and New Zealand. These countries spread across three continents account for about 40 percent of global GDP and about 30 percent of international trade.