Garment, textile sector short on growth
Vietnam Economic Times, Vietnam
VNECONOMY updated: 11/07/2014
The garment and textile sector has not grown as expected despite the fact that limits on exports were removed when Viet Nam joined the World Trade Organisation, according to industry experts.
They said Vietnamese businesses aren’t taking advantage of opportunities to make Free on Board (FOB) goods– items that Vietnamese companies are no longer responsible for after they are loaded onto transport ships or planes. These contracts can be more lucrative for export businesses because they do not have to insure the cargo or pay import duties when the items reach their destination.
Currently, only 20 to 30 per cent of textile and garment exports fall into this category.
To address this issue, the sector plans to encourage businesses to shift their focus to FOB products to increase the industry’s overall production between 5 and 10 per cent this year.
Pham Xuan Hong, general director of Sai Gon Garment and Textile said: “Only by producing FOB items can businesses survive and develop.”
So far this year, the sector has recorded revenues of US$3.4 billion in the first half of the year and an annual growth rate of between 20 and 30 per cent.
While positive, the industry’s target of earning $12 billion in exports by 2014 will be difficult to reach if reforms are not made and soon.
Another issue that was up to 80 per cent of raw materials were imported.
The sector plans to try and reverse this trend by building three industrial zones specifically designed to knit and dye fabrics.
“We will invest in three centres to provide materials for garment and textile companies in Ha Noi, Da Nang and HCM City and move the production to surrounding areas of those centres to address the high demand for materials,” said Le Quoc An, chairman of the Viet Nam Garment and Textile Association.
Businesses will likely also use Viet Nam’s burgeoning fashion industry to diversify their products and create special trade marks.
Labour shortage
To do this, they’ll need the support of skilled workers, yet another problem plaguing the sector.
Vietnamese companies typically produce items for foreign companies that outsource to Viet Nam, but local businesses simply do not have the human resources or capacity to meet their quotas.
“We are not worried about lacking contracts, instead we’re having trouble employing enough workers. Investing in new technology is now even easier than finding skilled labour,” said Hong.
The average salary for a tailor can be as much as VND1.5 million per month, but even that hasn’t made recruitment any easier.
People who have been hired from outside HCM City can be tough to hold onto, as well, especially after the Lunar New Year or Tet when they return to their home villages.
The Sai Gon Garment and Textile Joint-Stock Company 2 has seen its orders from American companies double recently, yet hasn’t be able to meet the deadlines because 25 of its 40 production lines are unmanned.
The situation is even more serious in Quang Ngai Province.
Of its seven garment companies, four have closed because they don’t have enough employees. Not even lowering the requirements for workers has helped.
Thuyen Nguyen Co Ltd needs more than 1,000 tailors, according to a provincial labour survey.
Source: Vietnam News
