MikeLigalig.com

By Quynh Hoa

Viet Nam's textile and garment sector is likely to face challenges this year to reach its target of US$ 18.5-19 billion export turnover, according to the vice-chairman of the Viet Nam Textile and Apparel Association (VITAS), who spoke at a seminar held Wednesday in HCM City.

Dang Phuong Dung, vice chairman and secretary general of VITAS, said global economic woes still plagued major markets as the US, EU and Japan.

Opinions and suggestions on the sectors' future growth and plans were discussed at the seminar.

"The public debt crisis and EU consumers have tightened their spending, leading to lower export orders," she said.

In addition, production costs and the prices of electricity, water and fuel as well as salaries and bank loan interest are all on the rise.

"One of the biggest challenges is the lack of human resources, especially for high quality workers," she said.

Many companies cannot fulfill orders on contract because they do not have enough workers affecting product quality.

She said that businesses should improve their sense of social responsibility, guarantee reasonable incomes for workers, build a healthy working environment, and create good promotion opportunities for workers.

She also noted that heavy reliance on imported materials and outsourcing orders that see a low return rate would not increase added value for export items or the competitiveness of the sector.

Production, technology and productivity management are all still weak, according to Dung.

Most small- and medium-sized enterprises (SMEs) lack marketing skills, and design capacity for producing unique products was poor. In addition, trademarks are not developed well.

Moreover, exporters have faced difficulties in accessing bank loans, and lack of capital to import materials. As a result, exporters must restrict their operations and only take outsourcing orders. That has lowered the competitiveness of the sector.

Foreign-currency loans in Viet Nam have a high interest rate of 6-8 per cent per year, but foreign- currency loans in many other countries are being offered at an interest rate of 0.5-2 per cent.

Dung said the nine-member Trans-Pacific Partnership (TPP), which is still in the negotiations stage, is seen as a great opportunity for the Vietnamese textile and garment sector.

With TPP, the tariffs imposed on the goods that Viet Nam and TPP-member countries export to the US would decrease gradually before they are removed.

This means that when Viet Nam's textile and garment products can be exempted from tax, it would be more competitive in the US market with other rivals.

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