Vietnam's textile and garment sector, the world's third-largest exporter behind China and Bangladesh, is set for robust expansion, projecting export revenues to hit $46 billion in 2025, representing a solid 5.6% year-on-year increase. This optimism is driven by manufacturers successfully securing orders well into the first quarter of 2026, a clear sign of global brands continuing to diversify sourcing away from China. The United States remains the key driver, expected to contribute $18.6 billion in revenue, an over 11% rise from the previous year, underscoring Vietnam's critical role in the global apparel supply chain.

The crucial green and digital shift

However, this growth trajectory is contingent on addressing significant internal challenges, particularly the pressure to meet increasingly stringent global sustainability standards. To maintain competitiveness, the sector is currently undergoing a "dual transformation": digitalization and greening. Industry leaders, like the Vietnam Textile and Apparel Association (VITAS), emphasize that this transition is mandatory, not optional. Key initiatives include massive investments in AI-powered production lines and Cold-Pad-Batch (CPB) dyeing technology, a greener process that can reduce utility costs by over 70% and lower emissions.

Navigating rising costs and trade policy

Despite its strong export performance, Vietnamese production costs are reportedly 40-45% higher than rivals like Bangladesh, and the country remains heavily dependent on importing up to 95% of its raw materials, including cotton and synthetic fibers. This dependency creates vulnerability, especially under tightening rules of origin within Free Trade Agreements (FTAs) like the EVFTA. Therefore, the strategic focus is on increasing the domestic value-added rate (currently around 52%) and attracting high-tech foreign direct investment to close the local supply chain gaps.