Vietnam’s ministry of Industry and Trade says, this year, importers shifted a large number of textile and garment orders to Bangladesh and Cambodia where labour costs are lower than Vietnam. Trung Quy Company General Director Tran Van Quy said that the company’s orders are 30 per cent less than last year. The reason: increase in input costs leading to higher production costs. Simple outsourcing orders, therefore, are sent to other countries with lower labour costs.
Pham Xuan Hong - Chairman of the Ho Chi Minh City Association of Garment, Textile, Embroidery and Knitting said textile companies in southern Vietnam are in difficulty. The fourth quarter is usually the peak season, requiring a lot of overtime. However, this year, some members are still in need of orders. Businesses in the association, therefore, have to share orders with others to help them maintain production.
The problem would keep the sector’s 2016 growth under 10 per cent - the lowest growth over the last decade. The Vietnam National Textile and Garment Group (VINATEX) is expected to maintain a 10 per cent export growth, the same as in 2015 and reach export revenue of $3.5 billion this year. However, this growth is lower than expected.
These difficulties of the textile and garment industry are expected to continue up to the third quarter of 2017. And to get by, Vinatex plans trade promotion and looking for additional markets. The shortage of orders is the consequence of many problems, including higher costs, lack of self-controlled material supply, modest competitiveness and labor shortages. Vietnam Textile and Apparel Association (VITAS) Chairman Vu Duc Giang affirmed the sector needs to improve its supply chain’s capability to solve their current problems, heading towards sustainable development.