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Vietnam’s garment sector export growth still unsustainable

Vietnam’s garment and textile revenue increased for the first half of this year but experts say growth has not yet become sustainable. The national garment and textiles export value in the first half of the year grew 11.3 per cent year-on-year to $14.58 billion, higher than the growth rate of 6.1 per cent year-on-year in the same period of 2016.

Le Tien Trưong, Deputy General Director of the Vietnam Garment and Textile Group (Vinatex), says the results were a praiseworthy effort in the context of the unstable global economy. The country earned $6 billion from exports to the US, surging nearly 9 per cent; $2.3 billion to the EU, up 8 per cent; and $1.5 billion to Japan, up 12 per cent. Vietnam outstripped its competitors in garment exports during the period. According to the Trade Map, China experienced a decline of more than 5 per cent year-on-year, while Bangladesh saw a drop of 3.5 per cent, and Indonesia was down 5 per cent.

However, trade protectionism policy of US President Donald Trump’s administration and interest rate adjustment from the US Federal Reserve will threaten sustainable export growth. There is a high possibility that Vietnam’s competitors will further devalue domestic currencies to support exports as they did in 2016, says Truong.

The biggest hurdle for Vietnamese garments is competitors, especially China with large scale production and low costs. Vietnamese enterprises need to join the global supply chain with fastidious requirements of quality, prices and time of good delivery. Moreover, the auxiliary industry for the textile and garment sector has not yet developed. Low capacity in weaving and dyeing has led to local demand for textile fabric being unsatisfied. The domestic garment industry must import 70 per cent of fabric, causing unbalanced development.

Meanwhile, Vietnamese garment enterprises are mostly small- and medium-sized limited ability in accessing domestic and foreign markets. If they do not link with some large enterprises, these firms will find it difficult to survive and never have the ability to compete internationally.

 
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