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Vietnam’s textile sector faces a slew of challenges related to labour

Textiles are often regarded as one of Vietnam’s key export sectors with an average annual growth rate of 15 per cent during 2010-2015. However, it is also faced with a slew of challenges of which the most recent challenge stems down to labour in the country no longer being as cheap as it once was.

On the other hand, it is also difficult to raise the textile industry to a higher level due to competitive factors in labour skills, modern technologies and equipment and diversified products. Due to limited resources, most domestic companies choose to gradually invest each year. This situation is in contrast compared to FDI as they represent less than 25 per cent of the nearly 7,000 textile enterprises nationwide but account for 70 per cent of the total export capacity. This shows that the overwhelming advantages of foreign companies over domestic enterprises will only continue to grow if reasonable policies and development direction are not soon formed.

According to the Vietnam Textile and Apparel Association, 2016 was an extremely difficult year for the country's textile industry, with the lowest growth rate since 2008 (the year that Vietnam's garment recorded no export turnover growth due to the global economic crisis) so far. By 2018, Vietnam's garment industry has been forecast to face many challenges, especially in regards to small and medium-sized enterprises facing the risk of closing down due to poor competitiveness and extremely difficult production conditions.