Textile material supply hangs by a thread
Textile material supply hangs by a thread
Viet Nam's textile and garment industry is teetering on the threshold of recovery but is now falling short of material supply due to a temporary lack of imports and the incompetence of local material manufacturers.
On 15 September, total textile and garment exports reached US$12.237 billion, up 16.9 per cent year on year. This figure is estimated to grow in the coming months with Viet Nam set to join the Trans-Pacific Partnership Agreement (TPP).
However, that move is also expected to create a bigger deficiency in materials available for domestic producers.
The Vietnamese industry imported 99 per cent of the material demanded by manufacturers last year, according to the Viet Nam Textile and Apparel Association (VITAS) statistics, but the process is getting slower, with damaging effects.
Le Quang Hung, chairman of the board of Sai Gon Garment Manufacturing Trade JSC (Gamex Sai Gon) told VnEconomy that garment companies were worried about their input, as cloth and apparel processing countries were struggling to source raw materials.
Material orders previously took one week to be delivered but are now taking up to one month, Hung said, adding that foreign material producers had taken advantage of the current shortage to raise prices by 10-15 per cent.
Major material suppliers for Viet Nam are mainland China, Taiwan and South Korea. In the first eight months, cloth imports from China were valued at $3.44 billion, cotton for $301 million, and other materials for $786.6 million.
Deputy General Secretary of VITAS Nguyen Van Tuan, for example, said the entire garment industry last year used 6.8 billion metres of cloth, of which 88 per cent was imported. Domestic cloth production only supplied 0.8 billion metres.
Viet Nam already has some in-house material manufacturing producers, however, they are not competent enough to supply materials for export-oriented products, with the dying and finishing stages particularly short of quality.
Tuan said the government should call for more direct investment from foreign textile manufacturers, while creating favourable conditions for the production of raw materials and core products.
Independent economist Pham Chi Lan also warned that building a self-supply capacity was getting more important with the TPP talks advancing and certificates of origin for fibre and cloth becoming more important.
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