Textile & garment, seafood manufacturers worried about Brexit
Textile & garment, seafood manufacturers worried about Brexit
The uncertainties of the EU economy with the Italian PM stepping down and the UK & Northern Ireland leaving the EU will adversely affect Vietnam’s exports to the large markets.
Le Tien Truong, general director of Vinatex, the nation’s leading textile & garment group, predicted that Brexit would show its impact on Vietnam by the end of the first quarter of 2017.
The EU is the second largest export market for Vietnam.
Meanwhile, the Vietnam-EU FTA (EVFTA) has been approved, but it will only take effect in two years.
Vietnamese garment companies this year plan to focus on small- and medium-scale orders, while striving to get orders for high-end products to compete with countries which can enjoy preferential GSP.
Vinatex’s subsidiaries have enough orders to ensure jobs until the end of the first quarter. However, they have been told that difficulties may come in the second quarter.
Soon after the information about Brexit, the textile & garment sector sent a document to the Ministry of Industry and Trade, requesting to lower the export turnover target from $31 billion to $29 billion.
Vu Duc Giang, chair of the Vietnam Textile & Apparel Association (Vinatas), then explained that the enterprises which export 50 percent of their products to the UK faced difficulties in obtaining orders.
The UK is the biggest importer of Vietnam’s garment products in the EU, which consumes 21 percent of total exports to the EU. The demand from the market has fallen sharply.
Brexit has not only affected Vietnamese enterprises which export products to the UK, but also had an impact on British investment in Vietnam. Some British investors have scaled down their production and tried to sell their factories.
Seafood exporters may suffer from exchange rate fluctuation
Brexit is expected to not affect Vietnam’s seafood exports to the UK, because UK has been importing seafood products directly from Vietnam. However, Brexit will still have an impact on Vietnam’s exporters because of the pound depreciation.
The EU is one of the three biggest markets for many Vietnamese seafood companies in Can Tho City, while the UK is a big importer. Therefore, the companies will suffer from both the pound and euro depreciation.
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam’s shrimp exports to the UK increased sharply by 39 percent in the first four months of 2016, but the growth rate declined to 16 percent after the information about Brexit was released.
Footwear manufacturers, who consider the EU as the key export market, also are worried about orders in 2017 because they still don’t know how the UK and EU policies will change.
