14:28 (GMT +7) - Monday 26/10/2020


Textile and garment exports miss target

Released at: 17:00, 21/12/2016

Textile and garment exports miss target

Photo: Viet Tuan

Sector growing but revised annual target just out of reach.

by Quynh Nguyen

Vietnam’s textile and garment exports have failed to reach the targeted $29 billion in export turnover set for this year.

Export turnover is estimated at $28.5 billion, up 5.4 per cent year-on-year, according to Mr. Le Tien Truong, CEO of the Vietnam National Textile and Garment Group and Chairman of the Vietnam Textile and Apparel Association, but short of the $29 billion target for the year, which was previously $30-$31 billion. “Growth is at its lowest since 2010,” Mr. Truong told VET. “But growth in absolute value was higher than in previous years.”

The decline stems from difficulties in global markets. Total global demand in 2016 did not increase and key markets for Vietnam’s major imports fell: in the US by 4.5 per cent and the EU 3 per cent, while only Japan increased more than 1 per cent.

Moreover, many countries who are not in the TPP and wanted to retain market share have already adopted policies to reduce the deal’s impact.

Vinatex’s business performance this year has been disappointing. Industrial production value increased just 3 per cent, to VND37.7 trillion ($1.65 billion), while export turnover of VND2.47 trillion ($108.6 million) was up 4 per cent year-on-year.

Total revenue reached VND40.5 billion ($1.78 million), up just 3 per cent year-on-year, and pre-tax profit stood at VND1.43 trillion ($62.9 million), up 9 per cent. Main markets such as the US, Japan, and South Korea saw single-digit growth.

Vietnam’s textile and garment sector was to be a major beneficiary of the TPP, but the future of the trade deal is now uncertain. This has raised concerns among some enterprises but many others believe that they will benefit with or without the TPP.

Export to the US and Japan are still on the increase, at $11 billion and $3.5 billion, respectively. “Even without the TPP, Vietnam’s textile exports are still on track,” Mr. Truong said. “Vietnam also has other free trade agreements with the EU, South Korea and Japan, which are expected to bring benefits to textile and garment enterprises.”

The recent ASEAN in Transformation report from the International Labor Organization (ILO) showed that 86 per cent of wage workers in the textile, clothing, and footwear (TCF) sector are at great risk from automation.

“Estimates indicate that a significant share of the TCF sector’s wage workers are at a high risk from automation, ranging from 64 per cent in Indonesia and 86 per cent in Vietnam to 88 per cent in Cambodia,” the report noted.

TCF is not only the vulnerable sector but it faces the highest risk compared to other manufacturing sectors. “The TCF sector predominantly consists of repetitive and mundane jobs that are replaceable by programmed machinery and engineering advancements,” the report stated.

It explained that when technology is introduced and workers become redundant in ASEAN’s TCF factories they are absorbed and retrained in other departments, because technology upgrades in ASEAN have thus far been incremental and small-scale and re-skilling and redeploying workers has been a common practice.

The figures indicate an uncertain outlook not only for Vietnam but also for ASEAN’s young workers in TCF, and the ILO is concerned that women are predominantly affected and often view the sector as a first step in the job market. “The sector may no longer have the capacity to absorb large numbers of low-skilled workers, who are typically recruited from rural areas or farms,” the report added.

User comment (0)

Send comment