Mr. Than Duc Viet, Deputy General Director of the Garment 10 Corporation (Garco 10), spoke with VET about the impact of the TPP on Vietnam's textiles and garment industry and Garco's future plans.
■ What are your thoughts on the TPP being officially signed?
The TPP being signed after five years of negotiations is good news for all 12 countries involved in the agreement. It will open up trade in goods between these countries by cutting import tariffs. For Vietnam, these markets have changed from being considered international markets to being markets in the same economic bloc as Vietnam.
■ Textiles will take on a new vibrancy when the TPP comes into effect. How has Garco 10 prepared to seize the benefits the agreement will bring?
Garco 10 has been preparing for some time. Because of the “yarn forward” rule in the TPP, over the last five years Garco 10 has established close relationships with local raw material suppliers and joint ventures with 100 per cent foreign investment to get abundant raw material supplies in the country. However, domestic raw material supply meets just 50 per cent of demand.
Garco 10 is now increasingly focused on raising the proportion of raw materials available from domestic enterprises, forming production chains to supply final products to importers in other countries to take advantage of tax incentives.
Vietnam’s textile sector will get the most benefit from the TPP because importers in the bloc do not import fabric or yarn but import final products. Meanwhile, Vietnam both produces and exports, so will benefit most from the agreement.
■ Despite the benefits, the textiles industry will still see many impacts from the TPP. What do you think about these impacts on the textile industry in general and on Garco 10 in particular?
I think the textile industry will be impacted but not a great deal. More and more foreign-invested enterprises will invest in Vietnam to benefit from the TPP. Domestic enterprises should therefore strengthen their cooperation and link production chains to not lose market share.
At Garco 10, due to producing certain products that cannot use domestic material sources, we are forced to import from other countries, including some that are not part of the TPP, such as India and Thailand. Garco 10 has therefore invited them to jointly invest with Garco 10 in Vietnam, extending the production chain with the aim of increasing the proportion of materials produced in Vietnam and conform to the principles of the TPP.
Difficulties sometimes present opportunities, providing motivation for textile enterprises in Vietnam to strongly engage in investment and the production of raw materials, expanding production chains to benefit from the TPP.
■ What are Garco 10’s plans for after the TPP comes into effect?
I believe that after joining the TPP Vietnam’s textile industry has great potential to grow. It is therefore necessary to develop more resources to seize the advantages. Earlier this year Garco10 focused on building an Original Design Manufacturer (ODM) team, which designs and manufactures a product that is eventually re-branded by another firm for sale. The whole design stage contributed to creating added value for our products. Instead of only being a manufacturer, Garco is becoming a business that provides packaged services and products to consumers.
- Garco 10