HANOI -
Streamlining production costs to increase
competitive edge and stabilizing labor should help
Vietnam's garment and textile sector hit its
US$5.4 billion export turnover target for the
year.
Many garment and textile companies
posted good results last year, and are looking to
build on that for 2006.
The Vietnam
National Textile and Garment Corp
(Vinatex), the country's leading state-run garment
producer, saw its total revenue hit VND16.2
trillion ($1 billion) last year, up 10.9% from
2004 with a 9.7% rise in export turnover to $896.7
million.
Vu Duc Giang, Vinatex's deputy
general director, said with last year's soaring
input material costs, Vinatex members managed to
boost production and business efficiency, yielding
a VND151.3 billion profit, up nearly 61% from
2004. Viet Tien Garment Co
gained
an impressive profitability of VND35 billion,
followed by Phong Phu Garment and Textile Co at
VND25 billion and Nha Be Garment Co with VND20
billion.
Vinatex acted to stabilize its
labor force by ensuring 100,000 jobs with an
average monthly income of VND1.48 million per
person.
This year Vinatex, which has more
than 50 member companies and subsidiaries, is
looking to produce 570 million square meters of
silk, 137.6 million of knitwear and more than 1
billion in apparel. It will also seek to raise
the localization rate among its garment items to
45% from 40% in 2005 with an aim to generate a
12.4% growth in export revenue.
Vinatex
subsidiaries have focused on perfecting
organizational structure and lessening production
costs to increase their competitive edge.
Despite the European Union lifting a
textile quota on Vietnamese garments, local
exports to this market remained stagnant due to
harsh competition from Chinese goods. As well, the
US textile quota means the market remains limited,
due mostly to inappropriate management from
relevant ministries.
Giang said Vietnamese
garments face fierce competition in the US market
against exports from 150 other countries,
particularly duty-free goods from China.
Apart from that, the local textile and
garment industry still suffers from an acute
shortage of laborers and the potential threat of
dumping lawsuits.
Giang suggested that the
sector should improve communication and awareness
to minimize the risk of dumping lawsuits, while
tightening administration to stop quota overlap on
locally made garment products.
Vietnam's
garment and textile sector has targeted increased
investment as well as forming raw material centers
and apparel-specific industrial parks to raise
localized production capacity and material
supplies.
A jump in garment exports to the
US, not subject to quota, totaling $1.1 billion
in 2005, helped boost the performance of the
textile and garment industry, said Le Quoc An,
chairman of the Vietnam Textile and Garment
Association.
Compared with four years ago,
when Vietnam earned just $200 million from
exporting quota-free products to the US, this was
remarkable, he said, adding that local companies
had succeeded in shifting their production to
quota-free items to boost exports.
Many
garment exporters, complaining about allocated
quota volumes not matching the market demand,
shifted to producing quota-free products to boost
export revenues.
Hoang Minh Khang,
director of the planning department of the Garment
Company 10, said the firm shifted to producing
quota-free items to offset the quota allocation
setback for a solid export growth.
Hoang
Van Khanh, director of the Hai Phong Joint-stock
Garment Company, said his company, which shifted
to producing quota-free items for the US, EU and
Japanese markets, achieved positive export results
last year.
While exports in quota
categories to the US fell by $100 million to $1.6
billion last year, the sector garnered a total of
$4.85 billion from garment exports by
restructuring production. However, this accounted
for a mere 10% increase from last year and about
$350 million below the set target.
The
ministry attributed the sluggish growth to serious
competition from World Trade Organization member
nations, which enjoyed the quota-free regime on
textiles and garments from early 2005, and pointed
out that Vietnam was yet to become a full member
of the institution.
Deputy Minister of
Trade Le Danh Vinh said the ministry was planning
to grant automatic quotas this year for textile
and apparel exports to the US.
However, only 70% of the export quota would be
allocated automatically, and the rest would be
distributed by the ministries of trade and industry.
The automatic quota allocation regime would
help enterprises sign contracts with US buyers
and continue production, he said.
Vietnam
exported some $850 million worth of textiles and
garments to the EU, an increase of 12%, with
revenue from the Japanese market reaching $630
million, up 17%, according to the ministry.
